01—Abstract
Summary
Summary of the 10-K filed March 30, 2021. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported fiscal 2020 (52 weeks ended January 31, 2021) net revenues of $6.78 billiona, up from $5.90 billion in fiscal 2019, an increase of 15.0%.
Comparable brand revenue grew 17.0%b, with double-digit comparable brand revenue growth across all brands. Growth was driven primarily by e-commerce revenues, which rose approximately 44%, partly offset by lower retail revenues from limited store capacity and reduced store traffic due to COVID-19. The filing states that e-commerce represented more than 70% of net revenues and profits in fiscal 2020.
Profitability improved significantly. Gross margin rose to 38.9% from 36.3%, and operating income reached $910.7 millionc, an operating margin of 13.4% versus 7.9% a year earlier. Net earnings were $680.7 million, and diluted earnings per share were $8.61, compared with $4.49.
The filing attributes the gross margin gain mainly to higher merchandise margins from reduced promotional activity and to occupancy leverage. Net cash provided by operating activities was $1.27 billiond, compared with $607.3 million in fiscal 2019. The balance sheet strengthened.
Cash and cash equivalents were $1.20 billion at year-end, up from $432.2 million, and no amount was outstanding under the revolving line of credit. The filing reports a $300 million term loan, which was repaid in full in February 2021.
In March 2021, the Board raised the quarterly dividend to $0.59 from $0.53 and authorized a new $1.0 billion share repurchase program. Store count fell to 581 from 614 as the company closed 43 stores and opened 10, and the filing notes ongoing COVID-19 uncertainty and possible future store impairments.
02—Key points
Key Highlights
- Net revenues of $6,783,189 thousand in fiscal 2020, up 15.0% from $5,898,008 thousand, with comparable brand revenue growth of 17.0%.
- Gross margin expanded to 38.9% from 36.3%, and operating margin rose to 13.4% from 7.9%, with operating income of $910,697 thousand.
- Net earnings of $680,714 thousand and diluted earnings per share of $8.61, versus $4.49 in fiscal 2019.
- E-commerce revenues increased approximately 44% and represented more than 70% of net revenues and profits in fiscal 2020.
- Net cash provided by operating activities of $1,274,848 thousand, more than double the prior year, and cash of $1,200,337 thousand with no revolver borrowings outstanding at year-end.
- Quarterly dividend increased to $0.59 per share from $0.53, and a new $1,000,000,000 share repurchase authorization was approved in March 2021.
- Store count reduced to 581 from 614 after 43 closings and 10 openings, with retail stores comprising approximately 30% of net revenues in fiscal 2020.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Williams-Sonoma kept $0.10.
- Revenue$6.78B100.0%
- Cost of revenue−$4.15B61.1%
- Gross profit$2.64B38.9%
- Operating costs−$1.73B25.4%
- Operating income$910.7M13.4%
- Interest, other & tax−$230.0M3.4%
- Net income$680.7M10.0%
Where FY2021 revenue went
$6.78B- Cost of revenue: $4.15B, 61% of revenue
- SG&A: $1.73B, 25% of revenue
- Net income: $680.7M, 10% of revenue
- Interest, other & tax: $230.0M, 3.4% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed March 30, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $6.78B$5.90B | +15.0% |
| Gross Profit | $2.64B$2.14B | +23.2% |
| SG&A Expenses | $1.73B$1.67B | +3.1% |
| Operating Income | $910.70M$465.87M | +95.5% |
| Net Income | $680.71M$356.06M | +91.2% |
| EPS (Basic) | $8.81$4.56 | +93.2% |
| EPS (Diluted) | $8.61$4.49 | +91.8% |
| Shares Outstanding (Basic) | 77.26M78.11M | −1.1% |
| Shares Outstanding (Diluted) | 79.06M79.22M | −0.2% |
05—Questions
Frequently Asked Questions
What drove Williams-Sonoma's revenue growth in fiscal 2020?
Net revenues rose 15.0% to $6.78 billion, with comparable brand revenue growth of 17.0%. The filing says the growth was primarily driven by an increase of approximately 44% in e-commerce revenues, due both to higher demand and a larger share of revenue from furniture, which has a higher average selling price. Retail revenues declined because of limited store capacity and reduced store traffic from COVID-19.
How did profitability change?
Gross margin increased to 38.9% from 36.3%, and operating margin increased to 13.4% from 7.9%. Operating income was $910.7 million, and diluted EPS was $8.61 versus $4.49. The filing attributes the gross margin improvement mainly to higher merchandise margins from reduced promotional activity and occupancy expense leverage, partly offset by higher shipping costs and inventory write-offs. Store asset impairment charges of approximately $27,069,000 were recorded in selling, general and administrative expenses.
How strong is the company's liquidity and balance sheet?
Cash and cash equivalents were $1,200,337 thousand at January 31, 2021, up from $432,162 thousand a year earlier. The company ended the year with no amount outstanding under its line of credit. A $300 million term loan was outstanding at year-end and was repaid in full in February 2021 before maturity. Total stockholders' equity increased to $1,651,185 thousand from $1,235,860 thousand.
What are the company's capital return plans?
The company returned approximately $307,645,000 to shareholders through dividends and share repurchases in fiscal 2020, and repurchased 1,496,100 shares for a total cost of $150,000,000. In March 2021, the Board approved a $1,000,000,000 repurchase authorization that replaced the remaining $424,982,000 under the prior program. The quarterly dividend was increased by $0.06, or 11.3%, to $0.59 per share, subject to capital availability.
What risks does the filing highlight for investors?
The filing highlights COVID-19 as the most significant ongoing risk, including the possibility of further store closures, store impairments, and supply disruptions such as shipping container shortages and port congestion. It also notes that about 65% of merchandise purchases in fiscal 2020 were sourced from foreign vendors, that tariffs on items sourced from China could increase costs, and that competition and changing consumer preferences could affect sales.
06—Continue