Williams-Sonoma, Inc. (NYSE:WSM) Q2 2021 Earnings Conference Call August 25, 2021 5:00 PM ET Company Participants Brian Yee - Senior Vice President of Corporate Finance and Treasury Laura Alber - President and Chief Executive Officer Julie Whalen - CFO Felix Carbullido - EVP and Chief Marketing Officer Conference Call Participants Adrienne Yih - Barclays Cristina Fernández - Telsey Advisory Group Curtis Nagle - Bank of America Seth Basham - Wedbush Securities Chuck Grom - Gordon Haskett Simeon Gutman - Morg ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 2, 2021. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-14077 _________________________ WILLIAMS-SONOMA, INC. (Exact name of registrant as specified in its cha ...

Williams-Sonoma, Inc. (NYSE:WSM) Q1 2021 Earnings Conference Call May 26, 2021 5:00 PM ET Company Participants Elise Wang - Vice President, Investor Relations Laura Alber - President & Chief Executive Officer Julie Whalen - Executive Vice President & Chief Financial Officer Felix Carbullido - Executive Vice President & Chief Marketing Officer Conference Call Participants Oliver Wintermantel - Evercore ISI Adrienne Yih - Barclays Max Rakhlenko - Cowen and Company Cristina Fernández - Telsey Advisory Group St ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Williams-Sonoma is an omni-channel specialty retailer of high-quality home products, operating a portfolio of distinct brands with significant foreign sourcing and Q4 seasonality - The company operates as a digital-first, design-led, and sustainable home retailer with **eight core merchandise strategies**[21](index=21&type=chunk) - As of January 31, 2021, the company operates **581 stores** globally, complemented by **136 franchised locations**[31](index=31&type=chunk) - Approximately **65% of merchandise purchases** in fiscal 2020 were sourced from foreign vendors, primarily in Asia and Europe[33](index=33&type=chunk) - The business is highly seasonal, with a significant portion of net revenues and earnings realized during the **fourth quarter**[35](index=35&type=chunk) - As of January 31, 2021, the company had approximately **21,000 employees**, including **12,200 full-time** and **10,000 temporary holiday staff**[36](index=36&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including pandemic impacts, economic downturns, supply chain disruptions, cybersecurity threats, foreign vendor dependence, and financial management challenges [Risks Related to our Business](index=12&type=section&id=Risks%20Related%20to%20our%20Business) Business risks include COVID-19 impacts, sensitivity to consumer spending, challenges in inventory and trend management, intense competition, and complexities of the omni-channel, multi-brand model - The COVID-19 pandemic has materially impacted the business through temporary store closures, largely offset by **e-commerce growth**, though future impacts on supply chains and costs remain uncertain[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - Business performance is sensitive to **consumer discretionary spending**, influenced by economic conditions, unemployment, and consumer confidence[73](index=73&type=chunk)[74](index=74&type=chunk) - The e-commerce channel, accounting for **over 70% of net revenues** in fiscal 2020, is critical, with management failures potentially harming operating results[91](index=91&type=chunk)[92](index=92&type=chunk) - The omni-channel, multi-brand structure poses risks, including potential **cannibalization of retail sales** by e-commerce or new brands[101](index=101&type=chunk) [Risks Related to Technology](index=20&type=section&id=Risks%20Related%20to%20Technology) Technology risks include cybersecurity threats, data privacy compliance with evolving laws like GDPR and CCPA, and potential business disruption from ongoing core information system replacements - A security breach involving online customer data could lead to **loss of consumer confidence**, litigation, and regulatory investigations[112](index=112&type=chunk) - Non-compliance with evolving global data privacy laws like **GDPR** and **CCPA/CPRA** could result in substantial financial penalties and reputational harm[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Significant system changes, including new **ERP system implementation** in fiscal 2020, carry inherent risks of disrupting core operations[118](index=118&type=chunk)[120](index=120&type=chunk) [Risks Related to our Vendors and Global Operations](index=22&type=section&id=Risks%20Related%20to%20our%20Vendors%20and%20Global%20Operations) Reliance on foreign vendors and global expansion expose the company to risks from currency fluctuations, trade restrictions, political instability, and supply chain disruptions - Approximately **65% of merchandise** sourced from foreign vendors in fiscal 2020 creates exposure to currency fluctuations, trade restrictions, political unrest, and supply chain disruptions[122](index=122&type=chunk)[123](index=123&type=chunk) - Global expansion efforts, including company-owned stores and franchise operations, face risks from lack of foreign market experience, differing consumer preferences, and political or economic instability[130](index=130&type=chunk) - The company's results depend on franchisee performance, with potential brand reputation harm if standards are not adhered to[132](index=132&type=chunk) [Risks Related to Taxes and Tariffs](index=26&type=section&id=Risks%20Related%20to%20Taxes%20and%20Tariffs) Financial results are vulnerable to changes in tax and trade policies, including import tariffs on foreign-manufactured goods and volatility in income tax obligations - Tariffs on items sourced from China could increase **cost of goods**, force price increases, and adversely affect operating results despite mitigation efforts[141](index=141&type=chunk) - Income tax provision is subject to volatility from changes in earnings mix across jurisdictions, tax examination resolutions, and tax law changes[142](index=142&type=chunk) [Risks Related to our Financial Statements and Liquidity](index=26&type=section&id=Risks%20Related%20to%20our%20Financial%20Statements%20and%20Liquidity) Financial risks include liquidity challenges, seasonality impacts on operating results, dependence of capital allocation on cash flow, and the importance of effective internal controls and accounting estimates - Quarterly operating results fluctuate due to **seasonality**, with a significant portion of net revenues and earnings realized in the fourth quarter[151](index=151&type=chunk) - The ability to pay quarterly dividends and repurchase stock depends on sufficient cash flow, with a new **$1 billion share repurchase authorization** approved in March 2021[155](index=155&type=chunk) - Failure to maintain effective internal controls, as required by **Sarbanes-Oxley Act Section 404**, could impair financial statement accuracy and harm investor confidence[156](index=156&type=chunk) - Changes in cash flow projection estimates could lead to **impairment charges** on long-lived assets, adversely affecting operating results[160](index=160&type=chunk) [Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments are reported for this period - None[161](index=161&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) The company primarily leases its 581 store locations and facilities, totaling approximately **6.3 million square feet**, while owning **471,000 square feet** for corporate headquarters Occupied Square Footage by Location (Approximate) | Location | Occupied Square Footage (Approximate) | | :--- | :--- | | **Distribution and Manufacturing Facilities** | | | Mississippi | 2,258,000 | | New Jersey | 2,103,000 | | California | 2,030,000 | | Texas | 1,298,000 | | Georgia | 1,075,000 | | Tennessee | 603,000 | | North Carolina | 442,000 | | **Corporate Facilities** | | | California | 269,000 | | New York | 238,000 | - As of January 31, 2021, the company owned **471,000 square feet** of space, primarily in California, for corporate headquarters and data center operations[165](index=165&type=chunk) [Legal Proceedings](index=31&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, which management believes will not materially affect consolidated financial statements - The company is involved in ordinary course lawsuits and claims, with management believing their ultimate resolution will not materially affect consolidated financial statements[166](index=166&type=chunk) [Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[167](index=167&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under WSM, with **$150 million** in repurchases in fiscal 2020 and a new **$1 billion** program authorized in March 2021 - During fiscal 2020, the company repurchased **1,496,100 shares** for **$150 million**, followed by a new **$1 billion stock repurchase program** authorization in March 2021[175](index=175&type=chunk) Issuer Purchases of Equity Securities | Fiscal period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | | :--- | :--- | :--- | :--- | | Nov 2, 2020 – Nov 29, 2020 | 125,310 | $98.91 | 125,310 | | Nov 30, 2020 – Dec 27, 2020 | 116,800 | $108.75 | 116,800 | | Dec 28, 2020 – Jan 31, 2021 | 134,655 | $117.75 | 134,655 | | **Total** | **376,765** | **$108.69** | **376,765** | [Selected Financial Data](index=34&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents a five-year summary of key financial and operational data, highlighting trends in net revenues, profitability, financial position, and store count Selected Financial and Operational Data | In thousands, except per share amounts | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | | :--- | :--- | :--- | :--- | | Net revenues (in thousands) | $6,783,189 | $5,898,008 | $5,671,593 | | Net revenue growth | 15.0% | 4.0% | 7.2% | | Comparable brand revenue growth | 17.0% | 6.0% | 3.7% | | Gross margin | 38.9% | 36.3% | 37.0% | | Operating margin | 13.4% | 7.9% | 7.7% | | Net earnings (in thousands) | $680,714 | $356,062 | $333,684 | | Diluted earnings per share (per share) | $8.61 | $4.49 | $4.05 | | Net cash provided by operating activities (in thousands) | $1,274,848 | $607,294 | $585,986 | | Number of stores at year-end (number of stores) | 581 | 614 | 625 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses fiscal 2020 financial results, highlighting **15.0% net revenue growth** and **17.0% comparable brand revenue growth** driven by e-commerce, significant operating margin expansion, and a strong **$1.2 billion cash** liquidity position [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Fiscal 2020 saw **15.0% net revenue growth** to **$6.78 billion** and **17.0% comparable brand revenue growth**, driven by e-commerce, with improved gross and operating margins due to cost leverage Net Revenues by Brand (in thousands) | In thousands | Fiscal 2020 | Fiscal 2019 | | :--- | :--- | :--- | | Pottery Barn | $2,526,241 | $2,214,397 | | West Elm | 1,682,254 | 1,466,537 | | Williams Sonoma | 1,242,271 | 1,032,368 | | Pottery Barn Kids and Teen | 1,042,531 | 908,561 | | Other | 289,892 | 276,145 | | **Total** | **$6,783,189** | **$5,898,008** | Comparable Brand Revenue Growth | Comparable brand revenue growth | Fiscal 2020 | Fiscal 2019 | | :--- | :--- | :--- | | Pottery Barn | 15.2% | 4.1% | | West Elm | 15.2% | 14.4% | | Williams Sonoma | 23.8% | 0.4% | | Pottery Barn Kids and Teen | 16.6% | 4.5% | | **Total** | **17.0%** | **6.0%** | - Cost of goods sold as a percentage of net revenues decreased to **61.1%** in fiscal 2020 from **63.7%** in fiscal 2019, driven by higher merchandise margins and occupancy leverage[212](index=212&type=chunk) - Selling, general and administrative expenses as a percentage of net revenues decreased to **25.4%** in fiscal 2020 from **28.4%** in fiscal 2019, driven by lower advertising and employment cost leverage[215](index=215&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company ended fiscal 2020 with strong liquidity, including **$1.2 billion in cash** and **$1.27 billion** in operating cash flow, with a **$300 million term loan** repaid in February 2021 - As of January 31, 2021, the company held **$1.2 billion in cash and cash equivalents**, a significant increase from **$432.16 million** at the end of fiscal 2019[217](index=217&type=chunk) - Net cash provided by operating activities was **$1.27 billion** for fiscal 2020, more than double the **$607.29 million** generated in fiscal 2019, primarily due to higher net earnings[225](index=225&type=chunk) - The company had a **$300 million outstanding term loan** as of January 31, 2021, fully repaid in February 2021 prior to maturity[221](index=221&type=chunk) Contractual Obligations (in thousands) | In thousands | Fiscal 2021 | Fiscal 2022 to Fiscal 2024 | Fiscal 2025 to Fiscal 2026 | Thereafter | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Current debt | $300,000 | — | — | — | $300,000 | | Operating leases | 267,760 | 605,121 | 263,192 | 291,356 | 1,427,429 | | Purchase obligations | 1,350,121 | 22,456 | — | — | 1,372,577 | | **Total** | **$1,918,423** | **$627,577** | **$263,192** | **$291,356** | **$3,100,548** | [Critical Accounting Policies and Estimates](index=43&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Critical accounting policies involve significant estimates for merchandise inventories, long-lived asset impairment, lease accounting, and income taxes, requiring substantial management judgment - Significant estimates are used for inventory valuation, with **$9.827 million** in obsolescence reserves as of January 31, 2021[242](index=242&type=chunk)[244](index=244&type=chunk) - A comprehensive review of long-lived assets in fiscal 2020, due to COVID-19, resulted in **$27.1 million in impairment charges**, including **$19.2 million** for property and equipment and **$7.9 million** for right-of-use assets[245](index=245&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk) - Lease accounting requires judgment in determining the incremental borrowing rate, which was a weighted average of **3.6%** in fiscal 2020[253](index=253&type=chunk)[352](index=352&type=chunk) - Income tax accounting involves estimating reserves for uncertain tax positions and determining the annual effective tax rate, which can be materially impacted by earnings mix across jurisdictions[255](index=255&type=chunk)[256](index=256&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily interest rate risk from variable-rate debt and foreign currency risk from international operations, partially mitigated by hedging strategies - The company's variable rate debt exposes it to interest rate risk, though a hypothetical **1% change** in rates would not materially affect results[259](index=259&type=chunk) - Foreign currency risk from international operations is partially mitigated by hedging a portion of exposure with foreign currency forward contracts[262](index=262&type=chunk) [Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year ended January 31, 2021, including key statements and accompanying notes [Consolidated Financial Statements](index=47&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show fiscal 2020 net earnings of **$680.7 million** on **$6.78 billion** net revenues, with total assets at **$4.66 billion** and strong **$1.27 billion** operating cash flow Consolidated Statements of Earnings (in thousands, except per share amounts) | In thousands, except per share amounts | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | | :--- | :--- | :--- | :--- | | Net revenues (in thousands) | $6,783,189 | $5,898,008 | $5,671,593 | | Gross profit (in thousands) | 2,636,269 | 2,139,092 | 2,101,013 | | Operating income (in thousands) | 910,697 | 465,874 | 435,953 | | Net earnings (in thousands) | $680,714 | $356,062 | $333,684 | | Diluted earnings per share (per share) | $8.61 | $4.49 | $4.05 | Consolidated Balance Sheets (in thousands) | In thousands | Jan. 31, 2021 | Feb. 2, 2020 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $1,200,337 | $432,162 | | Merchandise inventories, net | 1,006,299 | 1,100,544 | | Total current assets | 2,467,080 | 1,755,635 | | Total assets | $4,661,424 | $4,054,042 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | 1,848,000 | 1,609,555 | | Total liabilities | 3,010,239 | 2,818,182 | | Total stockholders' equity | 1,651,185 | 1,235,860 | | Total liabilities and stockholders' equity | $4,661,424 | $4,054,042 | [Notes to Consolidated Financial Statements](index=51&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes to consolidated financial statements provide detailed information on significant accounting policies, borrowing arrangements, income taxes, leases, stock-based compensation, and segment reporting - The company adopted the new lease accounting standard in fiscal 2019, recognizing approximately **$1.2 billion in right-of-use assets** and **$1.4 billion in lease liabilities**[327](index=327&type=chunk) - As of January 31, 2021, the company had a **$300 million term loan** (repaid Feb 2021) and access to **$700 million in revolving credit facilities**, with no amounts drawn[334](index=334&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) - The company aggregates its brand-based operating segments into a **single reportable segment** due to similar economic and qualitative characteristics[374](index=374&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=73&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure were reported - None[418](index=418&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of January 31, 2021, with no significant changes in Q4 fiscal 2020 - Management concluded that the company's disclosure controls and procedures were **effective** as of January 31, 2021[419](index=419&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of January 31, 2021, based on COSO criteria[422](index=422&type=chunk) [Other Information](index=74&type=section&id=Item%209B.%20Other%20Information) No other information is reported for this section - None[425](index=425&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=75&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's **2021 Proxy Statement**[428](index=428&type=chunk) [Executive Compensation](index=75&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation, including director and compensation committee details, is incorporated by reference from the 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's **Proxy Statement**[429](index=429&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=75&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of principal stockholders and management is incorporated by reference from the 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's **Proxy Statement**[430](index=430&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=75&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's **Proxy Statement**[431](index=431&type=chunk) [Principal Accountant Fees and Services](index=75&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's **Proxy Statement**[432](index=432&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=76&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits included in or incorporated by reference into the Form 10-K - This item lists financial statements filed under Item 8 and provides an index of all exhibits filed with or incorporated by reference into the **Form 10-K**[434](index=434&type=chunk)[436](index=436&type=chunk) [Form 10-K Summary](index=82&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided for this report - None[449](index=449&type=chunk)

Williams-Sonoma, Inc. (NYSE:WSM) Q4 2020 Earnings Conference Call March 17, 2021 5:00 PM ET Company Participants Elise Wang - VP, IR Laura Alber - President, CEO & Director Julie Whalen - EVP & CFO Felix Carbullido - EVP & CMO Conference Call Participants Adrian Yih - Barclays Steven Forbes - Guggenheim Securities Oliver Wintermantel - Evercore Seth Basham - Wedbush Securities Cristina Fernández - Telsey Advisory Group Jonathan Matuszewski - Jefferies Marni Shapiro - The Retail Tracker Operator Please stand ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 1, 2020. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-14077 WILLIAMS-SONOMA, INC. (Exact name of registrant as specified in its charter) Delaware 94-2203880 (St ...

Williams-Sonoma, Inc. (NYSE:WSM) Q3 2020 Earnings Conference Call November 19, 2020 5:00 PM ET Company Participants Elise Wang - VP, IR Laura Alber - President, CEO & Director Julie Whalen - EVP & CFO Felix Carbullido - EVP & CMO Conference Call Participants Oliver Wintermantel - Evercore ISI Katharine McShane - Goldman Sachs Group Chuck Grom - Gordon Haskett Research Advisors Simeon Gutman - Morgan Stanley Brian Nagel - Oppenheimer Bradley Thomas - KeyBanc Capital Markets Adrian Yih - Barclays Bank Anthony ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and notes on key policies and impacts Condensed Consolidated Statements of Earnings (Thirteen Weeks Ended) | In thousands, except per share amounts | August 2, 2020 | August 4, 2019 | | :--- | :--- | :--- | | **Net revenues** | **$1,490,777** | **$1,370,814** | | Gross profit | $551,202 | $483,861 | | Operating income | $185,361 | $86,165 | | **Net earnings** | **$134,564** | **$62,648** | | **Diluted earnings per share** | **$1.70** | **$0.79** | Condensed Consolidated Balance Sheet Highlights | In thousands | August 2, 2020 | February 2, 2020 | | :--- | :--- | :--- | | **Total assets** | **$4,487,296** | **$4,054,042** | | Cash and cash equivalents | $947,760 | $432,162 | | Merchandise inventories, net | $1,042,340 | $1,100,544 | | **Total liabilities** | **$3,154,374** | **$2,818,182** | | **Total stockholders' equity** | **$1,332,922** | **$1,235,860** | Condensed Consolidated Statements of Cash Flows (Twenty-six Weeks Ended) | In thousands | August 2, 2020 | August 4, 2019 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | **$216,400** | **($26,636)** | | Net cash used in investing activities | ($75,882) | ($76,719) | | Net cash provided by (used in) financing activities | $377,910 | ($113,471) | | **Net increase (decrease) in cash and cash equivalents** | **$515,598** | **($218,487)** | [Note A: Basis of Presentation and COVID-19 Impact](index=9&type=section&id=NOTE%20A.%20FINANCIAL%20STATEMENTS%20-%20BASIS%20OF%20PRESENTATION) This note details the unaudited financial statements' basis, highlighting significant asset impairment charges and inventory write-offs due to COVID-19, with no goodwill impairment - Due to the COVID-19 pandemic and resulting store closures, the company recorded significant asset impairment charges during the twenty-six weeks ended August 2, 2020[33](index=33&type=chunk) COVID-19 Related Charges (Twenty-six weeks ended Aug 2, 2020) | Charge Type | Amount (in thousands) | | :--- | :--- | | Store Asset Impairment (Property & Equipment) | $16,514 | | Store Asset Impairment (Operating Lease ROU) | $5,461 | | Inventory Write-offs | $11,378 | - The company evaluated goodwill for impairment due to the pandemic but concluded that no impairment charge was necessary as of the second quarter of fiscal 2020[35](index=35&type=chunk)[36](index=36&type=chunk) [Note B: Borrowing Arrangements](index=10&type=section&id=NOTE%20B.%20BORROWING%20ARRANGEMENTS) This note details the company's credit facility, including a $500 million revolver and $300 million term loan, amended in May 2020, and a new $200 million revolving line of credit - In May 2020, the company amended its credit facility, extending the maturity of its **$300 million** term loan to January 8, 2022[44](index=44&type=chunk) - A new **$200 million** 364-Day Credit Agreement for an additional unsecured revolving line of credit was entered into during the second quarter of fiscal 2020[48](index=48&type=chunk) - As of August 2, 2020, the company had **$300 million** outstanding under its term loan and had borrowed **$487.8 million** under its revolver during fiscal 2020[45](index=45&type=chunk)[47](index=47&type=chunk) [Note E: Segment Reporting](index=13&type=section&id=NOTE%20E.%20SEGMENT%20REPORTING) This note explains the aggregation of operating segments into a single reportable segment, detailing net revenues by brand, with Pottery Barn and West Elm as top contributors Net Revenues by Brand (Thirteen Weeks Ended) | Brand | August 2, 2020 (in thousands) | August 4, 2019 (in thousands) | | :--- | :--- | :--- | | Pottery Barn | $563,276 | $524,847 | | West Elm | $380,552 | $357,574 | | Williams Sonoma | $243,133 | $191,374 | | Pottery Barn Kids and Teen | $235,987 | $227,853 | | Other | $67,829 | $69,166 | | **Total** | **$1,490,777** | **$1,370,814** | [Note G: Stock Repurchase Program and Dividends](index=13&type=section&id=NOTE%20G.%20STOCK%20REPURCHASE%20PROGRAM%20AND%20DIVIDENDS) This note states no stock repurchases occurred in H1 2020, with **$575 million** remaining for repurchases, and **$0.48** cash dividends per share declared - No shares of common stock were repurchased during the thirteen and twenty-six weeks ended August 2, 2020[65](index=65&type=chunk) - As of August 2, 2020, **$574.982 million** remained available under the company's stock repurchase program[65](index=65&type=chunk) - The company declared cash dividends of **$0.48** per common share during the second quarter of 2020, the same amount as in the second quarter of 2019[68](index=68&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2020 financial results, highlighting an **8.8%** net revenue increase driven by e-commerce, improved liquidity, and anticipated higher shipping and safety costs - Q2 2020 net revenues increased **8.8%** to **$1.49 billion**, with comparable brand revenue growth of **10.5%**, driven by strong e-commerce sales which offset declines from temporary retail store closures[101](index=101&type=chunk) - Diluted EPS for Q2 2020 was **$1.70**, a significant increase from **$0.79** in Q2 2019. This included a **$0.06** impact from store asset impairments[104](index=104&type=chunk) - The company bolstered its financial flexibility by extending its **$300 million** term loan and obtaining an additional **$200 million** in borrowing capacity through a new credit line[103](index=103&type=chunk) - Looking ahead, the company expects robust sales but anticipates higher shipping costs due to third-party surcharges and incremental costs for safety measures related to the pandemic[106](index=106&type=chunk) [Net Revenues](index=21&type=section&id=NET%20REVENUES) Net revenues for Q2 2020 increased **8.8%** to **$1.20 billion**, driven by **10.5%** comparable brand revenue growth and strong e-commerce, offsetting retail declines Comparable Brand Revenue Growth | Brand | Q2 2020 | Q2 2019 | | :--- | :--- | :--- | | Pottery Barn | 8.1% | 4.2% | | West Elm | 7.0% | 17.5% | | Williams Sonoma | 29.4% | (1.1%) | | Pottery Barn Kids and Teen | 4.8% | 3.7% | | **Total** | **10.5%** | **6.5%** | [Cost of Goods Sold](index=22&type=section&id=COST%20OF%20GOODS%20SOLD) COGS as a percentage of net revenues decreased to **63.0%** in Q2 2020, driven by higher merchandise margins and occupancy leverage, partially offset by increased shipping costs - COGS as a percentage of net revenues decreased by **170 basis points** in Q2 2020 compared to Q2 2019, driven by higher merchandise margins and occupancy leverage[119](index=119&type=chunk) - The decrease in COGS percentage was partially offset by higher shipping costs due to a shift to e-commerce and surcharges from third-party shippers related to COVID-19[119](index=119&type=chunk) [Selling, General and Administrative Expenses](index=22&type=section&id=SELLING%2C%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES) SG&A expenses decreased by **8.0%** in Q2 2020, falling to **24.5%** of net revenues due to advertising and employment cost leverage, partially offset by **$6.355 million** in impairment charges - SG&A as a percentage of net revenues decreased by **450 basis points** in Q2 2020 compared to Q2 2019[123](index=123&type=chunk) - The improvement was driven by leverage on advertising and employment costs, partially offset by **$6.355 million** in store asset impairment charges[123](index=123&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of August 2, 2020, the company held **$947.8 million** in cash, bolstered liquidity by drawing **$487.8 million** on its credit line, and generated **$216.4 million** in operating cash flow - Cash and cash equivalents stood at **$947.76 million** as of August 2, 2020[126](index=126&type=chunk) - As a precautionary measure, the company drew down **$487.823 million** on its revolving line of credit during the first quarter of fiscal 2020[127](index=127&type=chunk) - Net cash provided by operating activities for year-to-date fiscal 2020 was **$216.4 million**, compared to net cash used of **$26.636 million** for the same period in 2019[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from changes in interest rates and foreign currency exchange rates, managing foreign currency risk with forward contracts - The company is subject to interest rate risk on its variable-rate revolver and term loan. As of Q2 2020, it had borrowings of **$487.8 million** under the revolver and **$300 million** outstanding on the term loan[140](index=140&type=chunk) - Foreign currency risk is present due to operations in Canada, Australia, and the UK. The company mitigates this risk by hedging a portion of its exposure with foreign currency forward contracts[143](index=143&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of August 2, 2020, with no material changes in internal control over financial reporting - Management concluded that as of August 2, 2020, the company's disclosure controls and procedures were effective[144](index=144&type=chunk) - No changes occurred during the recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[145](index=145&type=chunk) [PART II. OTHER INFORMATION](index=26&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits and claims incidental to its ordinary course of business, with management believing no material adverse effect on financial statements - Information regarding legal proceedings is contained in Note F to the Condensed Consolidated Financial Statements[147](index=147&type=chunk) [Risk Factors](index=26&type=page&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on the uncertain impact of the COVID-19 pandemic, including reduced store traffic, supply chain disruptions, and increased shipping costs - The COVID-19 pandemic continues to materially impact the business, with the full duration and extent of its effect on future operations remaining uncertain[149](index=149&type=chunk) - Reduced store traffic and closures have negatively impacted retail revenues and may continue to do so, potentially leading to further asset impairment charges[151](index=151&type=chunk) - The company has incurred and expects to continue to incur higher shipping costs due to surcharges from third-party shippers, especially during the peak holiday season[155](index=155&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during Q2 fiscal 2020, and its stock repurchase program has no expiration date - There were no repurchases of common stock in the second quarter of fiscal 2020[161](index=161&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, CEO and CFO certifications, and financial statements in Inline XBRL - Filed exhibits include the First Amendment to the Credit Agreement and the new 364-Day Credit Agreement[165](index=165&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Securities Exchange Act and Sarbanes-Oxley Act were also filed[165](index=165&type=chunk)

Williams-Sonoma, Inc. (NYSE:WSM) Q2 2020 Earnings Conference Call August 26, 2020 5:00 PM ET Company Participants Elise Wang - VP, IR Laura Alber - President and CEO Julie Whalen - CFO Felix Carbullido - CMO Yasir Anwar - Chief Technology Officer Conference Call Participants Adrienne Yih - Barclays Peter Benedict - Baird Brian Nagel - Oppenheimer Oliver Wintermantel - Evercore ISI Chris Horvers - JPMorgan Chuck Grom - Gordon Haskett Seth Basham - Wedbush Brad Thomas - KeyBanc Capital Markets Michael Lasser ...

Investor Presentation 1 WILLIAMS-SONOMA, INC. 2020 As the world's largest digital-frst, design-led, sustainable home retailer, we are shaping the future of shopping for the home — 2 3 TRACK RECORD Financial Performance Market leader with a strong track record of proftable growth — Track Record of Profitable Growth Strong performance during the COVID-19 pandemic, despite temporary store closures, highlights the resilience of our business model Q1 FY2019 54% ECOM 46% RETAIL Q1 FY2020 71% ECOM 29% 2.6% RETAIL ...