San Francisco, CA – November 30, 2023
Williams-Sonoma, Inc. (NYSE: WSM), a prominent player in the home retail sector and recognized as one of the biggest global buyers, showcased unwavering growth in its third-quarter operating results despite facing headwinds in the global market. The company reported a formidable operating margin of 17.0%, surpassing expectations and delivering an earnings per share of $3.66.
Laura Alber, President, and Chief Executive Officer, expressed pride in the company’s performance, stating, “We are proud to deliver another quarter of strong earnings, significantly exceeding expectations, despite a challenging macroeconomic backdrop for our industry.” Alber attributed the success to the company’s resilient operational model, marked by full-price selling, supply chain efficiencies, and exceptional customer service.
Key Financial Highlights for Q3 2023:
Comparable brand revenue experienced a decline of -14.6%, with a 2-year comp at -6.5% and a 4-year comp at +34.8%.
Gross margin reached 44.4%, marking a 290 basis points increase from the previous year. This surge was propelled by a selling margin rise of 450 basis points due to lower shipping and freight costs. Occupancy costs were reported at $200 million, representing a -1.0% change from the previous year.
SG&A rate stood at 27.4%, reflecting a 140 basis points increase year-on-year, driven by employment and general expense deleverage. SG&A amounted to $507 million, indicating an -11.1% change from the previous year.
Operating income reached $315 million, with an operating margin of 17.0%.
Diluted EPS stood at $3.66 per share.
Merchandise inventories witnessed a notable decrease of -17.2% compared to the third quarter of the previous year, amounting to $1.4 billion.
The company reported cash at quarter-end of $699 million with no outstanding borrowings. Operating cash flow amounted to $290 million, directed towards funding dividends and stock repurchases.
Alber expressed optimism about the upcoming holiday season, citing strong early seasonal reads. She concluded, “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.”
Guidance for Fiscal 2023 was updated, with the company anticipating net revenue growth in the range of -10% to -12% and an operating margin between 16% to 16.5%. Williams-Sonoma remains steadfast in its long-term outlook, expecting mid-to-high single-digit annual net revenue growth with an operating margin above 15%.
Williams-Sonoma, Inc., positioned as one of the biggest global buyers in the home retail sector, continues to operate successfully across various merchandise strategies and multiple brands. The company’s digital-first, design-led, and sustainable approach has solidified its presence in the U.S., Puerto Rico, Canada, Australia, and the United Kingdom, with international shipping available worldwide. The Key Rewards loyalty and credit card program further enhances the customer experience. Unaffiliated franchisees extend the company’s reach to the Middle East, the Philippines, Mexico, South Korea, and India. (GT)
