01—Abstract
Summary
Summary of the 10-K filed April 3, 2014. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported fiscal 2013 (52 weeks ended February 2, 2014) net revenues of $4,387,889,000,a up 8.5% from $4,042,870,000 in fiscal 2012, with comparable brand revenue growth of 8.8%.
Diluted earnings per share rose to $2.82b from $2.54, and net earnings were $278,902,000. Gross margin was 38.8% of net revenues, versus 39.4% in fiscal 2012, as cost of goods sold rose to 61.2% of net revenues from 60.6%, which the company attributed primarily to lower selling margins. Selling, general and administrative expenses were 28.5% of net revenues, down from 29.3%, driven by greater advertising efficiency.
Operating income was $452,098,000,c an operating margin of 10.3%. The direct-to-customer segment grew to $2,115,022,000 in net revenues (up 13.1%), with Pottery Barn, West Elm, Pottery Barn Kids and PBteen leading growth. Retail net revenues increased 4.6% to $2,272,867,000, and the company operated 585 stores at year-end.
Pottery Barn comparable brand revenues rose 10.4%, while West Elm grew 17.4% and PBteen 14.1%; Williams-Sonoma brand comparable revenues rose 1.5%. Management outlined four long-term strategies for fiscal 2014: strengthening brands, global expansion, supply chain investment and e-commerce investment. Capital returns were significant: the company returned $350,855,000d to stockholders through repurchases ($239,274,000) and dividends ($111,581,000 paid).
A $750,000,000 repurchase program was authorized in 2013 to be executed over three years, with $511,222,000 remaining at year-end. In March 2014 the quarterly dividend was raised 6%, from $0.31 to $0.33 per share. Cash and cash equivalents were $330,121,000, and the company had no borrowings under its $300,000,000 unsecured revolving credit facility.
02—Key points
Key Highlights
- Net revenues rose 8.5% to $4,387,889,000, with comparable brand revenue growth of 8.8%.
- Diluted EPS increased to $2.82 from $2.54; net earnings were $278,902,000.
- Direct-to-customer net revenues grew 13.1% to $2,115,022,000 and retail net revenues grew 4.6% to $2,272,867,000.
- Gross margin declined to 38.8% of net revenues from 39.4%, mainly due to lower selling margins; SG&A improved to 28.5% from 29.3%.
- Operating cash flow was $453,769,000, up from $364,127,000 in fiscal 2012; capital expenditures were $193,953,000.
- Returned $350,855,000 to stockholders via $239,274,000 in share repurchases and $111,581,000 in dividends paid; a $750,000,000 repurchase program runs over three years.
- Quarterly dividend increased 6% to $0.33 per share in March 2014; no borrowings were outstanding under the $300,000,000 credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Williams-Sonoma kept $0.06.
- Revenue$4.39B100.0%
- Cost of revenue−$2.68B61.2%
- Gross profit$1.70B38.8%
- Operating costs−$1.25B28.5%
- Operating income$452.1M10.3%
- Interest, other & tax−$173.2M3.9%
- Net income$278.9M6.4%
Where FY2014 revenue went
$4.39B- Cost of revenue: $2.68B, 61% of revenue
- SG&A: $1.25B, 29% of revenue
- Net income: $278.9M, 6.4% of revenue
- Interest, other & tax: $173.2M, 3.9% of revenue
Kept 6.4% as net incomeNet income $278.9M · 6.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed April 3, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $4.39B$4.04B | +8.5% |
| Gross Profit | $1.70B$1.59B | +7.0% |
| SG&A Expenses | $1.25B$1.18B | +5.8% |
| Operating Income | $452.10M$409.16M | +10.5% |
| Net Income | $278.90M$256.73M | +8.6% |
| EPS (Basic) | $2.89$2.59 | +11.6% |
| EPS (Diluted) | $2.82$2.54 | +11.0% |
| Shares Outstanding (Basic) | 96.67M99.27M | −2.6% |
| Shares Outstanding (Diluted) | 98.77M101.05M | −2.3% |
05—Questions
Frequently Asked Questions
How did Williams-Sonoma perform in fiscal 2013?
Net revenues increased 8.5% to $4,387,889,000, comparable brand revenue grew 8.8%, and diluted EPS rose to $2.82 from $2.54. Operating income was $452,098,000, or 10.3% of net revenues.
Which brands drove growth?
Pottery Barn was the largest brand with net revenues of $1,910,978,000 and comparable brand revenue growth of 10.4%. West Elm comparable brand revenues grew 17.4%, PBteen grew 14.1%, and Pottery Barn Kids grew 7.8%. The Williams-Sonoma brand's comparable brand revenues rose 1.5%.
How much did the company return to shareholders and what is remaining under the buyback?
The company returned $350,855,000 through stock repurchases and dividends. It repurchased 4,344,962 shares for $239,274,000 under a $750,000,000 program, leaving $511,222,000 available at fiscal year-end. In March 2014 the quarterly dividend was raised from $0.31 to $0.33 per share.
Is the company carrying debt or facing liquidity constraints?
No amounts were outstanding under the $300,000,000 unsecured revolving credit facility as of February 2, 2014. Cash and cash equivalents were $330,121,000, and the company stated that its cash on hand and credit facilities would provide adequate liquidity over the next 12 months. Total long-term debt was $3,753,000, consisting of Memphis-based distribution facilities bond-related debt.
What are the main risks highlighted in the filing?
Key risks include consumer spending declines, dependence on foreign vendors (approximately 64% of fiscal 2013 merchandise purchases were foreign-sourced from 50 countries), cybersecurity and e-commerce risks, expansion of global operations and franchise arrangements, and increasing competition. The company also noted reliance on two carriers for merchandise delivery and rising postal and paper costs for its catalog business.
06—Continue