8-K
WILLIAMS SONOMA INC (WSM)
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): August 22, 2021
Williams-Sonoma, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-14077 | 94-2203880 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
3250 Van Ness Avenue, San Francisco, California 94109
(Address of principal executive offices)
Registrant’s 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))
| Title of each class: | Trading <br>Symbol(s): | Name of each exchange<br>on which registered: |
|---|---|---|
| Common Stock, par value $.01 per share | WSM | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
On August 22, 2021, Williams-Sonoma, Inc. (the “Company”) amended its Reimbursement Agreements, dated as of August 30, 2013, and as previously amended on August 29, 2014, August 28, 2015, August 26, 2016, August 25, 2017, August 24, 2018, August 23, 2019, and August 23, 2020, with each of Bank of America, N.A., Wells Fargo Bank, N.A. and U.S. Bank National Association (collectively, the “Banks”), to extend the maturity dates of the agreements. These Reimbursement Agreements allow the Company and its subsidiary, Williams-Sonoma Singapore Pte. Ltd. (the “Singapore Subsidiary”), to request the Banks to issue letters of credit on the Company’s behalf, the Singapore Subsidiary’s behalf or on behalf of any of its other subsidiaries until the maturity of the agreements on August 22, 2022. The aggregate credit available under the facilities is $35,000,000. The Company also has a $500,000,000 unsecured revolving line of credit with Bank of America, N.A., among others. As of August 22, 2021, there were approximately $6,900,000 of issued letters of credit outstanding under the facilities.
The letter of credit facilities contain certain restrictive loan covenants that are consistent with the Company’s unsecured revolving line of credit, including, among others, certain financial covenants, and covenants limiting the Company’s ability to dispose of assets, make acquisitions, be acquired (if a default would result from the acquisition), incur indebtedness, grant liens and make investments. The Company’s obligations under the letter of credit facilities are guaranteed by certain of the Company’s U.S. subsidiaries. The Singapore Subsidiary’s obligations under the letter of credit facilities are guaranteed by the Company.
The letter of credit facilities also contain events of default that include, among others, non-payment of drawings under letters of credit or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default will result in the imposition of interest on unreimbursed amounts at the lender’s prime rate (or if greater, the average rate on overnight federal funds plus one-half of one percent) plus 2.0%, and could result in the acceleration of the Company’s obligations under the letter of credit facilities, an obligation of the Company to deposit with the Banks as collateral an amount equal to all outstanding letters of credit, and an obligation of any or all of the Company’s subsidiaries that have guaranteed the letter of credit facilities to pay the full amount of the Company’s obligations under the letter of credit facilities.
Item 2.02. Results of Operations and Financial Condition
On August 25, 2021, the Company issued a press release announcing the Company’s financial results for its second quarter ended August 1, 2021. A copy of the Company’s 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 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off Balance Sheet Arrangement of a Registrant
The disclosure set forth under Item 1.01 of this Current Report is incorporated by reference herein.
Item 8.01. Other Events
On August 25, 2021, the Company issued a press release announcing that its Board of Directors authorized a 20% increase in the Company’s quarterly cash dividend and also approved a new $1.25 billion stock repurchase authorization, which supersedes the remaining outstanding under the Company’s current stock repurchase authorization. A copy of the Company’s press release is attached as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
| (d) | List of Exhibits: |
|---|---|
| 99.1 | Press Release datedAugust 25, 2021titled Williams-Sonoma, Inc. announces strongsecondquarter results;Q2 revenues grow 30.7%withcomparable brand revenue growthofexhibit991fy2021q2earnings.htm29.8%, 2YR comp of 40.3%; Q2GAAP operating margin of16.6%; Q2exhibit991fy2021q2earnings.htmNon-GAAP operating margin expansion of360bps to16.7%; Q2GAAP diluted EPS of $3.21; Q2Non-GAAP diluted EPS of $3.24, increasing 80%;Quarterly dividend increase of 20%;new stock repurchase authorization of $1.25 billion; Raises full-year 2021 and long-term outlook. |
| 99.2 | Press Releasedated August 25, 2021 titledexhibit992q321dividendincr.htmWilliams-Sonoma, Inc.announces a 20% quarterly dividendincrease and a new $1.25 billion stock repurchase authorization. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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: August 25, 2021 | By: | /s/ Julie Whalen |
| Julie Whalen | ||
| Chief Financial Officer |
4
Document
Exhibit 99.1
Williams-Sonoma, Inc. announces record second quarter results
Q2 revenues grow 30.7% with comparable brand revenue growth of 29.8%, 2YR comp of 40.3%
Q2 GAAP operating margin of 16.6%; Q2 Non-GAAP operating margin expansion of 360bps to 16.7%
Q2 GAAP diluted EPS of $3.21; Q2 Non-GAAP diluted EPS of $3.24, increasing 80%
Quarterly dividend increase of 20%; new stock repurchase authorization of $1.25 billion
Raises full-year 2021 and long-term outlook
San Francisco, CA, August 25, 2021 – Williams-Sonoma, Inc. (NYSE: WSM), the world’s largest digital-first, design-led and sustainable home retailer, today announced operating results for the second fiscal quarter ended August 1, 2021 (“Q2 21”) versus the second fiscal quarter ended August 2, 2020 (“Q2 20”).
"We are proud to report another quarter of outperformance with a 30% comp, strong growth across all brands and channels, and 360 basis points of operating margin expansion. These second quarter results demonstrate the success of our growth strategies and the earnings power of our company. We have an advantage in the industry due to our exclusive in-house design capability, our channel strategy which is digital-first but not digital only, and our values - with sustainability and equity underlying all that we do." said Laura Alber, President and Chief Executive Officer.
"The momentum we are seeing in our business and our winning positioning set us up to continue to take share in a fractured market. We do not see any evidence that growth trends are waning, and in fact, we see favorability in the macro environment as more people prioritize their homes and home décor. We believe we are at the intersection of a transformative change that will accelerate the growth of our industry, and our market share within the industry. In addition, our growth strategies are gaining traction faster than we predicted, and our key differentiators are further distancing us from our competition." Alber continued.
Alber concluded, "We see a clear path to beating our previous revenue and profitability targets and we are raising our full year revenue outlook again, with revenue growth now expected to be in the high teens to low twenties and operating margins now expected to be in the range of 16% to 17%. Given our increased optimism, we now expect to achieve our long-term goal of $10 billion in revenues in 2024, one year faster than previously expected, and with higher profitability, which will now be at or above our increased FY21 operating margin."
SECOND QUARTER 2021
•Revenues grow 30.7%, with strong growth across all brands and channels, including ecommerce holding at 65% of total company revenues
•Comparable brand revenue growth of 29.8%, including West Elm at 51.1%, Pottery Barn at 29.6%, Pottery Barn Kids and Teen at 18.0%, and Williams Sonoma at 6.4% on top of a 29.4% last year
•Ecommerce and retail comparable brand revenue growth on a two-year basis were 58.0% and 56.5%, respectively
•GAAP and non-GAAP gross margin of 44.1%, expanding 710bps and driven by higher year-over-year merchandise margins as well as occupancy leverage of approximately 210bps; occupancy costs were $176 million
•GAAP operating margin of 16.6%; non-GAAP operating margin of 16.7%, leveraging approximately 360bps
•GAAP diluted EPS of $3.21; non-GAAP diluted EPS of $3.24, increasing 80% over last year
•Maintaining strong liquidity position of $655 million in cash and over $475 million in operating cash flow, enabling the company to repurchase an additional $135 million in shares in the second quarter and over $450 million year-to-date. We also announced in a separate release today, an additional 20% quarterly dividend increase to $0.71, and a new stock repurchase authorization raising our existing authorization from the approximate $500 million remaining to $1.25 billion.
OUTLOOK
Fiscal Year 2021
Given the strength of our business year-to-date and the macro trends that we believe will continue to benefit our business, we are raising our fiscal year 2021 outlook to high-teens to low-twenties net revenue growth and non-GAAP operating margin between 16% to 17%.
Long-Term
For the long-term, we are planning for net revenue growth of mid-to-high single digits with an accelerated path to $10 billion in net revenues now over the next four years. Our continued strong results, combined with our three key differentiators of in-house design, digital-first channel strategy and values, and the macro trends that should benefit our business over the long-term, give us confidence in these future growth projections and an accelerated path to $10 billion in net revenues by 2024 while maintaining at least fiscal year end 2021 non-GAAP operating margins. This reflects reaching our long-term revenue outlook one year faster, and with higher profitability.
CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. will host a live conference call today, August 25, 2021, 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.
CONTACT INFORMATION
Julie Whalen EVP, Chief Financial Officer – (415) 616 8524
Investor Relations – (415) 616 8571
SEC REGULATION G — NON-GAAP INFORMATION
This press release includes non-GAAP financial measures. Exhibit 1 provides reconciliations of these non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We have not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential variability and limited visibility of excluded items; these excluded items may include expenses related to the impact of inventory write-offs, the acquisition of Outward, Inc., and asset impairment charges. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of current period performance 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. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to the GAAP financial measures presented in this press release and our financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
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 capture significant opportunities in the home furnishings industry; increase our market share; macro trends; our ability to continue to improve performance; our focus on operational excellence; our ability to improve customers’ experience; our growth strategies; our optimism about the future; our ability to maximize growth and maintain high profitability; our fiscal year 2021 outlook and long-term financial targets, including projected net revenue growth and operating margin expansion; our stock repurchase program and dividend expectations; our planned capital investments; 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: continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; the continuing impact of the coronavirus on our global supply chain, retail store operations and customer demand; 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; the impact of current and potential future tariffs and our ability to mitigate impacts; the impact of inflation on consumer spending; the potential for increased corporate income taxes; 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, 2021 and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. We have not filed our Form 10-Q for the quarter ended August 1, 2021. As a result, all financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates that are identified prior to the time we file the Form 10-Q. 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 the world’s largest digital-first, design-led and sustainable home retailer. The company’s products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, and Mark and Graham — are marketed through e-commerce websites, direct-mail catalogs and retail stores. These brands are also part of The Key Rewards, our free-to-join loyalty program that offers members exclusive benefits across the Williams-Sonoma family of brands. We operate in the U.S., Puerto Rico, Canada, Australia and the United Kingdom, offer international shipping to customers worldwide, and have unaffiliated franchisees that operate stores in the Middle East, the Philippines, Mexico, South Korea and India, as well as e-commerce websites in certain locations. We are also proud to lead the industry with our Environmental, Social and Governance (“ESG”) efforts. Our company is Good By Design — we’ve deeply engrained sustainability into our business. From our factories to your home, we’re united in a shared purpose to care for our people and our planet.
For more information on our ESG efforts, please visit: https://sustainability.williams-sonomainc.com/
WSM-IR
Condensed Consolidated Statements of Earnings (unaudited)
| Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| August 1, 2021 | August 2, 2020 | August 1, 2021 | August 2, 2020 | |||||||||
| In thousands, except per share amounts | % of<br>Revenues | % of<br>Revenues | % of<br>Revenues | % of<br>Revenues | ||||||||
| Net revenues | 100 | % | 100 | % | 100 | % | 100 | % | ||||
| Cost of goods sold | 1,089,951 | 55.9 | 939,575 | 63.0 | 2,086,127 | 56.4 | 1,760,518 | 64.6 | ||||
| Gross profit | 858,388 | 44.1 | 551,202 | 37.0 | 1,611,241 | 43.6 | 965,462 | 35.4 | ||||
| Selling, general and administrative expenses | 535,288 | 27.5 | 365,841 | 24.5 | 1,012,964 | 27.4 | 731,456 | 26.8 | ||||
| Operating income | 323,100 | 16.6 | 185,361 | 12.4 | 598,277 | 16.2 | 234,006 | 8.6 | ||||
| Interest (income) expense, net | (39) | — | 6,464 | 0.4 | 1,833 | — | 8,623 | 0.3 | ||||
| Earnings before income taxes | 323,139 | 16.6 | 178,897 | 12.0 | 596,444 | 16.1 | 225,383 | 8.3 | ||||
| Income taxes | 77,069 | 4.0 | 44,333 | 3.0 | 122,572 | 3.3 | 55,396 | 2.0 | ||||
| Net earnings | 12.6 | % | 9.0 | % | 12.8 | % | 6.2 | % | ||||
| Earnings per share (EPS): | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
| Shares used in calculation of EPS: | ||||||||||||
| Basic | 74,786 | 77,783 | 75,293 | 77,522 | ||||||||
| Diluted | 76,584 | 79,264 | 77,516 | 78,841 |
All values are in US Dollars.
| 2nd Quarter Net Revenues and Comparable Brand Revenue Growth by Concept* | ||||||||
|---|---|---|---|---|---|---|---|---|
| Net Revenues<br>(Millions) | Comparable Brand Revenue<br>Growth | |||||||
| Q2 21 | Q2 20 | Q2 21 | Q2 20 | |||||
| Pottery Barn | $ | 732 | $ | 563 | 29.6 | % | 8.1 | % |
| West Elm | 580 | 381 | 51.1 | 7.0 | ||||
| Williams Sonoma | 255 | 243 | 6.4 | 29.4 | ||||
| Pottery Barn Kids and Teen | 274 | 236 | 18.0 | 4.8 | ||||
| Other** | 107 | 68 | N/A | N/A | ||||
| Total | $ | 1,948 | $ | 1,491 | 29.8 | % | 10.5 | % |
| * See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue, which is calculated on a 13-week to 13-week basis for Q2 2021 and Q2 2020. Comparable stores that were temporarily closed due to COVID-19 were not excluded from the comparable stores calculation.<br><br>** Primarily consists of net revenues from our international franchise operations, Rejuvenation and Mark and Graham. |
Condensed Consolidated Balance Sheets (unaudited)
| In thousands, except per share amounts | August 1, 2021 | January 31, 2021 | August 2, 2020 | |||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 655,211 | $ | 1,200,337 | $ | 947,760 |
| Accounts receivable, net | 141,814 | 143,728 | 128,737 | |||
| Merchandise inventories, net | 1,170,561 | 1,006,299 | 1,042,340 | |||
| Prepaid expenses | 85,587 | 93,822 | 109,495 | |||
| Other current assets | 20,537 | 22,894 | 27,098 | |||
| Total current assets | 2,073,710 | 2,467,080 | 2,255,430 | |||
| Property and equipment, net | 875,295 | 873,894 | 887,401 | |||
| Operating lease right-of-use assets | 1,052,617 | 1,086,009 | 1,146,229 | |||
| Deferred income taxes, net | 58,848 | 61,854 | 37,789 | |||
| Goodwill | 85,421 | 85,446 | 85,419 | |||
| Other long-term assets, net | 99,146 | 87,141 | 75,028 | |||
| Total assets | $ | 4,245,037 | $ | 4,661,424 | $ | 4,487,296 |
| Liabilities and stockholders' equity | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 601,879 | $ | 542,992 | $ | 373,086 |
| Accrued expenses | 224,089 | 267,592 | 158,407 | |||
| Gift card and other deferred revenue | 403,409 | 373,164 | 292,684 | |||
| Income taxes payable | 61,335 | 69,476 | 28,502 | |||
| Current debt | — | 299,350 | — | |||
| Borrowings under revolving line of credit | — | — | 487,823 | |||
| Operating lease liabilities | 213,784 | 209,754 | 221,575 | |||
| Other current liabilities | 74,331 | 85,672 | 102,086 | |||
| Total current liabilities | 1,578,827 | 1,848,000 | 1,664,163 | |||
| Deferred lease incentives | 18,359 | 20,612 | 24,684 | |||
| Long-term debt | — | — | 298,995 | |||
| Long-term operating lease liabilities | 994,165 | 1,025,057 | 1,080,622 | |||
| Other long-term liabilities | 126,967 | 116,570 | 85,910 | |||
| Total liabilities | 2,718,318 | 3,010,239 | 3,154,374 | |||
| Stockholders' equity | ||||||
| Preferred stock: $0.01 par value; 7,500 shares authorized, none issued | — | — | — | |||
| Common stock: $0.01 par value; 253,125 shares authorized; 74,426, 76,340, and 77,796 shares issued and outstanding at August 1, 2021, January 31, 2021 and August 2, 2020, respectively | 745 | 764 | 778 | |||
| Additional paid-in capital | 569,734 | 638,375 | 608,892 | |||
| Retained earnings | 964,000 | 1,019,762 | 736,772 | |||
| Accumulated other comprehensive loss | (7,049) | (7,117) | (12,921) | |||
| Treasury stock, at cost | (711) | (599) | (599) | |||
| Total stockholders' equity | 1,526,719 | 1,651,185 | 1,332,922 | |||
| Total liabilities and stockholders' equity | $ | 4,245,037 | $ | 4,661,424 | $ | 4,487,296 |
| Retail Store Data<br><br>(unaudited) | |||||
|---|---|---|---|---|---|
| May 2, 2021 | Openings | Closings | August 1, 2021 | August 2, 2020 | |
| Williams Sonoma | 195 | 3 | (2) | 196 | 210 |
| Pottery Barn | 195 | 1 | (1) | 195 | 201 |
| West Elm | 121 | 2 | — | 123 | 121 |
| Pottery Barn Kids | 57 | — | — | 57 | 72 |
| Rejuvenation | 10 | — | — | 10 | 10 |
| Total | 578 | 6 | (3) | 581 | 614 |
Condensed Consolidated Statements of Cash Flows (unaudited)
| Twenty-six Weeks Ended | ||||
|---|---|---|---|---|
| In thousands | August 1, 2021 | August 2, 2020 | ||
| Cash flows from operating activities: | ||||
| Net earnings | $ | 473,872 | $ | 169,987 |
| Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | ||||
| Depreciation and amortization | 96,687 | 93,120 | ||
| Loss on disposal/impairment of assets | 455 | 25,408 | ||
| Amortization of deferred lease incentives | (2,254) | (2,975) | ||
| Non-cash lease expense | 105,739 | 108,448 | ||
| Deferred income taxes | (7,037) | (2,229) | ||
| Tax benefit related to stock-based awards | 10,302 | 12,694 | ||
| Stock-based compensation expense | 46,260 | 33,395 | ||
| Other | (274) | 255 | ||
| Changes in: | ||||
| Accounts receivable | 2,002 | (16,740) | ||
| Merchandise inventories | (163,621) | 60,055 | ||
| Prepaid expenses and other assets | (4,622) | (30,968) | ||
| Accounts payable | 48,457 | (141,602) | ||
| Accrued expenses and other liabilities | (43,653) | 12,117 | ||
| Gift card and other deferred revenue | 30,308 | 2,936 | ||
| Operating lease liabilities | (108,791) | (113,489) | ||
| Income taxes payable | (8,162) | 5,988 | ||
| Net cash provided by operating activities | 475,668 | 216,400 | ||
| Cash flows from investing activities: | ||||
| Purchases of property and equipment | (78,281) | (76,123) | ||
| Other | 97 | 241 | ||
| Net cash used in investing activities | (78,184) | (75,882) | ||
| Cash flows from financing activities: | ||||
| Repurchases of common stock | (451,388) | — | ||
| Repayment of long-term debt | (300,000) | — | ||
| Tax withholdings related to stock-based awards | (100,160) | (29,589) | ||
| Payment of dividends | (91,069) | (79,274) | ||
| Borrowings under revolving line of credit | — | 487,823 | ||
| Debt issuance costs | — | (1,050) | ||
| Net cash (used in) provided by financing activities | (942,617) | 377,910 | ||
| Effect of exchange rates on cash and cash equivalents | 7 | (2,830) | ||
| Net (decrease) increase in cash and cash equivalents | (545,126) | 515,598 | ||
| Cash and cash equivalents at beginning of period | 1,200,337 | 432,162 | ||
| Cash and cash equivalents at end of period | $ | 655,211 | $ | 947,760 |
Exhibit 1
| 2nd Quarter GAAP to Non-GAAP Reconciliation<br><br>(unaudited) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | ||||||||||||
| Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||
| August 1, 2021 | August 2, 2020 | August 1, 2021 | August 2, 2020 | |||||||||
| % of<br>revenues | % of<br>revenues | % of<br>revenues | % of<br>revenues | |||||||||
| Gross profit | 44.1 | % | 37.0 | % | 43.6 | % | 35.4 | % | ||||
| Inventory write-off 1 | — | — | — | 11,378 | ||||||||
| Non-GAAP gross profit | 44.1 | % | 37.0 | % | 43.6 | % | 35.8 | % | ||||
| Selling, general and administrative expenses | 27.5 | % | 24.5 | % | 27.4 | % | 26.8 | % | ||||
| Outward-related 2 | (2,757) | (3,341) | (5,596) | (6,699) | ||||||||
| Asset impairment 3 | — | (6,355) | — | (21,975) | ||||||||
| Non-GAAP selling, general and administrative expenses | 27.3 | % | 23.9 | % | 27.2 | % | 25.8 | % | ||||
| Operating income | 16.6 | % | 12.4 | % | 16.2 | % | 8.6 | % | ||||
| Outward-related 2 | 2,757 | 3,341 | 5,596 | 6,699 | ||||||||
| Inventory write-off 1 | — | — | — | 11,378 | ||||||||
| Asset impairment 3 | — | 6,355 | — | 21,975 | ||||||||
| Non-GAAP operating income | 16.7 | % | 13.1 | % | 16.3 | % | 10.1 | % | ||||
| Tax rate | Tax rate | Tax rate | Tax rate | |||||||||
| Income taxes | 23.9 | % | 24.8 | % | 20.6 | % | 24.6 | % | ||||
| Outward-related 2 | 462 | 451 | 973 | 1,192 | ||||||||
| Inventory write-off 1 | — | — | — | 2,940 | ||||||||
| Asset impairment 3 | — | 1,287 | — | 5,324 | ||||||||
| Non-GAAP income taxes | 23.8 | % | 24.4 | % | 20.5 | % | 24.4 | % | ||||
| Diluted EPS | ||||||||||||
| Outward-related 2 | 0.03 | 0.04 | 0.06 | 0.07 | ||||||||
| Inventory write-off 1 | — | — | — | 0.11 | ||||||||
| Asset impairment 3 | — | 0.06 | — | 0.21 | ||||||||
| Non-GAAP diluted EPS* | ||||||||||||
| *Per share amounts may not sum due to rounding to the nearest cent per diluted share |
All values are in US Dollars.
SEC Regulation G – Non-GAAP Information
These tables include non-GAAP gross profit, gross margin, selling, general and administrative expense, 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 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.
Notes to Exhibit 1:
1During year-to-date 2020, we incurred approximately $11.4 million of inventory write-offs for inventory with minor damage that we could not liquidate through our outlets due to store closures resulting from COVID-19.
2During Q2 2021 and year-to-date 2021, we incurred approximately $2.8 million and $5.6 million, respectively, associated with acquisition-related compensation expense and the amortization of acquired intangibles for Outward, Inc. During Q2 2020 and year-to-date 2020, we incurred approximately $3.3 million and $6.7 million, respectively, associated with acquisition-related compensation expense and the amortization of acquired intangibles for Outward, Inc.
3During Q2 2020 and year-to-date 2020, we incurred approximately $6.4 million and $22.0 million, respectively, of expense associated with store asset impairments due to the impact that COVID-19 had on our retail stores.
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Document
Exhibit 99.2
| CONTACT: |
|---|
| Julie Whalen |
| EVP, Chief Financial Officer |
| (415) 616-8524 |
| Brian Yee |
| SVP Treasury – Corporate Finance |
| (415) 402-4085 |
PRESS RELEASE
Williams-Sonoma, Inc. announces a 20% quarterly dividend
increase and a new $1.25 billion stock repurchase authorization
San Francisco, CA, August 25, 2021 – Williams-Sonoma, Inc. (NYSE: WSM) announced today that its Board of Directors has authorized a 20.3% increase in the company’s quarterly cash dividend to $0.71 per share. The quarterly dividend is payable on November 26, 2021 to stockholders of record as of the close of business on October 22, 2021. The Board of Directors also approved a new $1.25 billion stock repurchase authorization, which supersedes the approximately $560 million, which remains outstanding under the company’s current stock repurchase authorization.
"Our decisions to increase our quarterly dividend again and to approve a new $1.25 billion share buyback authorization reflect the strength of our business and financial position, and our commitment to maximizing returns for our shareholders,” said Laura Alber, President and Chief Executive Officer. "Our strong performance reinforces the sustainable power of our key differentiators: our in-house design, our digital-first channel strategy and our values. Combined with our winning positioning in a growing but fragmented industry, and our incremental growth initiatives, we are more confident than ever in our ability to deliver outsized returns into the future."
This new stock repurchase authorization is effective as of August 25, 2021, and results in $1.25 billion available for future repurchases under the company’s stock repurchase authorization. The company’s stock repurchase program authorizes the purchase of the company’s common stock through open market and privately negotiated transactions, including through Rule 10b5-1 plans, at such times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability and other market conditions. The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.
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 quarterly cash dividend; our stock repurchase program; our commitment to return capital to stockholders and maximize stockholder returns; and our long-term outlook.
The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: 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
Exhibit 99.2
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; the impact of recently enacted and potential future tariffs; the continuing impact of the COVID-19 pandemic on our business, supply chain and consumer demand; and our ability to mitigate impacts and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K, our quarterly reports on Form 10-Q and our 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 the world’s largest digital-first, design-led and sustainable home retailer. The company’s products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, and Mark and Graham — are marketed through e-commerce websites, direct-mail catalogs and retail stores. These brands are also part of The Key Rewards, our free-to-join loyalty program that offers members exclusive benefits across the Williams-Sonoma family of brands. We operate in the U.S., Puerto Rico, Canada, Australia and the United Kingdom, offer international shipping to customers worldwide, and have unaffiliated franchisees that operate stores in the Middle East, the Philippines, Mexico, South Korea and India, as well as e-commerce websites in certain locations. We are also proud to lead the industry with our Environmental, Social and Governance (“ESG”) efforts. Our company is Good By Design — we’ve deeply engrained sustainability into our business. From our factories to your home, we’re united in a shared purpose to care for our people and our planet.
For more information on our ESG efforts, please visit: https://sustainability.williams-sonomainc.com/
WSM-DIV
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