01—Abstract
Summary
Summary of the 10-K filed March 30, 2017. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported net revenues of $5.08 billiona for fiscal 2016 (52 weeks ended January 29, 2017), up $107,722,000 or 2.2% from fiscal 2015, with comparable brand revenue growth of 0.7%.
E-commerce net revenues rose 4.4% to $2.63 billionb and now represent 51.8% of net revenues, while retail net revenues declined 0.1% to $2.45 billion. Gross margin was 37.0% versus 37.1% a year earlier, and operating income fell to $472.6 million from $488.6 million, with operating margin of 9.3% compared with 9.8%. Severance-related reorganization charges of approximately $14.4 million weighed on fiscal 2016 SG&A.
Diluted earnings per share rose to $3.41c from $3.37, and net earnings were $305.4 million. Pottery Barn, the largest brand at $2.02 billion in net revenues, saw comparable brand revenues decline 3.5%, while West Elm grew comparable brand revenues 12.8% to $971.6 million in net revenues. The company returned $284.8 million to stockholders through repurchases and dividends, and at year-end held $213.7 million in cash and $410.6 million of remaining repurchase authorization under its $500 million program.
In March 2017 the board authorized a dividend increase from $0.37 to $0.39d per quarter. Management plans to drive fiscal 2017 growth through innovation and operational excellence, including digital advertising investment, point-of-sale technology, and optimizing top-performing stores while closing underperforming ones. The filing states that cash on hand and available credit facilities will provide adequate liquidity for the next 12 months, and the company reported 629 stores at year-end.
02—Key points
Key Highlights
- Net revenues of $5,083,812 thousand in fiscal 2016, up 2.2% from $4,976,090 thousand in fiscal 2015.
- E-commerce net revenues grew 4.4% to $2,633,602 thousand and made up 51.8% of net revenues; retail net revenues declined 0.1% to $2,450,210 thousand.
- Operating income declined to $472,599 thousand (9.3% operating margin) from $488,634 thousand (9.8%), with approximately $14.4 million of severance-related reorganization charges.
- Diluted EPS increased to $3.41 from $3.37; net earnings were $305,387 thousand.
- Pottery Barn comparable brand revenues declined 3.5%, while West Elm comparable brand revenues increased 12.8% and West Elm net revenues reached $971,568 thousand.
- Stockholders received $284,811 thousand through share repurchases and dividends; $410,578 thousand remained under the $500 million repurchase program at year-end.
- Quarterly dividend to be increased from $0.37 to $0.39 per share, announced in March 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Williams-Sonoma kept $0.06.
- Revenue$5.08B100.0%
- Cost of revenue−$3.20B63.0%
- Gross profit$1.88B37.0%
- Operating costs−$1.41B27.7%
- Operating income$472.6M9.3%
- Interest, other & tax−$167.2M3.3%
- Net income$305.4M6.0%
Where FY2017 revenue went
$5.08B- Cost of revenue: $3.20B, 63% of revenue
- SG&A: $1.41B, 28% of revenue
- Net income: $305.4M, 6.0% of revenue
- Interest, other & tax: $167.2M, 3.3% of revenue
Kept 6.0% as net incomeNet income $305.4M · 6.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed March 30, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $5.08B$4.98B | +2.2% |
| Gross Profit | $1.88B$1.84B | +2.1% |
| SG&A Expenses | $1.41B$1.36B | +4.1% |
| Operating Income | $472.60M$488.63M | −3.3% |
| Net Income | $305.39M$310.07M | −1.5% |
| EPS (Basic) | $3.45$3.42 | +0.9% |
| EPS (Diluted) | $3.41$3.37 | +1.2% |
| Shares Outstanding (Basic) | 88.59M90.79M | −2.4% |
| Shares Outstanding (Diluted) | 89.46M92.10M | −2.9% |
05—Questions
Frequently Asked Questions
How did Williams-Sonoma perform in fiscal 2016?
Net revenues rose 2.2% to $5.08 billion, with comparable brand revenue growth of 0.7%. Diluted EPS increased to $3.41 from $3.37, though operating income declined to $472.6 million from $488.6 million.
Which channel drove growth in fiscal 2016?
E-commerce net revenues increased 4.4% to $2.63 billion, primarily driven by West Elm, Williams Sonoma and Rejuvenation, with particular strength in furniture. Retail net revenues declined 0.1% to $2.45 billion, primarily in Pottery Barn and Williams Sonoma.
Which brands are performing well and which are struggling?
West Elm comparable brand revenues increased 12.8% on top of a 14.8% gain in fiscal 2015. Pottery Barn, the largest brand, saw comparable brand revenues decline 3.5%, and PBteen declined 6.2%. Rejuvenation and Mark and Graham net revenues increased 26.6%.
How much did the company return to shareholders and what is its capital position?
The company returned $284.8 million through repurchases and dividends in fiscal 2016. It held $213.7 million in cash and cash equivalents at year-end, had no borrowings outstanding under its $500 million credit facility, and stated its cash and credit facilities will provide adequate liquidity over the next 12 months.
What is management's strategy for fiscal 2017?
Management plans to drive growth through innovation and operational excellence, including investment in digital and online advertising, point-of-sale technology, and product innovation in Pottery Barn Kids, PBteen and Williams Sonoma. It also plans to optimize top-performing stores while closing underperforming stores.
06—Continue