Williams-Sonoma Q3 Net Jumps 12.6 Percent
November 15, 2012,
SAN FRANCISCO-With momentum rising for all of its brands, Williams-Sonoma posted a 12.6 percent pickup in third-quarter net income, to $48.9 million.
Net sales in the quarter, which ended on Oct. 28, rose 8.9 percent to a total of $944.6 million. As detailed by Laura Alber, president and CEO, in a conference call to retail analysts yesterday, all of the Williams-Sonoma brands had a positive third quarter, led by West Elm with comparable-brand revenue growth of 13 percent, Pottery Barn with a comparable-brand increase of 11 percent and Pottery Barn Kids with a 10 percent pickup. The Williams-Sonoma brand posted comparable-brand growth of 1.3 percent, while PBTeen's comparable-brand revenues increased 2 percent.
Alber added that furniture and textiles were star sales performers for Pottery Barn, West Elm and PBTeen. Small electrics and tabletop helped propel Williams-Sonoma in the quarter.
The company's gross margin rose 70 basis points in the quarter, to 39 percent. Selling, general and administrative expenses increased 9.7 percent in dollars and 20 basis points as a percentage of sales, to 30.6 percent.
Alber told the analysts that Williams-Sonoma's financials have benefited throughout the year from the three strategic initiatives it launched earlier this year, including growing the existing brands, expanding globally and launching new businesses. Among the latter in the third quarter were the debut of West Elm Market, the shop-in-shop concept in West Elm stores, and Mark and Graham, a gift and accessories brand.
Regarding the existing nameplates, Alber said the Williams-Sonoma brand will offer a higher percentage of new and exclusive products--particularly in cookware, electrics and entertaining--in the fourth quarter and beyond. In Pottery Barn, the company has already begun to expand on its offerings in lighting, bathroom consoles, hardware fixtures and window treatments.
Gifts and seasonal merchandise are expected to fuel the results for both Pottery Barn Kids and PBTeen, Alber said. Store-count growth and the West Elm Market concept should drive growth within the West Elm brand going forward.