Williams Sonoma Inc 8-K, filed Aug 23, 2023

Williams Sonoma Inc (WSM)

8-K 2023-08-23 For: 2023-08-23

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Added on April 04, 2026

About this 8-K

Williams Sonoma Inc filed this 8-K on August 23, 2023.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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Delaware	001-14077	94-2203880
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


(d)						List of Exhibits:

99.1						Press Release dated August 23, 2023 titled Williams-Sonoma, Inc. announces second quarter 2023 results; Q2 comparable brand revenue -11.9%; Operating margin of 14.6%; Diluted EPS of $3.12; Revises 2023 outlook with lower revenues offset by higher operating margin

104						Cover Page Interactive Data File (embedded within the Inline XBRL document).


		WILLIAMS-SONOMA, INC.

Date: August 23, 2023	By:	/s/ Jeffrey E. Howie
		Jeffrey E. Howie
		Chief Financial Officer


	For the Thirteen Weeks Ended								For the Twenty-six Weeks Ended
	July 30, 2023				July 31, 2022				July 30, 2023				July 31, 2022
(In thousands, except per share amounts)	$		% of Revenues		$		% of Revenues		$		% of Revenues		$		% of Revenues

Net revenues	$	1,862,614	100.0	%	$	2,137,537	100.0	%	$	3,618,065	100.0	%	$	4,028,764	100.0	%
Cost of goods sold	1,105,047		59.3		1,208,728		56.5		2,185,439		60.4		2,271,407		56.4
Gross profit	757,567		40.7		928,809		43.5		1,432,626		39.6		1,757,357		43.6
Selling, general and administrative expenses	486,019		26.1		563,288		26.4		961,601		26.6		1,068,355		26.5
Operating income	271,548		14.6		365,521		17.1		471,025		13.0		689,002		17.1
Interest expense (income), net	(3,335)		(0.2)		(344)		—		(8,833)		(0.3)		(507)		—
Earnings before income taxes	274,883		14.8		365,865		17.1		479,858		13.3		689,509		17.1
Income taxes	73,376		3.9		98,790		4.6		121,820		3.4		168,321		4.2
Net earnings	$	201,507	10.8	%	$	267,075	12.5	%	$	358,038	9.9	%	$	521,188	12.9	%
Earnings per share (EPS):
Basic	$	3.14			$	3.92			$	5.51			$	7.50
Diluted	$	3.12			$	3.87			$	5.46			$	7.36
Shares used in calculation of EPS:
Basic	64,163				68,180				65,006				69,516
Diluted	64,526				69,081				65,586				70,844


2nd Quarter Net Revenues and Comparable Brand Revenue Growth (Decline)1

	Net Revenues				Comparable Brand Revenue Growth (Decline)
(In millions, except percentages)	Q2 23		Q2 22		Q2 23		Q2 22
Pottery Barn	$	786	$	879	(10.6)	%	21.5	%
West Elm	484		608		(20.8)		6.1
Williams Sonoma	245		249		(0.7)		0.5
Pottery Barn Kids and Teen	256		284		(9.0)		5.3


Other2	92		118		N/A		N/A
Total	$	1,863	$	2,138	(11.9)	%	11.3	%
1See the Company’s 10-K and 10-Q for the definition of comparable brand revenue, which is calculated on a 13-week basis, and includes business-to-business revenues.

2Primarily consists of net revenues from Rejuvenation, our international franchise operations, and Mark and Graham.


	As of
(In thousands, except per share amounts)	July 30, 2023		January 29, 2023		July 31, 2022
Assets
Current assets
Cash and cash equivalents	$	514,435	$	367,344	$	124,944
Accounts receivable, net	117,045		115,685		133,500
Merchandise inventories, net	1,300,838		1,456,123		1,542,428
Prepaid expenses	73,521		64,961		102,312
Other current assets	26,293		31,967		25,537
Total current assets	2,032,132		2,036,080		1,928,721
Property and equipment, net	1,036,407		1,065,381		973,676
Operating lease right-of-use assets	1,232,925		1,286,452		1,174,354
Deferred income taxes, net	73,610		81,389		52,897
Goodwill	77,322		77,307		85,269
Other long-term assets, net	119,415		116,407		104,257
Total assets	$	4,571,811	$	4,663,016	$	4,319,174
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	597,104	$	508,321	$	680,097
Accrued expenses	184,996		247,594		244,559
Gift card and other deferred revenue	435,369		479,229		498,354
Income taxes payable	127,581		61,204		87,159


Operating lease liabilities	222,155		231,965		206,931
Other current liabilities	96,645		108,138		93,945
Total current liabilities	1,663,850		1,636,451		1,811,045


Long-term operating lease liabilities	1,168,221		1,211,693		1,115,501
Other long-term liabilities	118,785		113,821		114,349
Total liabilities	2,950,856		2,961,965		3,040,895
Stockholders' equity
Preferred stock: $0.01 par value; 7,500 shares authorized, none issued	—		—		—
Common stock: $0.01 par value; 253,125 shares authorized; 64,145, 66,226, and 67,057 shares issued and outstanding at July 30, 2023, January 29, 2023 and July 31, 2022, respectively	642		663		671
Additional paid-in capital	551,507		573,117		541,895
Retained earnings	1,084,772		1,141,819		750,083
Accumulated other comprehensive loss	(14,540)		(13,809)		(13,631)
Treasury stock, at cost	(1,426)		(739)		(739)
Total stockholders' equity	1,620,955		1,701,051		1,278,279
Total liabilities and stockholders' equity	$	4,571,811	$	4,663,016	$	4,319,174


Retail Store Data (unaudited)

	Beginning of quarter			End of quarter	As of
	April 30, 2023	Openings	Closings	July 30, 2023	July 31, 2022
Pottery Barn	188	3	(1)	190	189
Williams Sonoma	165	—	(1)	164	175
West Elm	123	1	(1)	123	121
Pottery Barn Kids	46	—	—	46	52
Rejuvenation	9	—	—	9	9
Total	531	4	(3)	532	546


	For the Twenty-six Weeks Ended
(In thousands)	July 30, 2023		July 31, 2022
Cash flows from operating activities:
Net earnings	$	358,038	$	521,188
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	110,843		102,455
Loss on disposal/impairment of assets	14,185		5,413

Non-cash lease expense	126,981		110,511
Deferred income taxes	(3,841)		(7,636)
Tax benefit related to stock-based awards	12,334		10,828
Stock-based compensation expense	44,159		51,743
Other	(1,647)		(1,481)
Changes in:
Accounts receivable	(1,502)		(1,985)
Merchandise inventories	154,712		(295,458)
Prepaid expenses and other assets	(6,615)		(30,585)
Accounts payable	87,840		59,404
Accrued expenses and other liabilities	(67,955)		(78,895)
Gift card and other deferred revenue	(43,699)		50,503
Operating lease liabilities	(135,206)		(120,036)
Income taxes payable	66,358		7,623
Net cash provided by operating activities	714,985		383,592
Cash flows from investing activities:
Purchases of property and equipment	(92,880)		(148,548)
Other	211		86
Net cash used in investing activities	(92,669)		(148,462)
Cash flows from financing activities:
Repurchases of common stock	(310,000)		(766,424)
Payment of dividends	(116,643)		(112,674)
Tax withholdings related to stock-based awards	(49,950)		(79,275)




Net cash used in financing activities	(476,593)		(958,373)
Effect of exchange rates on cash and cash equivalents	1,368		(2,151)
Net increase (decrease) in cash and cash equivalents	147,091		(725,394)
Cash and cash equivalents at beginning of period	367,344		850,338
Cash and cash equivalents at end of period	$	514,435	$	124,944


2nd Quarter GAAP to Non-GAAP Reconciliation (unaudited)

	For the Thirteen Weeks Ended								For the Twenty-six Weeks Ended
	July 30, 2023				July 31, 2022				July 30, 2023				July 31, 2022
(In thousands, except per share data)	$		% of revenues		$		% of revenues		$		% of revenues		$		% of revenues
Occupancy costs	$	203,259	10.9	%	$	192,964	9.0	%	$	405,871	11.2	%	$	379,370	9.4	%
Exit Costs1	—				—				(239)				—
Non-GAAP occupancy costs	$	203,259	10.9	%	$	192,964	9.0	%	$	405,632	11.2	%	$	379,370	9.4	%


Gross profit	$	757,567	40.7	%	$	928,809	43.5	%	$	1,432,626	39.6	%	$	1,757,357	43.6	%


Exit Costs1	—				—				$	2,141			—

Non-GAAP gross profit	$	757,567	40.7	%	$	928,809	43.5	%	$	1,434,767	39.7	%	$	1,757,357	43.6	%



Selling, general and administrative expenses	$	486,019	26.1	%	$	563,288	26.4	%	$	961,601	26.6	%	$	1,068,355	26.5	%


Exit Costs1	—				—				(15,790)				—
Reduction-in-force Initiatives2	—				—				(8,316)				—

Non-GAAP selling, general and administrative expenses	$	486,019	26.1	%	$	563,288	26.4	%	$	937,495	25.9	%	$	1,068,355	26.5	%




Operating income	$	271,548	14.6	%	$	365,521	17.1	%	$	471,025	13.0	%	$	689,002	17.1	%



Exit Costs1	—				—				17,931				—
Reduction-in-force Initiatives2	—				—				8,316				—

Non-GAAP operating income	$	271,548	14.6	%	$	365,521	17.1	%	$	497,272	13.7	%	$	689,002	17.1	%


	$		Tax rate		$		Tax rate		$		Tax rate		$		Tax rate
Income taxes	$	73,376	26.7	%	$	98,790	27.0	%	$	121,820	25.4	%	$	168,321	24.4	%



Exit Costs1	—				—				4,690				—
Reduction-in-force Initiatives2	—				—				2,174				—



Non-GAAP income taxes	$	73,376	26.7	%	$	98,790	27.0	%	$	128,684	25.4	%	$	168,321	24.4	%



Diluted EPS	$	3.12			$	3.87			$	5.46			$	7.36



Exit Costs1	—				—				0.20				—
Reduction-in-force Initiatives2	—				—				0.09				—


Non-GAAP diluted EPS3	$	3.12			$	3.87			$	5.75			$	7.36
1During Q1 2023, we incurred exit costs of $17.9 million, including $9.3 million associated with the closure of our West Coast manufacturing facility and $8.6 million associated with the exiting of Aperture, a division of our Outward, Inc. subsidiary.
2During Q1 2023, we incurred costs related to reduction-in-force initiatives of $8.3 million primarily in our corporate functions.
3Per share amounts may not sum due to rounding to the nearest cent per diluted share.