01—Abstract
Summary
Summary of the 10-K filed March 20, 2024. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported fiscal 2023 (the 52 weeks ended January 28, 2024) with net revenues of $7.75 billiona, down $923.8 million, or 10.6%, from $8.67 billion in fiscal 2022.
Company comparable brand revenue declined 9.9%, driven by continuing customer hesitancy toward furniture purchases and the company's strategy to reduce promotional activity, partially offset by strength in certain non-furniture categories. Gross margin rose to 42.6% from 42.4%, but operating income fell to $1.24 billionb from $1.50 billion, and diluted earnings per share declined to $14.55 from $16.32. Net earnings were $949.8 million versus $1.13 billion in the prior year.
The balance sheet and cash flow picture is strong. The company ended the year with $1.26 billionc in cash and cash equivalents and no outstanding borrowings under its revolving credit line, and it generated $1.68 billion in net cash from operating activities, up from $1.05 billion. Stockholder returns totaled $545.5 million through stock repurchases and dividends, with $313.0 million spent on buybacks and $236.8 million in dividends declared.
Management highlighted three priorities for 2024: returning to growth, elevating customer service and driving earnings. The filing also notes that in March 2024 the Board authorized a new $1.0 billiond stock repurchase program and a 26% increase in the quarterly dividend, from $0.90 to $1.13 per share. The filing identifies several risks for investors, including sensitivity to consumer spending on home furnishings, a weak housing market, elevated interest rates, reliance on foreign suppliers (about 81% of merchandise purchases in fiscal 2023, with 25% sourced from China), tariff and trade policy changes, and a possible port strike.
Management also flagged elevated inventory shrink and fraud relative to historical levels. Store count declined to 518 from 530, with 13 openings and 25 closings.
02—Key points
Key Highlights
- Net revenues fell 10.6% to $7.75 billion, with company comparable brand revenue down 9.9%, reflecting weak furniture demand and reduced promotional activity.
- Gross margin improved to 42.6% from 42.4%, driven by higher merchandise margins from lower input costs and reduced promotions, partially offset by higher occupancy costs.
- Diluted EPS declined to $14.55 from $16.32, and net earnings fell to $949.8 million from $1.13 billion; SG&A rose to 26.6% of net revenues from 25.1%.
- Operating cash flow rose to $1.68 billion from $1.05 billion, and year-end cash reached $1.26 billion with no revolver borrowings outstanding.
- Stockholder returns totaled $545.5 million in fiscal 2023, and in March 2024 the Board authorized a new $1.0 billion repurchase program and a 26% quarterly dividend increase to $1.13 per share.
- E-commerce generated approximately 66% of net revenues and retail stores approximately 34% in fiscal 2023.
- Management cited elevated inventory shrink, loss of other assets and fraud relative to historical levels as a risk to results.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Williams-Sonoma kept $0.12.
- Revenue$7.75B100.0%
- Cost of revenue−$4.45B57.4%
- Gross profit$3.30B42.6%
- Operating costs−$2.06B26.6%
- Operating income$1.24B16.1%
- Interest, other & tax−$294.2M3.8%
- Net income$950.0M12.3%
Where FY2024 revenue went
$7.75B- Cost of revenue: $4.45B, 57% of revenue
- SG&A: $2.06B, 27% of revenue
- Net income: $950.0M, 12% of revenue
- Interest, other & tax: $294.2M, 3.8% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed March 20, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $7.75B$8.67B | −10.6% |
| Cost of Revenue | $4.45B— | — |
| Gross Profit | $3.30B$3.68B | −10.2% |
| SG&A Expenses | $2.06B$2.18B | −5.5% |
| Operating Income | $1.24B$1.50B | −17.0% |
| Net Income | $950.00M$1.13B | −15.8% |
| EPS (Basic) | $7.35$8.29 | −11.3% |
| EPS (Diluted) | $7.28$8.16 | −10.8% |
| Shares Outstanding (Basic) | 129.15M136.04M | −5.1% |
| Shares Outstanding (Diluted) | 130.54M138.20M | −5.5% |
05—Questions
Frequently Asked Questions
Why did Williams-Sonoma's revenue decline in fiscal 2023?
Net revenues decreased $923.8 million, or 10.6%, driven by continuing customer hesitancy toward furniture purchases and the company's strategy to reduce promotional activity. Strength in certain non-furniture categories partially offset the decline. West Elm's comparable brand revenue fell 18.8% and Pottery Barn's fell 9.7%.
Did profitability improve or decline?
Gross margin improved slightly to 42.6% from 42.4%, but operating income fell to $1.24 billion from $1.50 billion. Diluted EPS dropped to $14.55 from $16.32, as SG&A rose to 26.6% of net revenues from 25.1%, reflecting higher performance-based incentive compensation.
How is the company returning capital to shareholders?
In fiscal 2023 the company repurchased 2,621,861 shares for $313.0 million and declared $236.8 million in dividends ($3.60 per share). As of January 28, 2024, $687.0 million remained under the repurchase program. In March 2024, the Board authorized a new $1.0 billion program and raised the quarterly dividend 26%, from $0.90 to $1.13 per share, subject to capital availability.
What are the main risks to the business?
Key risks include reduced consumer spending on home furnishings, a weak housing market, elevated interest rates, and dependence on foreign suppliers, with about 81% of merchandise purchases sourced abroad and 25% from China. Tariff and trade policy changes, supply chain disruption (including a possible East Coast port strike when the ILA contract expires September 30, 2024), and elevated inventory shrink and fraud are also flagged.
How is the company's liquidity position?
Williams-Sonoma ended fiscal 2023 with $1.26 billion in cash and cash equivalents and no outstanding revolver borrowings. The $500 million revolving credit facility can be increased by up to $250 million, and the company stated it expects its cash, operating cash flows and credit facilities to provide adequate liquidity over the next 12 months.
06—Continue