It was a mixed third quarter for Williams-Sonoma, highlighted by a strong comp gain from West Elm.
In the third quarter, Williams-Sonoma recorded net earnings of $69.4 million, or 78 cents per diluted share, versus $70.5 million, or 77 cents per diluted share, in the year-previous quarter. Adjusted earnings per share in the third quarter came in at 79 cents. The retailer beat an analyst average estimate of 77 cents per diluted share published by Zacks Investment Research.
Comparable sales were down 0.4% versus the previous third quarter. By brand, West Elm comps gained 12% and Williams-Sonoma gained 0.1%. However, PBteen comps slipped by 10.9%, Pottery Barn by 4.6% and Pottery Barn Kids by 1%.
Net revenues were $1.25 billion versus $1.23 billion in the prior-year period. Operating income was $110 million versus $110.7 million in the 2015 quarter. E-commerce represented 52.1% of sales, Williams-Sonoma maintained. E-commerce revenues increased 3.3% while store revenues decreased 1.2% versus the year-earlier quarter.
Laura Alber, Williams-Sonoma president and CEO, said that the company had been pressing initiatives to improve sales, including those focused on customer acquisition. It also has been remodeling Pottery Barn locations and adding new-generation Williams-Sonoma stores mounting Williams-Sonoma Home installations, as well as adding those installations in additional existing stores.
Alber also pointed out that the company rolled out The Key, its first cross-brand loyalty program. Williams-Sonoma designed the program to showcase its retail brands and reward customers for shopping across the store portfolio. The company will continue the program launch over the next 24 months by adding technology, services and experiences, including integration with Weston hotels, and other benefits. Besides providing value for customers, Alber said, The Key program will improve Williams-Sonoma’s ability to deliver a more relevant experience across the brand portfolio.
Alber stated, “Our third quarter performance demonstrates our competitive strengths, our differentiated portfolio of brands and profitable multi-channel business model, as well as the ongoing success of our strategic initiatives that we have seen this year. We saw continued double-digit growth in West Elm, our newer businesses Rejuvenation and Mark and Graham, and our international company-owned businesses. We also made additional progress across our supply chain and continued to reduce inventory, which resulted in better gross margins, allowing us to meet our earnings commitment at the high end of our guidance range, despite a more difficult retail environment.”
Williams-Sonoma operates 626 stores across its retail portfolio.