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): March 14, 2017
Williams-Sonoma, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 001-14077 | 94-2203880 | ||
(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)
Registrants 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)) |
Item 2.02. | Results of Operations and Financial Condition |
On March 15, 2017, Williams-Sonoma, Inc. (the Company) issued a press release announcing the Companys financial results for its fourth quarter and fiscal year ended January 29, 2017. A copy of the Companys 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 5.02. | Departure of Directors or Certain Officers; Election of Directors, Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On March 15, 2017, the Company announced that Sandra Stangl, President of the Pottery Barn Brands, is resigning from the Company on March 31, 2017. The Company also announced that it has restructured the leadership of the Pottery Barn Brands. Marta Benson has been named President of the Pottery Barn brand, Jennifer Kellor has become President of the Pottery Barn Kids and PBteen brands, and Jeff Howie has become Executive Vice President, Chief Administrative Officer of the Pottery Barn Brands.
A copy of the related press release is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
Pursuant to a Separation Agreement and General Release entered into March 14, 2017, Ms. Stangl will remain employed with the Company through March 31, 2017 and continue to receive her base salary of $1,100,000 for up to one year thereafter, as well as payments up to an aggregate of $26,130 to cover the cost of health care coverage for up to one year. The Company has also agreed to accelerate the vesting of 42,644 restricted stock units held by Ms. Stangl that are scheduled to vest in April 2017.
Item 8.01. | Other Events |
On March 15, 2017, the Company issued a press release announcing that its Board of Directors authorized a 5% increase in the Companys quarterly cash dividend. A copy of the Companys press release is attached as Exhibit 99.3 and is incorporated herein by reference.
Item 9.01. | Financial Statements and Exhibits | |
(d) |
List of Exhibits: | |
99.1 |
Press Release dated March 15, 2017 titled Williams-Sonoma, Inc. announces fourth quarter and fiscal year 2016 results; Q4 GAAP EPS of $1.63 and non-GAAP EPS of $1.55; Q4 gross margin expands 100bps; merchandise inventories decrease 0.1%; Authorizes 5% dividend increase and provides financial guidance for Q1 and fiscal year 2017 | |
99.2 |
Press Release dated March 15, 2017 titled Williams-Sonoma, Inc. Announces Pottery Barn Brands Leadership Changes | |
99.3 |
Press Release dated March 15, 2017 titled Williams-Sonoma, Inc. Increases Quarterly Dividend by $0.02, or 5%, to $0.39 per Common Share |
2
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: March 15, 2017 |
By: |
/s/ Julie P. Whalen | ||||
Julie P. Whalen Chief Financial Officer |
3
INDEX TO EXHIBITS
Exhibit Number |
Description | |
99.1 |
Press Release dated March 15, 2017 titled Williams-Sonoma, Inc. announces fourth quarter and fiscal year 2016 results; Q4 GAAP EPS of $1.63 and non-GAAP EPS of $1.55; Q4 gross margin expands 100bps; merchandise inventories decrease 0.1%; Authorizes 5% dividend increase and provides financial guidance for Q1 and fiscal year 2017 | |
99.2 |
Press Release dated March 15, 2017 titled Williams-Sonoma, Inc. Announces Pottery Barn Brands Leadership Changes | |
99.3 | Press Release dated March 15, 2017 titled Williams-Sonoma, Inc. Increases Quarterly Dividend by $0.02, or 5%, to $0.39 per Common Share |
4
Exhibit 99.1
WILLIAMS-SONOMA, INC.
3250 Van Ness Avenue
San Francisco, CA 94109
CONTACT: | ||||||
Julie P. Whalen | ||||||
EVP, Chief Financial Officer | ||||||
(415) 616-8524 | ||||||
Beth Potillo-Miller | ||||||
SVP, Finance & Corporate Treasurer | ||||||
Investor Relations | ||||||
(415) 616-8643 |
PRESS RELEASE
Williams-Sonoma, Inc. announces fourth quarter and fiscal year 2016 results
Q4 GAAP EPS of $1.63 and non-GAAP EPS of $1.55
Q4 gross margin expands 100bps; merchandise inventories decrease 0.1%
Authorizes 5% dividend increase and provides financial guidance for Q1 and fiscal year 2017
San Francisco, CA, March 15, 2017 Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the fourth fiscal quarter (Q4 16) and fiscal year 2016 (FY 16) ended January 29, 2017 versus the fourth fiscal quarter (Q4 15) and fiscal year 2015 (FY 15) ended January 31, 2016.
4th QUARTER 2016 RESULTS
| Q4 16 net revenues decreased 0.3% to $1.582 billion versus $1.586 billion in Q4 15 with comparable brand revenue decreasing 0.9%. |
| Q4 16 operating margin was 13.6% versus 14.0% in Q4 15. |
| Q4 16 diluted earnings per share (EPS) was $1.63 versus $1.55 in Q4 15. Excluding the net benefit of approximately $0.08 per diluted share from a one-time favorable tax adjustment, non-GAAP EPS was $1.55 in Q4 16. See Exhibit 1 for a reconciliation of GAAP to non-GAAP EPS. |
| Cash returned to stockholders totaled $69 million, comprising $36 million in stock repurchases and $33 million in dividends. |
FISCAL YEAR 2016 RESULTS
| FY 16 net revenues grew 2.2% to $5.084 billion versus $4.976 billion in FY 15 with comparable brand revenue growth of 0.7%. |
| FY 16 operating margin was 9.3% versus 9.8% in FY 15. Excluding severance-related reorganization charges, non-GAAP operating margin was 9.6% in FY 16. See Exhibit 1 for a reconciliation of GAAP to non-GAAP operating margin. |
| FY 16 diluted earnings per share (EPS) was $3.41 versus $3.37 in FY 15. Excluding severance-related reorganization charges of approximately $0.10 per diluted share and the net benefit of approximately $0.08 per diluted share from a one-time favorable tax adjustment, non-GAAP EPS was $3.43 in FY 16. See Exhibit 1. |
| Cash returned to stockholders totaled $285 million, comprising $151 million in stock repurchases and $134 million in dividends. |
Laura Alber, President and Chief Executive Officer, commented: In 2016, we delivered revenues of over $5 billion, which included another year of double-digit growth across West Elm, our newer businesses Rejuvenation and Mark and Graham, and our company-owned global operations. Additionally, from an operational perspective, we executed one of our best holiday seasons and delivered an improved customer experience which is at the center of everything we do.
Alber continued, Entering 2017, we will continue to improve performance and increase our competitive advantage, with a focus on innovation in e-commerce, our products and service, and the retail experience. We will also remain relentlessly focused on operational excellence throughout our supply chain, driving strategies that will improve our customers experience across all of our brands. We are optimistic about the future and believe we have the infrastructure, strategies and talent in place to succeed and drive long-term profitable growth for our shareholders.
4th QUARTER 2016 RESULTS
Net revenues decreased 0.3% to $1.582 billion in Q4 16 from $1.586 billion in Q4 15.
Comparable brand revenue in Q4 16 decreased 0.9% compared to 0.8% growth in Q4 15 as shown in the table below:
4th Quarter Comparable Brand Revenue Growth by Concept*
|
||||||||||||
Q4 16 | Q4 15 | |||||||||||
Pottery Barn |
(4.1%) | (2.0%) | ||||||||||
Williams Sonoma |
1.4% | 0.9% | ||||||||||
West Elm |
6.5% | 12.8% | ||||||||||
Pottery Barn Kids |
(4.9%) | 0.1% | ||||||||||
PBteen |
(8.1%) | (12.2%) | ||||||||||
Total |
(0.9%) | 0.8% | ||||||||||
* See the Companys 10-K and 10-Q filings for the definition of comparable brand revenue.
|
|
E-commerce net revenues in Q4 16 increased 2.2% to $809 million from $792 million in Q4 15. E-commerce net revenues generated 51.1% of total company net revenues in Q4 16 and 49.9% of total company net revenues in Q4 15.
Retail net revenues in Q4 16 decreased 2.7% to $773 million from $794 million in Q4 15.
Operating margin in Q4 16 was 13.6% compared to 14.0% in Q4 15:
| Gross margin was 39.3% in Q4 16 versus 38.3% in Q4 15. |
| Selling, general and administrative (SG&A) expenses were $406 million, or 25.7% of net revenues in Q4 16, versus $385 million, or 24.3% of net revenues in Q4 15. |
The effective income tax rate in Q4 16 was 33.0% versus 36.6% in Q4 15, reflecting a one-time favorable tax adjustment. Excluding this adjustment, the effective tax rate in Q4 16 was 36.5%. See Exhibit 1 for a reconciliation of GAAP to non-GAAP effective income tax rate.
EPS in Q4 16 was $1.63 versus $1.55 in Q4 15. Excluding the tax adjustment, non-GAAP EPS was $1.55 in Q4 16. See Exhibit 1.
2
FISCAL YEAR 2016 RESULTS
Net revenues increased 2.2% to $5.084 billion in FY 16 from $4.976 billion in FY 15.
Comparable brand revenue in FY 16 increased 0.7% on top of 3.7% in FY 15 as shown in the table below:
Fiscal Year Net Revenues and Comparable Brand Revenue Growth by Concept*
|
||||||||||||||||
Net Revenues (Millions) | Comparable Brand Revenue Growth |
|||||||||||||||
FY 16 | FY 15 | FY 16 | FY 15 | |||||||||||||
Pottery Barn |
$ | 2,024 | $ | 2,074 | (3.5% | ) | 1.9% | |||||||||
Williams Sonoma |
1,002 | 994 | 1.3% | 1.1% | ||||||||||||
West Elm |
972 | 821 | 12.8% | 14.8% | ||||||||||||
Pottery Barn Kids |
635 | 640 | (1.4% | ) | 2.2% | |||||||||||
PBteen |
238 | 254 | (6.2% | ) | (2.7% | ) | ||||||||||
Other |
213 | 193 | N/A | N/A | ||||||||||||
Total |
$ | 5,084 | $ | 4,976 | 0.7% | 3.7% | ||||||||||
* See the Companys 10-K and 10-Q filings for the definition of comparable brand revenue.
|
|
E-commerce net revenues in FY 16 increased 4.4% to $2.634 billion from $2.523 billion in FY 15. E-commerce net revenues generated 51.8% of total company net revenues in FY 16 and 50.7% of total company net revenues in FY 15.
Retail net revenues in FY 16 decreased 0.1% to $2.450 billion from $2.454 billion in FY 15.
Operating margin in FY 16 was 9.3% compared to 9.8% in FY 15. Excluding severance-related reorganization charges, non-GAAP operating margin was 9.6% in FY 16:
| Gross margin was 37.0% in FY 16 versus 37.1% in FY 15. |
| Selling, general and administrative (SG&A) expenses were $1.411 billion, or 27.7% of net revenues in FY 16, versus $1.356 billion, or 27.2% of net revenues in FY 15. Excluding severance-related reorganization charges of approximately $14 million, non-GAAP SG&A expenses were $1.396 billion, or 27.5% of net revenues, in FY 16. See Exhibit 1. |
The effective income tax rate in FY 16 was 35.3% versus 36.5% in FY 15, reflecting a one-time favorable tax adjustment. Excluding this adjustment, the effective tax rate in FY 16 was 36.9%. See Exhibit 1.
EPS in FY 16 was $3.41 versus $3.37 in FY 15. Excluding severance-related reorganization charges and the tax adjustment, non-GAAP EPS was $3.43 in FY 16. See Exhibit 1.
Merchandise inventories at the end of FY 16 were $978 million, down 0.1% compared to FY 15.
STOCK REPURCHASE PROGRAM AND DIVIDEND INCREASE
During FY 16, we repurchased 2.9 million shares of common stock at an average cost of $52.68 per share and a total cost of approximately $151 million. As of January 29, 2017, there was approximately $411 million remaining under our current stock repurchase program. As announced in a separate release today, our Board of Directors authorized a $0.02, or 5%, increase in our quarterly cash dividend to $0.39 per share.
3
FISCAL YEAR 2017 FINANCIAL GUIDANCE
1st Quarter 2017 Financial Guidance
| ||
Total Net Revenues (millions) |
$1,085 $1,120 | |
Comparable Brand Revenue Growth/(Decrease) | (1%) 2% | |
Diluted EPS |
$0.45 $0.50 | |
Fiscal Year 2017 Financial Guidance
| ||
Total Net Revenues (millions) |
$5,165 $5,265 | |
Comparable Brand Revenue Growth |
1% 3% | |
Operating Margin |
9.4% 9.6% | |
Diluted EPS |
$3.45 $3.65 | |
Income Tax Rate |
36.5% 37.5% | |
Capital Spending (millions) |
$200 $220 | |
Depreciation and Amortization (millions) |
$185 $195 |
Store Opening and Closing Guidance by Retail Concept*
| ||||||||||||||||||||||||||
FY 2016 ACT | FY 2017 GUID | |||||||||||||||||||||||||
Total | New | Close | End | |||||||||||||||||||||||
Williams Sonoma |
234 | 3 | (6 | ) | 231 | |||||||||||||||||||||
Pottery Barn |
201 | 6 | (3 | ) | 204 | |||||||||||||||||||||
West Elm |
98 | 10 | (3 | ) | 105 | |||||||||||||||||||||
Pottery Barn Kids |
89 | - | (4 | ) | 85 | |||||||||||||||||||||
Rejuvenation |
7 | 2 | - | 9 | ||||||||||||||||||||||
Total |
629 | 21 | (16 | ) | 634 | |||||||||||||||||||||
| ||||||||||||||||||||||||||
* Included in the FY 16 store count are 19 stores in Australia and one store in the UK.
|
CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. will host a live conference call today, March 15, 2017, 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 http://ir.williams-sonomainc.com/events. A replay of the webcast will be available at http://ir.williams-sonomainc.com/events.
4
SEC REGULATION G NON-GAAP INFORMATION
This press release includes non-GAAP SG&A, operating income, operating margin, income taxes, effective tax rate and diluted EPS. These non-GAAP financial measures exclude the impact of severance-related reorganization charges in Q1 16 and Q3 16 and a one-time favorable tax adjustment in Q4 16. We have reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in the text of this release and in Exhibit 1. 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 and FY 16 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 measures 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 ability to continue to improve performance and increase our competitive advantage; our focus on operational excellence; our abilty to improve customers experience; our optimism about the future; our ability to drive long-term profitable growth; our future financial guidance, including Q1 17 and FY 2017 guidance; our stock repurchase program; 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 Q4 16 and as audited year-end financial statements are prepared; 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, including our Annual Report on Form 10-K for the fiscal year ended January 31, 2016 and all subsequent quarterly reports on Form 10-Q and 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 retail 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 and stores and e-commerce websites in Mexico.
5
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
Thirteen weeks ended January 29, 2017 and January 31, 2016
(Dollars and shares in thousands, except per share amounts)
4th Quarter | ||||||||||||||||
2016 | 2015 | |||||||||||||||
$ | % of Revenues |
$ | % of Revenues |
|||||||||||||
E-commerce net revenues |
$ | 808,942 | 51.1 | % | $ | 791,903 | 49.9 | % | ||||||||
Retail net revenues |
772,639 | 48.9 | 794,401 | 50.1 | ||||||||||||
|
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|
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|||||||||
Net revenues |
1,581,581 | 100.0 | 1,586,304 | 100.0 | ||||||||||||
Cost of goods sold |
959,550 | 60.7 | 978,744 | 61.7 | ||||||||||||
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|
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|||||||||
Gross profit |
622,031 | 39.3 | 607,560 | 38.3 | ||||||||||||
Selling, general and administrative expenses |
406,212 | 25.7 | 384,880 | 24.3 | ||||||||||||
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Operating income |
215,819 | 13.6 | 222,680 | 14.0 | ||||||||||||
Interest (income) expense, net |
101 | | 2 | | ||||||||||||
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Earnings before income taxes |
215,718 | 13.6 | 222,678 | 14.0 | ||||||||||||
Income taxes |
71,091 | 4.5 | 81,550 | 5.1 | ||||||||||||
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Net earnings |
$ | 144,627 | 9.1 | % | $ | 141,128 | 8.9 | % | ||||||||
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Earnings per share (EPS): |
||||||||||||||||
Basic |
$ | 1.65 | $ | 1.57 | ||||||||||||
Diluted |
$ | 1.63 | $ | 1.55 | ||||||||||||
Shares used in calculation of EPS: |
||||||||||||||||
Basic |
87,669 | 89,760 | ||||||||||||||
Diluted |
88,633 | 90,988 |
6
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
Fifty-two weeks ended January 29, 2017 and January 31, 2016
(Dollars and shares in thousands, except per share amounts)
Fiscal Year | ||||||||||||||||
2016 | 2015 | |||||||||||||||
$ | % of Revenues |
$ | % of Revenues |
|||||||||||||
E-commerce net revenues |
$ | 2,633,602 | 51.8 | % | $ | 2,522,580 | 50.7 | % | ||||||||
Retail net revenues |
2,450,210 | 48.2 | 2,453,510 | 49.3 | ||||||||||||
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|
|||||||||
Net revenues |
5,083,812 | 100.0 | 4,976,090 | 100.0 | ||||||||||||
Cost of goods sold |
3,200,502 | 63.0 | 3,131,876 | 62.9 | ||||||||||||
|
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|
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|
|
|||||||||
Gross profit |
1,883,310 | 37.0 | 1,844,214 | 37.1 | ||||||||||||
Selling, general and administrative expenses |
1,410,711 | 27.7 | 1,355,580 | 27.2 | ||||||||||||
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|
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Operating income |
472,599 | 9.3 | 488,634 | 9.8 | ||||||||||||
Interest (income) expense, net |
688 | | 627 | | ||||||||||||
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Earnings before income taxes |
471,911 | 9.3 | 488,007 | 9.8 | ||||||||||||
Income taxes |
166,524 | 3.3 | 177,939 | 3.6 | ||||||||||||
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|
|||||||||
Net earnings |
$ | 305,387 | 6.0 | % | $ | 310,068 | 6.2 | % | ||||||||
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|
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Earnings per share (EPS): |
||||||||||||||||
Basic |
$ | 3.45 | $ | 3.42 | ||||||||||||
Diluted |
$ | 3.41 | $ | 3.37 | ||||||||||||
Shares used in calculation of EPS: |
||||||||||||||||
Basic |
88,594 | 90,787 | ||||||||||||||
Diluted |
89,462 | 92,102 |
7
Williams-Sonoma, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(Dollars and shares in thousands, except per share amounts)
Jan. 29, 2017 | Jan. 31, 2016 | |||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 213,713 | $ | 193,647 | ||||
Accounts receivable, net |
88,803 | 79,304 | ||||||
Merchandise inventories, net |
977,505 | 978,138 | ||||||
Prepaid catalog expenses |
23,625 | 28,919 | ||||||
Prepaid expenses |
52,882 | 44,654 | ||||||
Other assets |
10,652 | 11,438 | ||||||
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|
|||||
Total current assets |
1,367,180 | 1,336,100 | ||||||
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|
|||||
Property and equipment, net |
923,283 | 886,813 | ||||||
Deferred income taxes, net |
135,238 | 141,784 | ||||||
Other assets, net |
51,178 | 52,730 | ||||||
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|||||
Total assets |
$ | 2,476,879 | $ | 2,417,427 | ||||
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Liabilities and stockholders equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 453,710 | $ | 447,412 | ||||
Accrued salaries, benefits and other |
130,187 | 127,122 | ||||||
Customer deposits |
294,276 | 296,827 | ||||||
Income taxes payable |
23,245 | 67,052 | ||||||
Other liabilities |
59,838 | 58,014 | ||||||
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Total current liabilities |
961,256 | 996,427 | ||||||
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Deferred rent and lease incentives |
196,188 | 173,061 | ||||||
Other long-term obligations |
71,215 | 49,713 | ||||||
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Total liabilities |
1,228,659 | 1,219,201 | ||||||
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Stockholders equity |
||||||||
Preferred stock: $.01 par value; 7,500 shares authorized; none issued |
- | - | ||||||
Common stock: $.01 par value; 253,125 shares authorized; 87,325 and 89,563 shares issued and outstanding at January 29, 2017 and January 31, 2016, respectively |
873 | 896 | ||||||
Additional paid-in capital |
556,928 | 541,307 | ||||||
Retained earnings |
701,702 | 668,545 | ||||||
Accumulated other comprehensive loss |
(9,903 | ) | (10,616 | ) | ||||
Treasury stock, at cost |
(1,380 | ) | (1,906 | ) | ||||
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Total stockholders equity |
1,248,220 | 1,198,226 | ||||||
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Total liabilities and stockholders equity |
$ | 2,476,879 | $ | 2,417,427 | ||||
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8
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
Fifty-two weeks ended January 29, 2017 and January 31, 2016
(Dollars in thousands)
Year-to-Date | ||||||||
2016 |
2015 |
|||||||
Cash flows from operating activities |
||||||||
Net earnings |
$ | 305,387 | $ | 310,068 | ||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
173,195 | 167,760 | ||||||
Loss on disposal/impairment of assets |
3,806 | 4,339 | ||||||
Amortization of deferred lease incentives |
(25,212 | ) | (24,721 | ) | ||||
Deferred income taxes |
7,114 | (7,436 | ) | |||||
Tax benefit related to stock-based awards |
3,230 | 14,592 | ||||||
Excess tax benefit related to stock-based awards |
(4,894 | ) | (14,494 | ) | ||||
Stock-based compensation expense |
51,116 | 41,357 | ||||||
Other |
(423 | ) | 149 | |||||
Changes in: |
||||||||
Accounts receivable |
(9,794 | ) | (12,849 | ) | ||||
Merchandise inventories |
4,493 | (92,647 | ) | |||||
Prepaid catalog expenses |
5,294 | 5,022 | ||||||
Prepaid expenses and other assets |
(6,367 | ) | (9,245 | ) | ||||
Accounts payable |
3,169 | 60,507 | ||||||
Accrued salaries, benefits and other liabilities |
25,876 | (135 | ) | |||||
Customer deposits |
(3,037 | ) | 35,877 | |||||
Deferred rent and lease incentives |
35,559 | 31,334 | ||||||
Income taxes payable |
(43,803 | ) | 34,548 | |||||
|
|
|
|
|||||
Net cash provided by operating activities |
524,709 | 544,026 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
(197,414 | ) | (202,935 | ) | ||||
Other |
439 | 769 | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
(196,975 | ) | (202,166 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Repurchase of common stock |
(151,272 | ) | (224,995 | ) | ||||
Payment of dividends |
(133,539 | ) | (127,636 | ) | ||||
Borrowings under revolving line of credit |
125,000 | 200,000 | ||||||
Repayments of borrowings under revolving line of credit |
(125,000 | ) | (200,000 | ) | ||||
Tax withholdings related to stock-based awards |
(27,062 | ) | (31,790 | ) | ||||
Excess tax benefit related to stock-based awards |
4,894 | 14,494 | ||||||
Proceeds related to stock-based awards |
1,532 | 2,647 | ||||||
Repayment of long-term obligations |
- | (1,968 | ) | |||||
Other |
(359 | ) | (135 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(305,806 | ) | (369,383 | ) | ||||
|
|
|
|
|||||
Effect of exchange rates on cash and cash equivalents |
(1,862 | ) | (1,757 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
20,066 | (29,280 | ) | |||||
Cash and cash equivalents at beginning of period |
193,647 | 222,927 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 213,713 | $ | 193,647 | ||||
|
|
|
|
9
Exhibit 1
Reconciliation of 4th Quarter and Fiscal Year Actual GAAP to Non-GAAP Operating Margin By Segment*
($ in thousands)
E-commerce | Retail | Unallocated | Total | |||||||||||||||||||||||||||||
Q4 16 | Q4 15 | Q4 16 | Q4 15 | Q4 16 | Q4 15 | Q4 16 | Q4 15 | |||||||||||||||||||||||||
Net Revenues |
$ | 808,942 | $ | 791,903 | $ | 772,639 | $ | 794,401 | $ | - | $ | - | $ | 1,581,581 | $ | 1,586,304 | ||||||||||||||||
Operating Income/(Expense) | 191,845 | 174,218 | 121,507 | 121,446 | (97,533) | (72,984) | 215,819 | 222,680 | ||||||||||||||||||||||||
Operating Margin | 23.7% | 22.0% | 15.7% | 15.3% | (6.2%) | (4.6%) | 13.6% | 14.0% | ||||||||||||||||||||||||
E-commerce | Retail | Unallocated | Total | |||||||||||||||||||||||||||||
FY 16 | FY 15 | FY 16 | FY 15 | FY 16 | FY 15 | FY 16 | FY 15 | |||||||||||||||||||||||||
Net Revenues | $ | 2,633,602 | $ | 2,522,580 | $ | 2,450,210 | $ | 2,453,510 | $ | - | $ | - | $ | 5,083,812 | $ | 4,976,090 | ||||||||||||||||
GAAP Operating Income/(Expense) | 606,286 | 562,081 | 231,929 | 239,288 | (365,616) | (312,735) | 472,599 | 488,634 | ||||||||||||||||||||||||
GAAP Operating Margin | 23.0% | 22.3% | 9.5% | 9.8% | (7.2%) | (6.3%) | 9.3% | 9.8% | ||||||||||||||||||||||||
Severance-related Reorganization Charges (1) | - | - | - | - | 14,406 | - | 14,406 | - | ||||||||||||||||||||||||
Non-GAAP Operating Income/ (Expense) Excluding Severance-related Reorganization Charges (3) | $ | 606,286 | $ | 562,081 | $ | 231,929 | $ | 239,288 | $ | (351,210) | $ | (312,735) | $ | 487,005 | $ | 488,634 | ||||||||||||||||
Non-GAAP Operating Margin (3) | 23.0% | 22.3% | 9.5% | 9.8% | (6.9%) | (6.3%) | 9.6% | 9.8% | ||||||||||||||||||||||||
* | See the Companys 10-K and 10-Q filings for additional information on segment reporting and the definition of Operating Income/(Expense) and Operating Margin. |
Reconciliation of 4th Quarter and Fiscal Year Actual GAAP to Non-GAAP Effective Tax Rate ($ in thousands)
| ||||||||||||||||||||
| ||||||||||||||||||||
Q4 16 | Q4 15 | FY 16 | FY 15 | |||||||||||||||||
| ||||||||||||||||||||
Earnings Before Income Taxes | $215,718 | $222,678 | $471,911 | $488,007 | ||||||||||||||||
GAAP Income Taxes | 71,091 | 81,550 | 166,524 | 177,939 | ||||||||||||||||
| ||||||||||||||||||||
GAAP Effective Tax Rate | 33.0% | 36.6% | 35.3% | 36.5% | ||||||||||||||||
| ||||||||||||||||||||
One-time Favorable Tax Adjustment (2) | 7,681 | - | 7,681 | - | ||||||||||||||||
| ||||||||||||||||||||
Non-GAAP Income Taxes Excluding Tax Adjustment(3) | $78,772 | $81,550 | $174,205 | $177,939 | ||||||||||||||||
| ||||||||||||||||||||
Non-GAAP Effective Tax Rate (3) | 36.5% | 36.6% | 36.9% | 36.5% | ||||||||||||||||
|
Reconciliation of Quarterly and Fiscal Year GAAP to Non-GAAP
Diluted Earnings Per Share** (Totals rounded to the nearest cent per diluted share)
| ||||||||||||||||||||
| ||||||||||||||||||||
Q1 16 ACT |
Q2 16 ACT |
Q3 16 ACT |
Q4 16 ACT |
FY 16 ACT | ||||||||||||||||
| ||||||||||||||||||||
2016 GAAP Diluted EPS | $0.44 | $0.58 | $0.78 | $1.63 | $3.41 | |||||||||||||||
| ||||||||||||||||||||
Impact of Severance-related Reorganization Charges (1) | $0.09 | - | $0.01 | - | $0.10 | |||||||||||||||
| ||||||||||||||||||||
One-time Favorable Tax Adjustment (2) | - | - | - | ($0.08) | ($0.08) | |||||||||||||||
| ||||||||||||||||||||
2016 Non-GAAP Diluted EPS Excluding Severance-related Reorganization Charges and Tax Adjustment (3) |
$0.53 | $0.58 | $0.79 | $1.55 | $3.43 | |||||||||||||||
| ||||||||||||||||||||
Q1 15 ACT |
Q2 15 ACT |
Q3 15 ACT |
Q4 15 ACT |
FY 15 ACT | ||||||||||||||||
| ||||||||||||||||||||
2015 GAAP Diluted EPS | $0.48 | $0.58 | $0.77 | $1.55 | $3.37 | |||||||||||||||
| ||||||||||||||||||||
** Due to the differences between the quarterly and year-to-date weighted average share count calculations and rounding to the nearest cent per diluted share, totals may not equal the sum of the line items and fiscal year diluted EPS may not equal the sum of the quarters. |
10
Notes:
(1) | Impact of Severance-related Reorganization Charges During Q1 16 and Q3 16, we incurred severance-related reorganization charges due to headcount reduction primarily in our corporate functions totaling approximately $14 million, or $0.10 per diluted share. These charges were recorded as SG&A expense within the unallocated segment. |
(2) | Impact of One-time Favorable Tax Adjustment During Q4 16 we incurred a benefit of approximately $8M, or $0.08 per diluted share, related to tax adjustments associated with intercompany transactions. |
(3) | SEC Regulation G Non-GAAP Information These tables include non-GAAP 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 and FY 16 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. |
Store Statistics
Store Count |
Avg. Leased Square Footage Per Store |
|||||||||||||||||||||||||||||||
Oct. 30, 2016 | Openings | Closings | Jan. 29, 2017 | Jan. 31, 2016 | Jan. 29, 2017 | Jan. 31, 2016 | ||||||||||||||||||||||||||
Williams Sonoma |
241 | 2 | (9 | ) | 234 | 239 | 6,600 | 6,600 | ||||||||||||||||||||||||
Pottery Barn |
202 | 1 | (2 | ) | 201 | 197 | 13,900 | 13,800 | ||||||||||||||||||||||||
Pottery Barn Kids |
89 | 1 | (1 | ) | 89 | 89 | 7,400 | 7,500 | ||||||||||||||||||||||||
West Elm |
97 | 1 | - | 98 | 87 | 13,300 | 13,200 | |||||||||||||||||||||||||
Rejuvenation |
6 | 1 | - | 7 | 6 | 9,100 | 9,000 | |||||||||||||||||||||||||
Total |
635 | 6 | (12 | ) | 629 | 618 | 10,100 | 10,000 | ||||||||||||||||||||||||
Oct. 30, 2016 | Jan. 29, 2017 | Jan. 31, 2016 | ||||||||||||||||||||||||||||||
Total store selling square footage |
|
3,966,000 | 3,951,000 | 3,827,000 | ||||||||||||||||||||||||||||
Total store leased square footage |
|
6,381,000 | 6,359,000 | 6,163,000 |
11
Exhibit 99.2
WILLIAMS-SONOMA, INC.
3250 Van Ness Avenue
San Francisco, CA 94109
CONTACT: | ||||||
Felix Carbullido | ||||||
Corporate Public Relations | ||||||
(415) 402-4056 | ||||||
Beth Potillo-Miller | ||||||
SVP, Finance & Corporate Treasurer | ||||||
Investor Relations | ||||||
(415) 616-8643 |
PRESS RELEASE
Williams-Sonoma, Inc. Announces Pottery Barn Brands Leadership Changes
San Francisco, CA, March 15, 2017 Williams-Sonoma, Inc. (NYSE: WSM) announced today that Sandra Stangl, President of the Pottery Barn Brands, is resigning from the company on March 31, 2017, after 23 years of service.
Laura Alber, the companys President and Chief Executive Officer, said, On behalf of the board and senior management team, I want to thank Sandra for her many contributions to the company. She provided vision and leadership for the Pottery Barn Brands for more than two decades. Sandra led the Pottery Barn Brands to record revenues and profits and was part of the small teams that created and launched Pottery Barn Kids and PBteen. Her dedication was instrumental as Pottery Barn grew to become the leading multi-channel home furnishings brand in specialty retail.
Ms. Stangl commented, I am so proud over the last two decades to have been a part of the Pottery Barn Brands mission to bring inspiration home. I am grateful to have had the opportunity to work with one of the most talented and inspiring teams in retail. I thank them for their dedication and look forward to their future successes.
In the context of Stangls resignation and the evolving needs of the business, the company announced that it has restructured the leadership of the Pottery Barn Brands.
| Marta Benson has been named President of the Pottery Barn brand reporting to Laura Alber. |
| Jennifer Kellor has been named President of the Pottery Barn Kids and PBteen brands reporting to Laura Alber. |
| Jeff Howie has been named Executive Vice President, Chief Administrative Officer, of the Pottery Barn Brands reporting to both Marta and Jennifer. |
Marta Benson has served as Executive Vice President, Pottery Barn Merchandising and Visual Merchandising, since 2015, and from 2011 to 2015, she served as Senior Vice President, Business Development. Marta spearheaded Williams-Sonoma, Inc.s acquisition of Portland-based lighting and house-parts brand Rejuvenation in 2011, and led its integration and growth strategy for four years. Additionally, she conceptualized the internal start-up of Mark and Graham, the companys high growth personalized gift business, which launched in November 2012. Prior to joining WSI in 2011, Marta served as CEO of Gumps.
Alber stated, Marta brings 25 years of experience in specialty retail and direct marketing to leading the Pottery Barn brand and its vision of serving as the most inspiring American home design resource.
Jennifer Kellor has served as Executive Vice President, Pottery Barn Kids and PBteen Merchandising and Visual Merchandising, since 2016. From 2011 to 2016, she served as Senior Vice President, General Merchandise Manager for Pottery Barn Kids, and from 2010 to 2011, she served in a similar role for PBteen. From 1997 to 2010, Jennifer held various positions in the Pottery Barn Brands organization.
Alber noted that, Jennifers 20 years of contributions to the Pottery Barn Brands demonstrate her ability to drive the business of Pottery Barn Kids and PBteen.
Jeff Howie has served as Executive Vice President, Pottery Barn Brands Inventory Management and Brand Finance, since 2016. From 2013 to 2016, he served as Senior Vice President, Finance and Inventory Management for the Williams Sonoma brand. From 2008 to 2013, he served as Senior Vice President, Inventory Management, for Pottery Barn Kids and PBteen. From 2002 to 2008, Jeff held various Inventory Management positions for Pottery Barn Kids.
Alber added, During Jeffs 15 years across several different brands at our company, he has focused on operational excellence. As Chief Administrative Officer for the Pottery Barn Brands, he will continue to drive operational excellence, with a relentless focus on improving the customer experience.
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 prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements related to the strategies of the Pottery Barn Brands. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include the risk that the strategies of the Pottery Barn Brands will not be successful. 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 retail 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 and stores and e-commerce websites in Mexico.
2
Exhibit 99.3
WILLIAMS-SONOMA, INC.
3250 Van Ness Avenue
San Francisco, CA 94109
CONTACT: | ||||||
Julie P. Whalen | ||||||
EVP, Chief Financial Officer | ||||||
(415) 616-8524 | ||||||
Beth Potillo-Miller | ||||||
SVP, Finance & Corporate Treasurer | ||||||
Investor Relations | ||||||
(415) 616-8643 |
PRESS RELEASE
Williams-Sonoma, Inc. Increases Quarterly Dividend by $0.02, or 5%, to $0.39 per Common Share
San Francisco, CA, March 15, 2017 -- Williams-Sonoma, Inc. (NYSE: WSM) announced today that its Board of Directors has authorized a 5% increase in the companys quarterly cash dividend.
The quarterly cash dividend will be increased from $0.37 to $0.39 per common share and is payable on May 26, 2017 to shareholders of record as of the close of business on April 28, 2017. The indicated annual cash dividend, subject to capital availability, is $1.56 per common share.
Laura Alber, President and Chief Executive Officer, remarked, Today, we are pleased to announce that our Board has authorized a $0.02, or 5%, increase in our quarterly dividend to $0.39 per share. Our decision today to increase the dividend reflects our confidence in the cash-generating power of our multi-channel, multi-brand business model and our commitment to returning capital to our shareholders through dividend payments and the continuation of our multi-year share repurchase authorization announced in March 2016.
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 prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements related to our indicated annual cash dividend and share repurchases, our ability to generate cash and our outlook for the future.
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 Q4 16 and as audited year-end financial statements are prepared; 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; 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, including our Annual Report on Form 10-K for the fiscal year ended January 31, 2016, and all subsequent quarterly reports on Form 10-Q and 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 retail 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 and stores and e-commerce websites in Mexico.
2