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Williams-Sonoma Annual Report, Year Ended Jan 29, 2006

Filing Date
Filed April 7, 2006
Period End
January 29, 2006
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 7, 2006. Cited figures are marked; the original filing is the authoritative source.

Williams-Sonoma, Inc. reported net revenues of $3.54 billiona for the fiscal year ended January 29, 2006, up 12.8% from $3.14 billion in fiscal 2004.

Net earnings rose to $214.9 millionb, or $1.81 per diluted share, compared with $191.2 million, or $1.60 per diluted share, the prior year. Retail revenues were $2.03 billion (57.4% of net revenues) and direct-to-customer revenues were $1.51 billion (42.6%). Comparable store sales grew 4.9%, and gross margin was 40.6% of net revenues, compared with 40.5% the prior year.

The company's results include a pre-tax charge of approximately $13.5 millionc ($0.07 per diluted share) from its decision in January 2006 to transition the Hold Everything brand into its other existing brands by the end of fiscal 2006, with an additional after-tax charge of $0.03 per diluted share expected in the first half of fiscal 2006. Operating cash flow was $348.4 million, and capital expenditures were $151.8 million. Cash and cash equivalents stood at $361.0 million at year-end, with no borrowings under a $300 million credit facility.

Looking ahead, the company declared its first-ever quarterly cash dividend of $0.10d per share, payable May 24, 2006, and authorized a new repurchase program of up to 2,000,000 shares. The filing also flags an expected negative impact of about 10% on fiscal 2006 diluted earnings per share from adopting SFAS No. 123R, and it plans to open 28 new stores in fiscal 2006 while implementing a new retail inventory management system.

02—Key points

Key Highlights

  1. Net revenues rose 12.8% to $3.54 billion in fiscal 2005, driven by an 8.6% increase in store leased square footage and comparable store sales growth of 4.9%.
  2. Diluted EPS increased 13.1% to $1.81 from $1.60, including a $0.07 per share charge tied to the Hold Everything brand transition.
  3. Internet revenues increased 36.5% during fiscal 2005, and the direct-to-customer channel grew 13.6% to $1.51 billion.
  4. The company will initiate its first quarterly cash dividend of $0.10 per share in May 2006, an indicated annual dividend of $0.40 per share, or about $46 million for fiscal 2006.
  5. A new share repurchase authorization of up to 2,000,000 shares was approved in March 2006.
  6. Management expects adoption of SFAS No. 123R to reduce fiscal 2006 diluted EPS by approximately $0.19, and the effective tax rate for fiscal 2006 is expected to be 38.6% to 38.8%.
  7. Year-end cash of $361.0 million and no borrowings under the $300 million credit facility, with capital expenditures planned at $170 million to $190 million for fiscal 2006.

03—Questions

Frequently Asked Questions

  1. How did Williams-Sonoma perform in fiscal 2005?

    Net revenues increased 12.8% to $3,538,947,000, and net earnings rose to $214,866,000, or $1.81 per diluted share, up from $1.60 in fiscal 2004. Retail revenues grew 12.3% and direct-to-customer revenues grew 13.6%.

  2. What was the one-time charge related to Hold Everything?

    In January 2006, the company decided to transition the Hold Everything brand's merchandising strategies into its other existing brands by the end of fiscal 2006. It recorded a pre-tax charge of approximately $13.5 million, or $0.07 per diluted share, in the fourth quarter of fiscal 2005, and expects an additional after-tax charge of $0.03 per diluted share in the first half of fiscal 2006.

  3. Is Williams-Sonoma starting to pay dividends?

    Yes. The Board authorized the initiation of a quarterly cash dividend of $0.10 per common share, payable May 24, 2006, to shareholders of record on April 26, 2006. The indicated annual cash dividend is $0.40 per share, or approximately $46 million in fiscal 2006.

  4. What are the main risks to the company's outlook?

    Key risks cited include the ability to anticipate consumer preferences and manage inventory, dependence on foreign vendors (about 63% of merchandise purchases were foreign-sourced), the success of new store openings, the cost of catalog mailings and paper, and the impact of new accounting rules. SFAS No. 123R is expected to reduce fiscal 2006 diluted EPS by approximately $0.19.

  5. How strong is the company's balance sheet and liquidity?

    At January 29, 2006, the company held $360,982,000 in cash and cash equivalents and had a $300,000,000 credit facility with no amounts borrowed in fiscal 2005 or fiscal 2004. Total shareholders' equity was $1,125,318,000, and debt-to-equity was 3.0%. Operating cash flow was $348,373,000 in fiscal 2005.

04—Continue

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