01—Abstract
Summary
Summary of the 10-K filed May 1, 2000. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported net sales of $1,383,993 thousanda (about $1.38 billion) for the fiscal year ended January 30, 2000 (fiscal 1999), an increase of $280,039,000 (25.4%) over fiscal 1998.
Net earnings were $68,100 thousandb ($1.16 diluted earnings per share), compared with $54,897 thousand ($0.96 diluted) in the prior year. Retail sales rose 20.7% to $869,078 thousand, and direct-to-customer sales rose 34.2% to $514,915 thousand, with Pottery Barn and Pottery Barn Kids cited as the main drivers. Comparable store sales grew 6.4%, and the company ended the year with 344 stores.
The company's balance sheet expanded substantially. Total assets rose to $738,942 thousandc from $576,245 thousand, and merchandise inventories increased to $257,342 thousand from $173,160 thousand. Management stated that year-end inventory levels were above its expectations and anticipated they would be back in line with forecasted sales in the second half of fiscal 2000.
Shareholders' equity increased to $383,309 thousandd, and the company has never paid a cash dividend. Long-term debt was $40,453 thousand, and there were no borrowings outstanding under the line of credit at year end. Looking ahead, the company planned gross capital expenditures of approximately $230,000,000 for fiscal 2000, including about $75,000,000 for a new corporate headquarters building (purchased in February 2000 for $80,000,000).
It also entered into a lease for a second 1,100,000 square-foot distribution facility in Olive Branch, Mississippi, and expects to replace its line of credit arrangements with a long-term agreement by the end of the third quarter of fiscal 2000. In March 2000, the company repurchased 825,000 shares for approximately $18,500,000.
02—Key points
Key Highlights
- Net sales of $1,383,993 thousand, up 25.4% from $1,103,954 thousand in fiscal 1998.
- Net earnings of $68,100 thousand, or $1.16 per diluted share, versus $54,897 thousand, or $0.96 per diluted share, the prior year.
- Direct-to-customer sales rose 34.2% to $514,915 thousand; retail sales rose 20.7% to $869,078 thousand.
- Comparable store sales grew 6.4%; the company operated 344 stores in 39 states and the District of Columbia at year end.
- Merchandise inventories rose to $257,342 thousand from $173,160 thousand, which management said were above expectations at year end.
- Planned fiscal 2000 gross capital expenditures of approximately $230,000,000, including about $75,000,000 for a new corporate headquarters building.
- In March 2000, the company repurchased 825,000 shares of common stock for approximately $18,500,000.
03—Questions
Frequently Asked Questions
How did Williams-Sonoma perform in fiscal 1999?
Net sales grew 25.4% to $1,383,993 thousand, and net earnings rose to $68,100 thousand from $54,897 thousand. Diluted earnings per share were $1.16 compared with $0.96 in fiscal 1998. Gross margin was $571,027 thousand, and the company also recorded a $3,962 thousand pre-tax gain from selling the Gardeners Eden catalog.
What drove the growth in sales?
Retail sales grew 20.7%, primarily from new store openings, and the company opened 58 stores during the year. Direct-to-customer sales grew 34.2%, mainly due to the strength of Pottery Barn, and Pottery Barn Kids sales were more than double the company's original plan. Internet sales were $9,948 thousand from the Williams-Sonoma wedding registry and e-commerce sites.
Does the company pay dividends, and how is it financed?
The company has never declared or paid a cash dividend and is prohibited from doing so under its bank credit agreement and limited under its 7.2% Senior Note agreement. At year end it had no borrowings under its line of credit and $39,361 thousand in outstanding letters of credit. Long-term debt and other liabilities totaled $40,453 thousand, and shareholders' equity was $383,309 thousand.
What are the company's major commitments going forward?
The company planned gross capital expenditures of about $230,000,000 for fiscal 2000, including about $75,000,000 for a new corporate headquarters building and $80,000,000 for stores. It also leased a second 1,100,000 square-foot distribution facility in Olive Branch, Mississippi, with estimated average annual rent of $4,500,000 during the primary term. The company expects to replace its line of credit arrangements with a long-term agreement by the end of the third quarter of fiscal 2000.
What risks did management identify in the filing?
Management noted that year-end merchandise inventory was above its expectations and expected inventory to return in line with forecasted sales in the second half of fiscal 2000. The filing also cites the company's dependence on foreign suppliers, with approximately 49.4% of merchandise payments going to foreign vendors, along with competition in specialty retail and changes in consumer spending. Interest rate risk is described as not materially affecting results, and the company states it does not use derivatives for trading.
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