Williams-Sonoma(US:WSM)2023-09-01 20:13Financial Performance - Net revenues for the second quarter of fiscal 2023 decreased by $274.9 million, or 12.9%, with comparable brand revenue decline of 11.9%[84] - For the first half of fiscal 2023, net revenues decreased by $410.7 million, or 10.2%, with a comparable brand revenue decline of 9.1%[92] - Diluted earnings per share for the second quarter of fiscal 2023 was $3.12, down from $3.87 in the same quarter of fiscal 2022[87] Brand Performance - Pottery Barn, the largest brand, experienced a 10.6% decline in comparable brand revenue for the second quarter, but showed 10.9% growth on a two-year basis[85] - West Elm saw a significant 20.8% decline in comparable brand revenue in the second quarter, reflecting the brand's high exposure to the furniture category[86] Cash Flow and Liquidity - As of July 30, 2023, the company had $514.4 million in cash and cash equivalents and generated operating cash flow of $715.0 million in the first half of fiscal 2023[88] - Net cash provided by operating activities for the first half of FY2023 was $715.0 million, compared to $383.6 million for the first half of FY2022[116] - The company has a $500 million unsecured revolving line of credit, which can be increased to $750 million, and had no borrowings under this facility as of July 30, 2023[112][113] Cost and Expenses - Cost of goods sold for the second quarter increased to 59.3% of net revenues, up from 56.5% in the prior year, driven by higher input and shipping costs[100] - Selling, general and administrative (SG&A) expenses decreased by $77.3 million, or 13.7%, in Q2 FY2023 compared to Q2 FY2022, with SG&A as a percentage of net revenues decreasing to 26.1% from 26.4%[103] - For the first half of FY2023, SG&A expenses decreased by $106.8 million, or 10.0%, compared to the first half of FY2022, with SG&A as a percentage of net revenues increasing slightly to 26.6% from 26.5%[104] Capital Expenditures and Shareholder Returns - The company invested $92.9 million in capital expenditures in the first half of fiscal 2023 while returning $426.6 million to shareholders through stock repurchases and dividends[88] Tax and Compliance - The effective tax rate for the first half of FY2023 was 25.4%, up from 24.4% in the first half of FY2022, with an expected effective tax rate of approximately 26.0% for FY2023[105] - The company is in compliance with its financial covenants under its Credit Facility and expects to remain compliant for the next 12 months[114] Future Expectations - The company expects pre-tax annualized savings of approximately $42 million from exit and reduction-in-force initiatives, primarily in selling, general and administrative expenses[89] - The company expects to use cash resources for inventory purchases, employment-related costs, advertising, taxes, and stock repurchases for the remainder of FY2023[109] Store Operations - The company operates a total of 532 stores as of July 30, 2023, with an average leased square footage of 11,300[96] Investing and Financing Activities - Net cash used in investing activities for the first half of FY2023 was $92.7 million, down from $148.5 million in the first half of FY2022, primarily for technology and supply chain enhancements[117] - Net cash used in financing activities for the first half of FY2023 was $476.6 million, a decrease from $958.4 million in the first half of FY2022, mainly due to reduced stock repurchases[118]