Williams-Sonoma Reports Mixed Results, Net Earnings Rise Despite Revenue Decline

Williams-Sonoma, Inc. reported net revenues of $1,800.7 million for the thirteen weeks ended October 27, 2024, a decrease from $1,853.7 million in the same period of 2023. Despite the decline in revenue, gross profit increased to $841.7 million, up from $822.4 million, resulting in a gross margin improvement from 44.4% to 46.7%. Operating income also saw a slight increase to $320.6 million from $315.1 million year-over-year. Net earnings rose to $249.0 million, compared to $237.3 million in the prior year, leading to basic earnings per share of $1.99, up from $1.85.

For the thirty-nine weeks ended October 27, 2024, net revenues totaled $5,249.3 million, down from $5,471.7 million in the same period of 2023. The decline was attributed primarily to customer hesitancy towards furniture purchases, impacting brands like Pottery Barn and West Elm, which reported comparable brand revenue declines of 7.5% and 3.5%, respectively. However, Pottery Barn Kids and Teen experienced a growth of 3.8%.

The company’s total current assets as of October 27, 2024, were $2,486.8 million, down from $2,719.8 million at the beginning of the fiscal year. Total assets decreased to $4,968.3 million from $5,273.5 million, while total liabilities also saw a reduction to $3,061.7 million from $3,145.7 million. Stockholders’ equity decreased to $1,906.6 million from $2,127.9 million.

In terms of strategic developments, Williams-Sonoma repurchased 3.9 million shares at an average cost of $135.86 per share during the third quarter, totaling $533.9 million. The company has a remaining authorization of approximately $1.3 billion under its stock repurchase programs. Additionally, the company declared cash dividends of $0.57 per share for the thirteen weeks ended October 27, 2024, compared to $0.45 per share in the same period of 2023.

The company faced challenges from supply chain disruptions and inflation, which have affected consumer spending behavior. However, management noted improvements in gross margins due to higher merchandise margins and supply chain efficiencies. The effective tax rate for the first thirty-nine weeks of fiscal 2024 was 24.3%, down from 25.8% in the same period of the previous year.

Overall, while Williams-Sonoma experienced a decline in revenues, it managed to improve profitability metrics and maintain a strong cash position, with $826.8 million in cash and cash equivalents as of October 27, 2024.