Williams-Sonoma Net Flat in Q4, Up 8.6 Percent for FY
March 13, 2014,
SAN FRANCISCO-Reduced margins and increased expenses offset a modest sales gain to bring Williams-Sonoma's fourth-quarter net income to $133.8 million, essentially unchanged from last year's fourth quarter. For the fiscal year ending on Feb. 2, the multichannel retailer logged in net income of $278.9 million, up 8.6 percent from the prior fiscal year.
Gross margin in the quarter fell 70 basis points to 40.6 percent. In a conference call yesterday to financial analysts, Julie Whalen, Williams-Sonoma's executive vice president and chief financial officer, attributed the decline to lower selling margins and "occupancy deleverage." Selling, general and administrative expenses increased by 2.1 percent in dollars, although expenses were down 50 basis points as a percentage of sales.
Total net revenues in the quarter gained 4.3 percent to $1.5 billion, bringing the top line for the year to $4.4 billion, up 8.5 percent. The key driver in both periods was Williams-Sonoma's direct-to-customer business, whose net revenues increased 11.5 percent in the quarter and 13.1 percent for the year. Retail net revenues slipped 1.7 percent in the quarter and posted a pickup of 4.6 percent for the year.
During the conference call, Laura Alber, president and CEO, said Williams-Sonoma gained market share during the holiday selling season, with all of its brands and its e-commerce business contributing to the top line. For the fiscal year, Alber said, the company's comparable-brand growth reached 8.8 percent, with the top performer being West Elm with a record 17.4 percent comparable-brand increase.
Alber also told the analysts that Williams-Sonoma "executed well" in its four areas of strategic focus: strengthening the brands, laying the foundation for global expansion and new business development, investing in its supply chain and investing in the technologies and infrastructure underlying these initiatives.
"Our investments resulted in profitable growth and increased market leadership," Alber said. "We've kept our focus on our customers, the products and services that we offer and the way that we interact with our customers across multiple channels. As such, we have created a differentiated and highly relevant experience."