Williams-Sonoma, Inc. (NYSE: WSM) yesterday announced operating results for the third quarter ended October 30, 2022 versus the third quarter ended October 31, 2021.
“We are proud of another strong quarter generating an 8.1% comp, or a 25% two-year comp and an almost 50% three-year comp, with record EPS growth of 12% over last year to $3.72 per share. These results reflect the continuation of backlog order fulfillment, strong product margins and disciplined cost control,” said Laura Alber, President and Chief Executive Officer.
“We delivered another quarter of record revenues and earnings in a challenging environment. Our topline results illustrate our ability to gain market share. Our bottom-line results demonstrate the power of our operating model to sustain merchandise margin and control SG&A expenses,” added Jeff Howie, Chief Financial Officer.
Alber concluded, “Although the macro backdrop has become more uncertain, we believe our strong positioning, growth initiatives, and culture of financial discipline will allow us to outperform in any environment.”
THIRD QUARTER 2022 HIGHLIGHTS
- Comparable brand revenue. Increased 8.1% with a 2-year comp of 25.0% and a 3-year comp of almost 50%.
- Gross margin. Rate of 41.5% which was 220bps below last year, driven by higher shipping and freight costs with merchandise margin flat to last year with occupancy deleverage of 30bps. Occupancy costs increased 10.5% to $202 million.
- SG&A. Rate of 26.0% leveraging 160bps on a GAAP basis and 150bps on a non-GAAP basis, reflecting employment and advertising leverage.
- Operating income. $340 million, increasing 2.8% on a GAAP basis and 2.0% on a non-GAAP basis, with operating margin of 15.5%.
- Diluted EPS. $3.72 per share, increasing 13.1% on a GAAP basis and 12.0% on a non-GAAP basis.
- Cash and cash flow. Ended the quarter with $113 million in cash and generated $205 million in operating cash flow.
OUTLOOK
- We are reiterating our fiscal year 2022 guidance of mid-to-high single digit annual net revenue growth and operating margins relatively in-line with our fiscal year 2021 operating margin.
- Given the macro uncertainty, we will not reiterate or update our guidance through fiscal year 2024.
- We will provide guidance for fiscal 2023 and beyond in our press release announcing our fourth quarter fiscal 2022 results.
Williams-Sonoma, Inc. is the world’s largest digital-first, design-led and sustainable home retailer. The company’s products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, and Mark and Graham — are marketed through e-commerce websites, direct-mail catalogs and retail stores.
