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Williams-Sonoma Annual Report, Year Ended Jan 30, 2005

Filing Date
Filed April 15, 2005
Period End
January 30, 2005
Security
WSM
In the record · 2016–202610-K1110-Q328-K84

WSM filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 84 current reports (8-K) between 2016 and 2026.

  1. FY2017 annual report10-K · Mar ’17Mar ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Aug ’21Aug ’21
  4. Material agreement8-K · Jun ’25Jun ’25

01—Abstract

Summary

Summary of the 10-K filed April 15, 2005. Cited figures are marked; the original filing is the authoritative source.

Williams-Sonoma, Inc. reported fiscal 2004 (52 weeks ended January 30, 2005) net revenues of $3.14 billiona, up 13.9% from $2.75 billion in fiscal 2003, with diluted earnings per share rising 21.2% to $1.60 and net earnings of $191.2 million.

Retail net revenues grew 11.6%b and direct-to-customer net revenues grew 17.1%, with the emerging brands PBteen, West Elm, Hold Everything and Williams-Sonoma Home contributing. Pre-tax operating margin improved to 9.9% from 9.3%, driven by lower shipping costs as a percentage of revenues, reduced telecommunication expenses, and lower corporate overhead. Comparable store sales rose 3.5%, and the company ended the year with 552 stores.

Management highlighted that Pottery Barn sales were weaker than expected in the fourth-quarter holiday season, and that Williams-Sonoma Home sales came in at the low end of expectations. Management set three long-term milestones: surpassing $3.5 billionc in revenues, achieving a 10.0% pre-tax operating margin, and delivering the highest diluted EPS in company history. The company plans 28 new stores and 10 remodels in fiscal 2005, with capital expenditures of $160 million to $180 million.

Cash rose to $239.2 milliond, and the company has never declared or paid a cash dividend. Shares repurchased in fiscal 2004 totaled $79.3 million.

The filing also discloses a purported class action (Alvarez) alleging misclassification of California store managers, whose financial impact cannot yet be predicted. In addition, the company replaced its $200 million credit facility with a $300 million unsecured revolving line on February 22, 2005, and it restated its lease accounting for rent holidays, increasing property and equipment and deferred rent by approximately $17.4 million each, with no impact on earnings.

02—Key points

Key Highlights

  1. Net revenues rose 13.9% to $3.14 billion; retail revenues grew 11.6% and direct-to-customer revenues grew 17.1%.
  2. Diluted EPS increased 21.2% to $1.60, and net earnings reached $191.2 million.
  3. Pre-tax operating margin expanded to 9.9% from 9.3%, aided by lower shipping costs and reduced telecom and overhead expenses.
  4. Comparable store sales increased 3.5%, and Internet sales grew 43.4% to $477.5 million.
  5. Emerging brands grew strongly: PBteen net sales rose 97.8% and West Elm net sales rose 75.9%, while Williams-Sonoma Home launched at the low end of expectations.
  6. Management set long-term targets of surpassing $3.5 billion in revenue and a 10.0% pre-tax operating margin.
  7. A new $300 million unsecured revolving credit facility replaced the $200 million facility in February 2005.

03—Questions

Frequently Asked Questions

  1. How did Williams-Sonoma perform financially in fiscal 2004?

    Net revenues reached $3,136.9 million, up 13.9% from $2,754.4 million. Net earnings were $191.2 million, and diluted EPS was $1.60, up from $1.32 in fiscal 2003. Gross margin was 40.5% of net revenues.

  2. What drove growth across the company's channels?

    Retail revenues rose 11.6%, driven by a 11.4% increase in leased square footage and 3.5% comparable store sales growth. Direct-to-customer revenues rose 17.1%, supported by a 12.1% increase in catalogs circulated and a 19.5% increase in pages circulated, along with e-commerce growth.

  3. What are the main risks disclosed in the filing?

    The filing discusses dependence on consumer spending, reliance on foreign vendors (about 62% of purchases were foreign-sourced), competition, new store openings, systems changes, and the risk of business method patent lawsuits. It also describes a pending California wage-and-hour class action whose financial impact cannot yet be predicted.

  4. What is the company's capital allocation and liquidity position?

    The company held $239.2 million in cash at year-end and repurchased $79.3 million of stock in fiscal 2004, with 442,300 shares remaining under the current authorization. It has never paid a cash dividend. Planned fiscal 2005 capital expenditures are $160 million to $180 million.

  5. What does management expect for fiscal 2005?

    Management plans 28 new stores and 10 remodeled stores, expects an effective tax rate of 38.1% to 38.5%, and plans a daily store replenishment test that it estimates will cost about $0.01 per share in 2005. It is also targeting revenues above $3.5 billion and a 10.0% pre-tax operating margin.

04—Continue

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