Wariness about purchasing big-ticket furniture and a promotional market environment hit Williams-Sonoma in the third quarter, according to the company. However, it still managed to beat a Wall Street earnings estimate.
Williams-Sonoma topped a MarketBeat-published analyst consensus earnings estimate of $3.44 but fell short of a $1.95 billion revenue estimate.
Comparable revenue slid 14.6% for the company in the quarter year over year while comps for West Elm declined 22.4%, for Pottery Barn declined by 16.6%, for Pottery Barn Kids and Teen declined 6.9% and for Williams Sonoma declined 1.9%
Sales in the quarter were $1.85 billion versus $2.19 billion in the year-before quarter. Operating income was $315.1 million versus $339.6 million in the period a year previous.
“We are proud to deliver another quarter of strong earnings, significantly exceeding expectations, despite a challenging macroeconomic backdrop for our industry,” said Laura Alber, Williams-Sonoma president and CEO, in announcing the results. “We beat profitability estimates with a record third quarter operating margin of 17% with earnings per share of $3.66. These results were achieved in an environment filled with ongoing consumer hesitancy on high-ticket discretionary furniture spend and elevated levels of promotional activity. The strength of our operating model produced strong earnings again this quarter, driven by our full-price selling, supply chain efficiencies, and best-in-class customer service. Our early seasonal reads are strong and we are optimistic about the holiday season.”
In a conference call, Alber pointed out that Williams-Sonoma operated at meaningfully lower promotional levels in the third quarter than it had in the 2022 period, instead addressing shopper need for value by introducing a larger offering of new products at mid-tier and lower price points. The decline in furniture purchasing has had the biggest impact at West Elm, she noted, but added that the banner had a positive reception for its new fall products, marking an evolution in the brand’s modern design approach.