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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

 CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 22, 2024


Williams-Sonoma, Inc.
(Exact name of registrant as specified in its charter)


Delaware001-1407794-2203880
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

3250 Van Ness Avenue, San Francisco, California 94109
(Address of principal executive offices)

Registrant’s telephone number, including area code (415) 421-7900

N/A
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class:Trading
Symbol(s):
Name of each exchange
on which registered:
Common Stock, par value $.01 per shareWSM
New York Stock Exchange, Inc.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02.    Results of Operations and Financial Condition

On August 22, 2024, the Company issued a press release announcing the Company’s financial results for its second quarter ended July 28, 2024. A copy of the Company’s press release is attached as Exhibit 99.1. The attached exhibit is provided under Item 2.02 of Form 8-K and is furnished to, but not filed with, the Securities and Exchange Commission.

Item 9.01.    Financial Statements and Exhibits


    
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

WILLIAMS-SONOMA, INC.
Date: August 22, 2024
By:/s/ Jeffrey E. Howie
Jeffrey E. Howie
Chief Financial Officer
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Exhibit 99.1
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Williams-Sonoma, Inc. announces second quarter 2024 results
Q2 comparable brand revenue -3.3%
Q2 operating margin of 16.2%; diluted EPS growth of 11.5% to $1.74
Revises 2024 outlook with lower revenues offset by higher operating margin
San Francisco, CA, August 22, 2024 – Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the second quarter ended July 28, 2024 versus the second quarter ended July 30, 2023.
“Today we are reporting strong results for the second quarter of 2024, which were driven by our Q2 improved top-line trend, market-share gains, and continued delivery on our commitment to profitability. In Q2, our comp came in at -3.3%, and we exceeded profitability estimates with an operating margin of 16.2% and earnings per share of $1.74, reflecting the 2-for-1 stock split we completed in July,” said Laura Alber, President and Chief Executive Officer.
Alber concluded, “We are pleased with our operating results. Our revised outlook today reflects our prudent view of the top-line, and the confidence we have in our profitability profile. We now expect full year revenues to come in at a range of down 4.0% to down 1.5%, but we are raising our guidance on operating margin to be in the range of 17.4% to 17.8%. The reduction in our revenue outlook is offset by our raised operating margin guidance."
SECOND QUARTER 2024 HIGHLIGHTS
Comparable brand revenue -3.3%.
Gross margin of 46.2% +550bps to LY driven by (i) higher merchandise margins of +380bps, (ii) supply chain efficiencies of +180bps, partially offset by (iii) occupancy deleverage of -10bps. Occupancy costs of $197 million, -3.0% to LY.
SG&A rate of 30.0% +390bps to LY driven by higher performance-based incentive compensation and advertising spend. SG&A of $536 million, +10.4% to LY.
Operating income of $290 million with an operating margin of 16.2%. +160bps to LY.
Diluted EPS of $1.74. +11.5% to LY.
Merchandise inventories -4.1% to the second quarter LY to $1.2 billion.
Maintained strong liquidity position of $1.3 billion in cash and operating cash flow of $246 million, enabling the company to deliver returns to stockholders of $203 million through $130 million in stock repurchases and $73 million in dividends.
On July 9, 2024, the Company effected a 2-for-1 stock split of its common stock through a stock dividend. All historical share and per share amounts in this release have been retroactively adjusted to reflect the stock split.

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Exhibit 99.1
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FIRST QUARTER 2024 OUT-OF-PERIOD ADJUSTMENT
Subsequent to the filing of our Form 10-K, in April 2024, the Company determined that it over-recognized freight expense in fiscal years 2021, 2022 and 2023 for a cumulative amount of $49 million. The Company evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. The Company then evaluated whether the cumulative amount of the over-accrual was material to its projected fiscal 2024 results, and determined the cumulative amount was not material. Therefore, the Condensed Consolidated Financial Statements for the twenty-six weeks ended July 28, 2024 include an out-of-period adjustment of $49 million, recorded in the first quarter of fiscal 2024, to reduce cost of goods sold and accounts payable, which corrected the cumulative error on the balance sheet as of January 28, 2024.
OUTLOOK
We are revising our fiscal 2024 guidance to reflect lower net revenue trends and higher operating margin expectations. The net effect of these changes holds earnings materially in line with our prior implied EPS guidance.
In fiscal 2024, we now expect annual net revenue growth in the range of -4.0% to -1.5% with comps in the range of -5.5% to -3.0% in fiscal 2024.
We are raising our guidance on our operating margin for fiscal 2024. We now expect an operating margin between 18.0% to 18.4%, including the impact of the first quarter out-of-period adjustment of 60bps. Without this adjustment, we expect an operating margin between 17.4% to 17.8% in fiscal 2024.
For fiscal 2024, we expect annual interest income to be approximately $45 million and our annual effective tax rate to be approximately 25.5%.
Fiscal 2024 is a 53-week year. Our financial statements will be prepared on a 53-week basis in fiscal 2024 and a 52-week basis in fiscal 2023. However, we will report comps on a 53-week versus 53-week comparable basis. All other year-over-year comparisons will be 53-weeks in fiscal 2024 versus 52-weeks in fiscal 2023. We expect the additional week in fiscal 2024 to contribute 150bps to net revenue growth and 10bps to operating margin, both of which are reflected in our guidance.
Over the long-term, we continue to expect mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.
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Exhibit 99.1
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CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. will host a live conference call today, August 22, 2024, at 7:00 A.M. (PT). The call will be open to the general public via live webcast and can be accessed at http://ir.williams-sonomainc.com/events. A replay of the webcast will be available at http://ir.williams-sonomainc.com/events.
CONTACT INFORMATION
Jeff Howie EVP, Chief Financial Officer – (415) 402 4324
Jeremy Brooks SVP, Chief Accounting Officer & Head of Investor Relations – (415) 733 2371
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SEC REGULATION G NON-GAAP INFORMATION
This press release includes non-GAAP financial measures. Exhibit 1 provides reconciliations of these non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We have not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis as we cannot do so without unreasonable efforts due to the potential variability and limited visibility of excluded items, and for the same reasons, we are unable to address the probable significance of the unavailable information. These excluded items include exit costs associated with the closure of our West Coast manufacturing facility and the exiting of Aperture, a division of our Outward, Inc. subsidiary, as well as costs related to reduction-in-force initiatives. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of current period performance on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to the GAAP financial measures presented in this press release and our financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
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, among other things, statements in the quotes of our President and Chief Executive Officer, our updated fiscal year 2024 outlook and long-term financial targets, and statements regarding our industry trends and business strategies.
The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; the continuing impact of inflation and measures to control inflation, including changing interest rates, on consumer spending; the continuing impact of global conflicts, such as the conflicts in Ukraine and the Middle East, and shortages of various raw materials on our global supply chain, retail store operations and customer demand; labor and material shortages; the outcome of our growth initiatives; 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; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce and grow 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, supply chain, product, transportation 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; the impact of current and potential future tariffs and our ability to mitigate impacts; the potential for increased corporate income taxes; 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, including our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. We have not filed our Form 10-Q for the quarter ended July 28, 2024. As a result, all financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates that are identified prior to the time we file the Form 10-Q. All forward-looking
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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 the world’s largest digital-first, design-led and sustainable home retailer. The company’s products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — are marketed through e-commerce websites, direct-mail catalogs and retail stores. These brands are also part of The Key Rewards, our loyalty and credit card program that offers members exclusive benefits across the Williams-Sonoma family of brands. We operate in the U.S., Puerto Rico, Canada, Australia and the United Kingdom, offer international shipping to customers worldwide, and have unaffiliated franchisees that operate stores in the Middle East, the Philippines, Mexico, South Korea and India, as well as e-commerce websites in certain locations. We are also proud to be a leader in our industry with our values-based culture and commitment to achieving our sustainability goals. Our company is Good By Design — we’ve deeply ingrained sustainability into our business. From our factories to your home, we’re united in a shared purpose to care for our people and our planet.
For more information on our sustainability efforts, please visit: https://sustainability.williams-sonomainc.com/
WSM-IR
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Condensed Consolidated Statements of Earnings (unaudited)
 
For the Thirteen Weeks Ended
For the Twenty-six Weeks Ended
July 28, 2024July 30, 2023July 28, 2024July 30, 2023
(In thousands, except per share amounts)$% of
Revenues
$% of
Revenues
$% of
Revenues
$% of
Revenues
Net revenues$1,788,307 100.0 %$1,862,614 100.0 %$3,448,655 100.0 %$3,618,065 100.0 %
Cost of goods sold961,981 53.8 1,105,047 59.3 1,819,814 52.8 2,185,439 60.4 
Gross profit826,326 46.2 757,567 40.7 1,628,841 47.2 1,432,626 39.6 
Selling, general and administrative expenses536,410 30.0 486,019 26.1 1,015,097 29.4 961,601 26.6 
Operating income289,916 16.2 271,548 14.6 613,744 17.8 471,025 13.0 
Interest income, net
15,208 0.9 3,335 0.2 31,261 0.9 8,833 0.3 
Earnings before income taxes305,124 17.1 274,883 14.8 645,005 18.7 479,858 13.3 
Income taxes79,379 4.4 73,376 3.9 153,594 4.5 121,820 3.4 
Net earnings$225,745 12.6 %$201,507 10.8 %$491,411 14.2 %$358,038 9.9 %
Earnings per share (EPS):
Basic$1.76 $1.57 $3.83 $2.75 
Diluted$1.74 $1.56 $3.78 $2.73 
Shares used in calculation of EPS:
Basic128,256128,326128,334 130,012 
Diluted129,810129,051130,103 131,173 

2nd Quarter Net Revenues and Comparable Brand Revenue Growth (Decline)1
Net RevenuesComparable Brand Revenue
Growth (Decline)
(In millions, except percentages)Q2 24Q2 23Q2 24Q2 23
Pottery Barn$726 $786 (7.1)%(10.6)%
West Elm459 484 (4.8)(20.8)
Williams Sonoma240 245 (0.8)(0.7)
Pottery Barn Kids and Teen259 256 1.5 (9.0)
Other2
104 92 N/AN/A
Total$1,788 $1,863 (3.3)%(11.9)%
1See the Company’s 10-K and 10-Q for the definition of comparable brand revenue, which is calculated on a 13-week basis, and includes business-to-business revenues.
2Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham, and GreenRow.

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Condensed Consolidated Balance Sheets (unaudited)

As of
(In thousands, except per share amounts)July 28, 2024January 28, 2024July 30, 2023
Assets
Current assets
Cash and cash equivalents$1,265,259 $1,262,007 $514,435 
Accounts receivable, net112,492 122,914 117,045 
Merchandise inventories, net1,247,426 1,246,369 1,300,838 
Prepaid expenses99,409 59,466 73,521 
Other current assets19,711 29,041 26,293 
Total current assets2,744,297 2,719,797 2,032,132 
Property and equipment, net975,137 1,013,189 1,036,407 
Operating lease right-of-use assets1,150,180 1,229,650 1,232,925 
Deferred income taxes, net106,080 110,656 73,610 
Goodwill77,307 77,306 77,322 
Other long-term assets, net158,671 122,950 119,415 
Total assets$5,211,672 $5,273,548 $4,571,811 
Liabilities and stockholders' equity
Current liabilities
Accounts payable$595,601 $607,877 $597,104 
Accrued expenses207,633 264,306 184,996 
Gift card and other deferred revenue576,458 573,904 435,369 
Income taxes payable53,373 96,554 127,581 
Operating lease liabilities233,361 234,517 222,155 
Other current liabilities92,369 103,157 96,645 
Total current liabilities1,758,795 1,880,315 1,663,850 
Long-term operating lease liabilities1,081,108 1,156,104 1,168,221 
Other long-term liabilities121,539 109,268 118,785 
Total liabilities2,961,442 3,145,687 2,950,856 
Stockholders' equity
Preferred stock: $0.01 par value; 7,500 shares authorized, none issued
— — — 
Common stock: $0.01 par value; 253,125 shares authorized; 127,788, 128,301, and 128,289 shares issued and outstanding at July 28, 2024, January 28, 2024 and July 30, 2023, respectively
1,278 1,284 1,283 
Additional paid-in capital538,172 587,960 550,866 
Retained earnings1,728,063 1,555,595 1,084,772 
Accumulated other comprehensive loss(16,848)(15,552)(14,540)
Treasury stock, at cost(435)(1,426)(1,426)
Total stockholders' equity2,250,230 2,127,861 1,620,955 
Total liabilities and stockholders' equity$5,211,672 $5,273,548 $4,571,811 
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Retail Store Data
(unaudited)
Beginning of quarterEnd of quarterAs of
April 28, 2024OpeningsClosingsJuly 28, 2024July 30, 2023
Pottery Barn184 (2)185 190 
Williams Sonoma156 — 158 164 
West Elm121 — 122 123 
Pottery Barn Kids45 — — 45 46 
Rejuvenation11 — — 11 
Total517 6 (2)521 532 


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Condensed Consolidated Statements of Cash Flows (unaudited)

For the Twenty-six Weeks Ended
(In thousands)July 28, 2024July 30, 2023
Cash flows from operating activities:
Net earnings$491,411 $358,038 
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization113,264 110,843 
Loss on disposal/impairment of assets2,963 14,185 
Non-cash lease expense129,608 126,981 
Deferred income taxes(5,931)(3,841)
Tax benefit related to stock-based awards10,139 12,334 
Stock-based compensation expense44,846 44,159 
Other(1,578)(1,647)
Changes in:
Accounts receivable10,393 (1,502)
Merchandise inventories(1,415)154,712 
Prepaid expenses and other assets(66,647)(6,615)
Accounts payable(26,617)87,840 
Accrued expenses and other liabilities(54,924)(67,955)
Gift card and other deferred revenue2,800 (43,699)
Operating lease liabilities(131,848)(135,206)
Income taxes payable(43,181)66,358 
Net cash provided by operating activities473,283 714,985 
Cash flows from investing activities:
Purchases of property and equipment(70,946)(92,880)
Other(13)211 
Net cash used in investing activities(70,959)(92,669)
Cash flows from financing activities:
Repurchases of common stock(173,603)(310,000)
Payment of dividends(135,768)(116,643)
Tax withholdings related to stock-based awards(88,851)(49,950)
Net cash used in financing activities(398,222)(476,593)
Effect of exchange rates on cash and cash equivalents(850)1,368 
Net increase in cash and cash equivalents3,252 147,091 
Cash and cash equivalents at beginning of period1,262,007 367,344 
Cash and cash equivalents at end of period$1,265,259 $514,435 
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Exhibit 1
2nd Quarter GAAP to Non-GAAP Reconciliation
(unaudited)
For the Thirteen Weeks Ended
For the Twenty-six Weeks Ended
July 28, 2024July 30, 2023July 28, 2024July 30, 2023
(In thousands, except per share data)$% of
revenues
$% of
revenues
$% of
revenues
$% of
revenues
Occupancy costs$197,243 11.0 %$203,259 10.9 %$393,398 11.4 %$405,871 11.2 %
Exit Costs1
— — — (239)
Non-GAAP occupancy costs$197,243 11.0 %$203,259 10.9 %$393,398 11.4 %$405,632 11.2 %
Gross profit$826,326 46.2 %$757,567 40.7 %$1,628,841 47.2 %$1,432,626 39.6 %
Exit Costs1
— — — 2,141 
Non-GAAP gross profit$826,326 46.2 %$757,567 40.7 %$1,628,841 47.2 %$1,434,767 39.7 %
Selling, general and administrative expenses$536,410 30.0 %$486,019 26.1 %$1,015,097 29.4 %$961,601 26.6 %
Exit Costs1
— — — (15,790)
Reduction-in-force Initiatives2
— — — (8,316)
Non-GAAP selling, general and administrative expenses$536,410 30.0 %$486,019 26.1 %$1,015,097 29.4 %$937,495 25.9 %
Operating income$289,916 16.2 %$271,548 14.6 %$613,744 17.8 %$471,025 13.0 %
Exit Costs1
— — — 17,931 
Reduction-in-force Initiatives2
— — — 8,316 
Non-GAAP operating income$289,916 16.2 %$271,548 14.6 %$613,744 17.8 %$497,272 13.7 %
  
$Tax rate$Tax rate$Tax rate$Tax rate
Income taxes$79,379 26.0 %$73,376 26.7 %$153,594 23.8 %$121,820 25.4 %
Exit Costs1
— — — 4,690 
Reduction-in-force Initiatives2
— — — 2,174 
Non-GAAP income taxes$79,379 26.0 %$73,376 26.7 %$153,594 23.8 %$128,684 25.4 %
Diluted EPS$1.74 $1.56 $3.78 $2.73 
Exit Costs1
— — — 0.10 
Reduction-in-force Initiatives2
— — — 0.05 
Non-GAAP diluted EPS3
$1.74 $1.56 $3.78 $2.88 
1During Q1 2023, we incurred exit costs of $17.9 million, including $9.3 million associated with the closure of our West Coast manufacturing facility and $8.6 million associated with the exiting of Aperture, a division of our Outward, Inc. subsidiary.
2During Q1 2023, we incurred costs related to reduction-in-force initiatives of $8.3 million primarily in our corporate functions.
3Per share amounts may not sum due to rounding to the nearest cent per diluted share.
SEC Regulation G – Non-GAAP Information
These tables include non-GAAP occupancy costs, gross profit, gross margin, selling, general and administrative expense, operating income, operating margin, income taxes, effective tax rate and diluted EPS. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our quarterly actual results on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
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v3.24.2.u1
Cover
Aug. 22, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 22, 2024
Entity Registrant Name Williams-Sonoma, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-14077
Entity Tax Identification Number 94-2203880
Entity Address, Address Line One 3250 Van Ness Avenue
Entity Address, City or Town San Francisco
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94109
City Area Code 415
Local Phone Number 421-7900
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $.01 per share
Trading Symbol WSM
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0000719955

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