Williams-Sonoma Net Climbs 12.8 Percent in Q2 as Brands Post Revenue Gains
Posted on August 29, 2013 by
SAN FRANCISCO-With several of its brands recording strong gains in comparable brand revenues, Williams-Sonoma's net income jumped 12.8 percent in its fiscal second quarter, to $48.9 million.
Total net revenues in the quarter, which ended on Aug. 4, were up 12.3 percent to $982.2 million. Key to the top-line growth were comparable-brand revenue gains of 16.5 percent for the West Elm brand, 16.3 percent for PBteen, 9.9 percent for Pottery Barn and 8.2 percent for Pottery Barn Kids. The Williams-Sonoma brand turned in the weakest performance, with a comparable-brand revenue drop of 0.4 percent.
In a conference call yesterday to financial analysts, Laura Alber, Williams-Sonoma's president and CEO, said the home furnishings brands led the way for the company in the quarter, each delivering double-digit revenue growth and combining for an aggregate revenue gain of 14 percent. These brands "are benefiting from exclusive product assortments, lifestyle merchandising, relevant marketing messages and a well-honed promotional strategy across our multiple channels," Alber said.
Looking at Williams-Sonoma's top line by channels, revenues from the direct-to-customer channel rose 15.3 percent and revenues from the retail channel were up 9.7 percent. Julie Whalen, executive vice president and chief financial officer, told the analysts that e-commerce fueled the direct-to-customer channel with a revenue increase of 20 percent. Revenue gains in Pottery Barn, West Elm and the international franchise operations provided the drivers for the retail channel.
Gross margin for the company as a whole was down 70 basis points to 37.6 percent. Selling, general and administrative expenses rose 10 percent in dollars but were slimmed by 60 basis points as a percentage of sales, to 29.6 percent.
For the third quarter, Alber said, Williams-Sonoma will focus on several strategies. These include maintaining "a compelling product line and value proposition" for West Elm; underscoring the strength of the direct channel and improving performance at the retail channel for the Williams-Sonoma brand; featuring a transitional late-summer color palette, expanding bedding and textiles offerings, and expanding the size assortment of the upholstery collection at Pottery Barn; and pushing the "preppy transitional esthetics" and collaborations with new brand partners at PBteen.
Along with releasing its financial results, Williams-Sonoma also said it is entering the Philippines market through a multiyear agreement with Store Specialists. The agreement calls for Store Specialists to develop all of Williams-Sonoma's brands in that nation, beginning early next year with the introduction of Pottery Barn and Pottery Barn Kids in Manila.