Williams-Sonoma Posts Q2 Earnings Results

For the 2014 second quarter ended August 3, Williams-Sonoma posted net earnings gain of 4.9% to $50.7 million, or $0.53 per diluted share versus $48.9 million or $0.49 per diluted share in the same quarter last year. 

Net revenue grew 5.8% to $1.039 billion versus $982 million in the same quarter last year with company-wide comparable brand revenue growth of 5.7%. 

Williams-Sonoma maintained that Pottery Barn comparable store sales advanced 4.4% while William-Sonoma comps gained 3.4%, Pottery Barn Kids comps gained 5.6%, West Elm comps gained 16.7% and PBteen comps was down 1%.

Operating income grew 9.3% to $85 million, the company said, and operating margin reached 8.2% versus 8.0% in Q2 2013. Gross margin narrowed 36.8% versus 37.6% in Q2 2013 and SG&A expenses were $297 million, or 28.6% of net revenues, versus $291 million or 29.6% in the same quarter last year.

Laura Alber, Williams-Sonoma president and CEO, said as part of the company’s financial results announcement that proprietary and exclusive product strategy, field leadership, better visuals and cohesive marketing strategies are driving the improved results. With Williams-Sonoma, the new proprietary Open Kitchen brand has been a driver of new customers, she stated, and that additional exclusive launches, such as the TK line by All-Clad, as well as additional launches of new cook’ tools and cutlery, have given the company strong leads for the third quarter.

Alber also announced that the company will be reopening Chuck Williams’ original store in Sonoma, CA on his 99th birthday this October.

For Pottery Barn, Alber noted that furniture sales were strong while softer areas included seasonal decorating, pillows and tabletop.

For Pottery Barn Teen, Alber noted that back orders increased in furniture doe to issues in Vietnam, and that the company expects to catch up late in the third quarter. New collections, such as Emily & Merritt and a new collaboration with Junk Gypsy will be launched this quarter.

In the second quarter, the company revamped West Elm’s price assortment, adding incremental volume across all categories, Alber said. The company also added a new lighting assortment and received a number of media coverage opportunities for its community-based tie ins. According to Alber, the company remains confident in the brand’s ability to be a $1 billion-plus business, she said.

Alber also commented on the company’s global expansion initiative, stating that four new stores will be opened in Australia (Pottery Barn, Pottery Barn Kids, Williams-Sonoma and West Elm) and that the company will look to continue growth in that market. The company has also opened a Pottery Barn in the Philippines and in the Middle East. The company currently operates 589 stores.