01—Abstract
Summary
Summary of the 10-K filed March 31, 2011. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported record fiscal 2010 results for the 52 weeks ended January 30, 2011.
Net revenues rose 12.9% to $3,504,158 thousanda from $3,102,704 thousand, and diluted earnings per share increased to $1.83 from $0.72. Gross margin was 39.2% of net revenues versus 35.6% a year earlier, and earnings before income taxes reached $323,060 thousand, compared with $120,289 thousand. Net earnings were $200,227 thousand.
Growth was led by the Internet channel, where revenues grew 26.9%b, and by comparable store sales, which rose 9.8%. Direct-to-customer revenues were 41.5% of net revenues and retail revenues were 58.5%. The company closed all stand-alone Williams-Sonoma Home retail stores and is shifting that merchandise into the Williams-Sonoma kitchen brand.
It operated 592 stores at year-end, down from 610, and it opened its first franchised stores in the Middle East through M.H. Alshaya. Management guided to fiscal 2011 net revenue growth of 4% to 6%, diluted EPS growth of 15% to 19%, capital spending of $135,000 thousand to $150,000 thousandc, and roughly $200,000 thousand returned to shareholders through dividends and buybacks.
The company also raised its quarterly dividend from $0.15 to $0.17d per share in March 2011. Cash and cash equivalents ended the year at $628,403 thousand, and the company had no borrowings under its $300,000 thousand revolving credit facility. Operating cash flow was $355,989 thousand.
During fiscal 2010 the company repurchased $125,000 thousand of stock, and it authorized a new $125,000 thousand repurchase program in January 2011. Deloitte & Touche LLP audited the financial statements, and management concluded internal control over financial reporting was effective.
02—Key points
Key Highlights
- Net revenues rose 12.9% to $3,504,158 thousand in fiscal 2010, and diluted EPS rose to $1.83 from $0.72.
- Internet revenues grew 26.9% and comparable store sales grew 9.8%, with Internet revenues reaching 82.4% of direct-to-customer revenues.
- Gross margin improved to 39.2% of net revenues from 35.6%, and pre-tax operating margin was 9.2% versus 3.9%.
- Ended the year with $628,403 thousand in cash and no borrowings under the $300,000 thousand credit facility.
- Closed all Williams-Sonoma Home stores and began franchising stores in the Middle East with M.H. Alshaya.
- Guided fiscal 2011 to net revenue growth of 4% to 6%, diluted EPS growth of 15% to 19%, and capital spending of $135,000 thousand to $150,000 thousand.
- Raised the quarterly dividend to $0.17 per share from $0.15 and authorized a new $125,000 thousand stock repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Williams-Sonoma kept $0.06.
- Revenue$3.50B100.0%
- Cost of revenue−$2.13B60.8%
- Gross profit$1.37B39.2%
- Operating costs−$1.05B30.0%
- Operating income$323.4M9.2%
- Interest, other & tax−$123.2M3.5%
- Net income$200.2M5.7%
Where FY2011 revenue went
$3.50B- Cost of revenue: $2.13B, 61% of revenue
- SG&A: $1.05B, 30% of revenue
- Net income: $200.2M, 5.7% of revenue
- Interest, other & tax: $123.2M, 3.5% of revenue
Kept 5.7% as net incomeNet income $200.2M · 5.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed March 31, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $3.50B$3.10B | +12.9% |
| Gross Profit | $1.37B$1.10B | +24.5% |
| SG&A Expenses | $1.05B$981.79M | +7.0% |
| Operating Income | $323.41M$121.44M | +166.3% |
| Net Income | $200.23M$77.44M | +158.6% |
| EPS (Basic) | $1.87$0.73 | +156.2% |
| EPS (Diluted) | $1.83$0.72 | +154.2% |
| Shares Outstanding (Basic) | 106.96M105.76M | +1.1% |
| Shares Outstanding (Diluted) | 109.52M107.37M | +2.0% |
05—Questions
Frequently Asked Questions
What drove the increase in fiscal 2010 revenue?
The filing attributes the 12.9% increase in net revenues mainly to 26.9% growth in Internet revenues, driven by increased Internet advertising, and to 9.8% growth in comparable store sales. These gains were partly offset by a 4.1% year-over-year reduction in retail leased square footage, including 18 net fewer stores.
How did profitability change?
Earnings before income taxes rose to $323,060 thousand from $120,289 thousand, and net earnings rose to $200,227 thousand from $77,442 thousand. Gross margin rose to 39.2% of net revenues from 35.6%, which the filing attributes to leverage of fixed occupancy costs, stronger selling margins, and lower occupancy expense dollars.
What is management's outlook for fiscal 2011?
Management expects net revenues to rise 4% to 6% and diluted EPS to rise 15% to 19%. It plans capital spending of $135,000 thousand to $150,000 thousand, an additional $25,000 thousand of SG&A investment, and returns of nearly $200,000 thousand to shareholders through dividends and repurchases. It expects the direct-to-customer segment to reach 43% of total revenues.
How strong is the balance sheet and how is cash being returned to shareholders?
The company held $628,403 thousand in cash and cash equivalents and had no borrowings under its $300,000 thousand unsecured revolving credit facility as of January 30, 2011. It repurchased $125,000 thousand of common stock in fiscal 2010, paid $59,160 thousand in dividends, and authorized a new $125,000 thousand repurchase program in January 2011. The quarterly dividend was raised to $0.17 per share in March 2011.
06—Continue