01—Abstract
Summary
Summary of the 10-Q filed November 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Williams-Sonoma, Inc. reported net revenues of $1.80 billiona for the third quarter of fiscal 2024 (thirteen weeks ended October 27, 2024), down from $1.85 billion a year earlier, with company comparable brand revenue declining 2.9%.
The filing attributes the decline to continuing customer hesitancy toward furniture purchases, partially offset by strength in the emerging brands and children's home furnishings. Despite lower revenue, net earnings rose to $248.9 millionb from $237.3 million, and diluted earnings per share increased to $1.96 from $1.83. Gross margin expanded to 46.7% from 44.4%, driven by higher merchandise margins and supply chain efficiencies, while SG&A rose to 28.9% of net revenues from 27.4%.
For the first thirty-nine weeks of fiscal 2024, net revenues were $5.25 billionc, down $222.4 million or 4.1%, while net earnings reached $740.4 million and diluted EPS was $5.74. Results include a $49.0 million out-of-period freight adjustment that reduced cost of goods sold. Operating cash flow was $726.7 million for the period, down from $1.0 billion a year earlier, mainly due to higher inventory spending.
Cash and cash equivalents were $826.8 milliond at quarter-end, and the company had no borrowings under its $500 million revolving credit facility. Capital returns were significant: the company repurchased 5,164,755 shares for $707.5 million year-to-date and paid $208.9 million in dividends.
As of October 27, 2024, $292.5 million remained under the $1.0 billion March 2024 repurchase program, and the Board authorized a new $1.0 billion program in September 2024, bringing total authorization to approximately $1.3 billion. The company also effected a 2-for-1 stock split on July 9, 2024, with all per-share amounts retroactively adjusted.
02—Key points
Key Highlights
- Third-quarter net revenues fell 2.9% to $1.80 billion, with company comparable brand revenue down 2.9%, driven by customer hesitancy toward furniture.
- Pottery Barn, the largest brand, posted a 7.5% comparable brand revenue decline in the quarter, while Pottery Barn Kids and Teen grew 3.8%.
- Gross margin improved to 46.7% from 44.4% in the third quarter, reflecting higher merchandise margins of 130 basis points and supply chain efficiencies of 100 basis points.
- Third-quarter diluted EPS rose to $1.96 from $1.83, and year-to-date diluted EPS was $5.74 versus $4.56 a year earlier.
- Year-to-date operating cash flow was $726.7 million, down from $1.0 billion, mainly due to higher merchandise inventory spending.
- The company repurchased $707.5 million of stock year-to-date and paid $208.9 million in dividends; total remaining repurchase authorization was approximately $1.3 billion.
- Cash and cash equivalents were $826.8 million at October 27, 2024, with no borrowings under the $500 million revolving credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Williams-Sonoma kept $0.13.
- Revenue$1.80B100.0%
- Cost of revenue−$983.1M54.6%
- Gross profit$817.6M45.4%
- Operating costs−$512.5M28.5%
- Operating income$305.0M16.9%
- Interest, other & tax−$67.8M3.8%
- Net income$237.3M13.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed November 22, 2024Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $1.80B$1.85B | −2.9% |
| Cost of Revenue | $983.10M— | — |
| Gross Profit | $817.57M$822.36M | −0.6% |
| SG&A Expenses | $512.53M$507.28M | +1.0% |
| Operating Income | $305.03M$315.08M | −3.2% |
| Net Income | $237.26M$237.28M | 0.0% |
| EPS (Basic) | $1.89$1.85 | +2.2% |
| EPS (Diluted) | $1.87$1.83 | +2.2% |
| Shares Outstanding (Basic) | 125.33M128.28M | −2.3% |
| Shares Outstanding (Diluted) | 126.89M129.55M | −2.1% |
05—Questions
Frequently Asked Questions
Why did Williams-Sonoma's revenue decline in the third quarter of fiscal 2024?
The filing attributes the $53.0 million, or 2.9%, decline in net revenues to continuing customer hesitancy toward furniture purchases. Strength in the emerging brands and the children's home furnishings business partially offset the decline.
How did profitability change despite lower sales?
Net earnings rose to $248.9 million from $237.3 million in the third quarter. Gross margin increased to 46.7% from 44.4%, driven by higher merchandise margins and supply chain efficiencies, while SG&A rose to 28.9% of net revenues from 27.4%, mainly due to higher employment expense.
What was the effect of the out-of-period freight adjustment?
The company over-recognized freight expense in fiscal 2021 through 2023 by a cumulative $49.0 million. The adjustment, recorded in the first quarter of fiscal 2024, reduced cost of goods sold and accounts payable, and contributed 100 basis points to year-to-date gross margin.
How is the company returning capital to shareholders?
Year-to-date, Williams-Sonoma repurchased 5,164,755 shares for $707.5 million and paid $208.9 million in dividends. The Board declared a quarterly dividend of $0.57 per share for the third quarter, and a new $1.0 billion repurchase program was authorized in September 2024.
Is the company's liquidity position sound?
As of October 27, 2024, the company held $826.8 million in cash and cash equivalents and had no revolver borrowings. It stated it was in compliance with its financial covenants and expects adequate liquidity over the next 12 months, though operating cash flow declined to $726.7 million year-to-date from $1.0 billion.
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