Williams-Sonoma (WSM)

[MCArmel1]

Williams-Sonoma beats by $0.03, beats on revenue

May 20 2015, 16:11 ET | About: Williams-Sonoma Inc. (WSM) | By: Jignesh Mehta, SA News Editor

Williams-Sonoma (NYSE:WSM): Q1 EPS of $0.48 beats by $0.03.
Revenue of $1.03B (+5.7% Y/Y) beats by $20M.
Press Release

http://seekingalpha.com/news/2536646-williams-sonoma-beats-by-0_03-beats-on-revenue?auth_param=ano5b:1alpqkl:a5df9e26e04df44ddb26887afe40761a&uprof=45#email_link


Williams-Sonoma, Inc. announces first quarter 2015 results Net revenues grow 5.8% with comparable brand revenue growth of 4.6%, operating margin of 7.0%, and diluted EPS of $0.48
Wed May 20, 2015 4:10 PM|Business Wire | About: WSM

SAN FRANCISCO--(BUSINESS WIRE)-- Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the first fiscal quarter ended May 3, 2015 (Q1 15) versus the first fiscal quarter ended May 4, 2014 (Q1 14).

1st QUARTER 2015 RESULTS

Q1 15 net revenues grew 5.8% to $1.031 billion versus $974 million in Q1 14 with comparable brand revenue growth of 4.6%.

Q1 15 operating margin was 7.0% versus 7.6% in Q1 14.

Q1 15 diluted earnings per share (EPS) was $0.48 versus $0.48 in Q1 14.

Cash returned to stockholders totaled $85 million, comprising $53 million in stock repurchases and $32 million in dividends.


Laura Alber, President and Chief Executive Officer, commented, "Our first quarter results were better than we expected, driven by West Elm and our new businesses, as well as strong operational and financial execution across all of our brands. Based on the results we see across our portfolio, we are confident in the fundamentals of our business and the year ahead. We believe that our growth strategies, consistent execution and operational discipline, put us on track to deliver another record year for our shareholders."

Ms. Alber concluded, "We believe our strong brands and profitable multi-channel strategy create a sustainable competitive advantage. We are focused on executing our long-term growth initiatives and we believe we are well-positioned for consistent market share gains."

Net revenues increased to $1.031 billion in Q1 15 from $974 million in Q1 14.

Comparable brand revenue growth in Q1 15 increased 4.6% on top of 10.0% in Q1 14 as shown in the table below:



1st Quarter Comparable Brand Revenue Growth by Concept*



Q1 15

Q1 14

Pottery Barn 2.4% 9.7%
Williams-Sonoma (WSM) 2.7% 6.0%
West Elm 15.3% 18.8%
Pottery Barn Kids 0.8% 8.1%
PBteen 3.0% 12.0%
Total 4.6% 10.0%
* See the Companys 10-K and 10-Q filings for the definition of comparable brand revenue growth.


E-commerce net revenues in Q1 15 increased 8.4% to $533 million from $491 million in Q1 14. E-commerce net revenues generated 52% of total company net revenues in Q1 15, compared to 50% in Q1 14.

Retail net revenues in Q1 15 increased 3.1% to $498 million from $483 million in Q1 14.

Operating margin in Q1 15 was 7.0% compared to 7.6% in Q1 14:

Gross margin was 36.8% in Q1 15 versus 37.8% in Q1 14.

Selling, general and administrative (SG&A) expenses were $307 million, or 29.8% of net revenues in Q1 15, versus $294 million, or 30.2% of net revenues, in Q1 14.


EPS in Q1 15 was $0.48 versus $0.48 in Q1 14.

Merchandise inventories at the end of Q1 15 increased 10.9% to $943 million from $850 million at the end of Q1 14. Inventory on-hand and available-for-sale grew 5.1% year-over-year. Inventory on-hand and available-for-sale for the Pottery Barn portfolio of brands declined by 2.0% year-over-year versus the end of Q1 14, with a 3.2% decrease in Pottery Barn, our largest brand.

STOCK REPURCHASE PROGRAM

During Q1 15, we repurchased 664,402 shares of common stock at an average cost of $79.11 per share and a total cost of approximately $53 million. As of May 3, 2015, there was approximately $234 million remaining under the three-year, $750 million stock repurchase program announced in March 2013.


FISCAL YEAR 2015 FINANCIAL GUIDANCE



2nd Quarter 2015 Guidance Financial Highlights

(Includes impact of the west coast port slowdown)*



Total Net Revenues (millions)

$1,085 $1,105


Comparable Brand Revenue Growth

4% 6%


Diluted EPS

$0.53 $0.57




Fiscal Year 2015 Guidance Financial Highlights

(Includes impact of the west coast port slowdown)*


Total Net Revenues (millions) $4,950 $5,020
Comparable Brand Revenue Growth 4% 6%
Operating Margin 10.2% 10.5%
Diluted EPS $3.35 $3.45
Income Tax Rate 38.3% 38.8%
Capital Spending (millions) $200 $220
Depreciation and Amortization (millions) $170 $180


* We have estimated the impact of the west coast port slowdown to be an
approximate $30 to $40 million reduction in net revenues and a $0.10 to
$0.12 reduction in EPS in fiscal year 2015. The second quarter 2015 impact
is estimated to be a $5 to $10 million reduction in net revenues and a
$0.02 to $0.04 reduction in EPS.





Store Opening and Closing Guidance by Retail Concept*


FY 2014 ACT FY 2015 GUID

Total

New

Close

End

Williams-Sonoma 243 5 (10)
238

Pottery Barn 199 4 (6) 197
Pottery Barn Kids 85 6 (4) 87
West Elm 69 19 - 88
Rejuvenation 5 1 - 6
Total 601 35 (20) 616

* Included in the FY 14 store count are 13 stores in Australia and one
store in the UK. FY 15 guidance includes six additional Australian stores.



CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, May 20, 2015, at 2:00 P.M. (PT). The call, hosted by Laura Alber, President and Chief Executive Officer, will be open to the general public via live webcast and can be accessed at www.williams-sonomainc.com/webcast. A replay of the webcast will be available at www.williams-sonomainc.com/webcast.

SEC REGULATION G NON-GAAP INFORMATION

We have reconciled non-GAAP diluted EPS with the most directly comparable GAAP financial measure in Exhibit 1. This non-GAAP financial measure excludes the impact of unusual business events which occurred in FY 14. We believe that this non-GAAP financial measure provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of our FY 15 guidance on a comparable basis with prior periods. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. This non-GAAP measure should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements relating to: our confidence in the fundamentals of our business; our growth strategies; our competitive advantage; our execution of long-term growth initiatives and our market share positioning; our future financial guidance, including Q2 15 and FY 2015 guidance; our three-year stock repurchase program; the impact of the west coast port slowdown; and our proposed store openings and closures.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: accounting adjustments as we close our books for Q1 15; continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; new interpretations of or changes to current accounting rules; our ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of our merchandise; changes in consumer spending based on weather, political, competitive and other conditions beyond our control; delays in store openings; competition from companies with concepts or products similar to ours; timely and effective sourcing of merchandise from our foreign and domestic vendors and delivery of merchandise through our supply chain to our stores and customers; effective inventory management; our ability to manage customer returns; successful catalog management, including timing, sizing and merchandising; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce new brands and brand extensions; challenges associated with our increasing global presence; dependence on external funding sources for operating capital; disruptions in the financial markets; our ability to control employment, occupancy and other operating costs; our ability to improve our systems and processes; changes to our information technology infrastructure; general political, economic and market conditions and events, including war, conflict or acts of terrorism; and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the SEC (SCUR), including our Annual Report on Form 10-K for the fiscal year ended February 1, 2015 and all subsequent current reports on Form 8-K. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

ABOUT WILLIAMS-SONOMA, INC.

Williams-Sonoma, Inc. is a specialty retailer of high-quality products for the home. These products, representing eight distinct merchandise strategies Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams-Sonoma Home, Rejuvenation, and Mark and Graham are marketed through e-commerce websites, direct mail catalogs and 603 stores. Williams-Sonoma, Inc. currently operates in the United States, Canada, Australia and the United Kingdom, offers international shipping to customers worldwide, and has unaffiliated franchisees that operate stores in the Middle East and the Philippines.

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