Williams-Sonoma(US:WSM)2021-08-26 02:48Financial Data and Key Metrics Changes - The company reported net revenues of approximately $1.95 billion, reflecting over 30% growth year-over-year, with comparable brand revenue growth of 29.8% and 40.3% on a two-year stack [24] - Operating income reached a record $326 million, resulting in an operating margin of 16.7%, which expanded by 360 basis points compared to the previous year [27] - Diluted earnings per share increased by 80% to $3.24 from $1.80 in the same quarter last year [27] Business Line Data and Key Metrics Changes - West Elm achieved a record comparable sales growth of 51.1%, with over 58% growth on a two-year basis [24] - Pottery Barn generated nearly $750 million in revenue with a comparable sales growth of 29.6% [24] - The Williams-Sonoma brand saw a 6.4% comparable sales increase, building on a prior year growth of 29.4% [24] - Emerging brands Rejuvenation and Mark and Graham combined saw a 42.3% comparable sales growth [24] Market Data and Key Metrics Changes - E-commerce sales grew by 12%, maintaining a 65% revenue mix, while retail sales drove a 98% comparable growth [13][19] - The global business segment grew nearly 50% to approximately $116 million [24] - The company anticipates home sales in 2021 to grow more than 20%, the highest since 2005 [7] Company Strategy and Development Direction - The company is raising its full-year revenue outlook to high teens to low 20s growth, with operating margins projected between 16% to 17% [8][29] - The strategic focus includes expanding the B2B segment, which is on track to reach nearly $700 million by year-end [11] - The company aims to achieve $10 billion in revenues by 2024, one year earlier than previously expected [8][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued market share gains, citing strong demand and favorable macro trends [21] - The company noted that the acceptance of remote work is expected to nearly double in five years, driving home investment [8] - Management highlighted the importance of sustainability and values in their business model, which resonates with consumers [20] Other Important Information - The company has committed to significant ESG goals, including keeping 75% of waste out of landfills and sourcing 75% of products from suppliers with worker well-being programs [20] - The company announced a 20% increase in quarterly dividends and a new share repurchase authorization of $1.25 billion [31] Q&A Session Summary Question: Can you help us understand the gross margin and merchandise margins? - Management noted that merchandise margin expansion has been a focus, with a shift away from site-wide promotions allowing for better pricing power [36] Question: How did demand progress through the quarter? - Management reported strong demand throughout the quarter, with no signs of waning, and expressed optimism for future performance [40] Question: What is the outlook for the wedding registry business? - The wedding registry business saw a 98% increase, indicating strong recovery as weddings resume [45] Question: How is the company navigating supply chain challenges? - Management acknowledged ongoing supply chain disruptions but emphasized their strong position to manage these challenges effectively [62] Question: What are the expectations for advertising spend? - The company plans to incrementally invest in advertising, viewing it as a competitive advantage to drive new customer acquisition [48]