Home: West Elm a winner for Williams-Sonoma
While West Port disruptions took some toll on its fourth quarter and fiscal 2014 performance, Williams-Sonoma Inc. still made gains, especially at West Elm.
“We experienced growth in all of our brands and across our channels, highlighted by our highly profitable ecommerce business, which grew to over 50% of total revenue,” said Laura Alber, president and ceo.
Fourth quarter net revenues increased 5.2% to $1.542 billion, and earnings per share grew 10.1% growth to $1.52. Comparable brand revenue was up 5.1% on top of 10.4% last year.
E-commerce net revenues represented 49.9% of net revenues during the quarter and grew 9% to $770 million. Net revenues in the retail channel grew 1.6% to $772 million.
For the full year, revenues increased 7.1% to $4.699 billion, and diluted earnings per share were up 12.7% to $3.20. Comparable brand revenue was up 7.1% on top of 8.8% in the prior year.
By channel, net revenues in e-commerce grew 12.1% to $2.371 billion for the year, “reaching a major milestone of representing over half of our annual revenues for the first time,” noted Julie Whalen, evp and cfo. Retail channel net revenues grew 2.4% to $2.328 billion.
During the quarter, comp brand revenues were up 2.9% at Pottery Barn, 2.7% at Pottery Barn Kids, and 3% at PBteen.
At Pottery Barn, delays in receipts increased back orders, said Alber. At PB Kids, the company’s strategy “to own seasonal decorating for children” contributed to the brand’s performance as well as attracted new customers. In PBteen, highlights included seasonal bedding and textile assortments, including girls and guys sleepover and gear collections.
West Elm was a bright spot in the 13-week period, delivering a 19.6% jump in comp brand net revenue growth on top of 18.3% last year.
Williams-Sonoma’s outlook for 2015 “includes the impact of the West Coast port disruption,” Whalen said.
For the year, the company expects to grow net revenues to a range of $4.950 billion to $5.020 billion, with comparable brand revenue growth up between 4% and 6% and diluted earnings per share of $3.35 to $3.45.
For the first quarter of 2015, net revenue growth is projected between $990 million and $1.01 billion, with comparable brand revenue growth of 2% to 4% and diluted earnings per share of $0.40 to $0.45.
Alber again offered a breakdown by segment, this time for growth plans in 2015.
Citing Pottery Barn brands’ collective approach to $3 billion in revenue, she said the company will expand categories, expand aesthetics, introduce new collaborations and further regionalize assortments. “We are introducing exciting new collaborations. We are offering additional pricing tiers. We are increasing our speed to market, and we are building on our personalization capabilities.”
But its “biggest opportunity over the next several years,” she went on, “may be our One Home strategy, which pulls our customer across every life stage, lifestyle, and life size. We placed all three brands under a leader who has worked on all three brands for more than 20 years, and the majority of our PB Kids customers are also PB customers, and the majority of our new PBteen customers were once PB Kids customers.”
The West Elm plans to open 19 new stores this year, expand and enhance the online business with new marketing initiatives, especially regarding the mobile customer experience.
As for the company’s two stand-alone brands Rejuvenation, and Mark and Graham – “both have excellent growth prospects and are both profitable today.” Together, they grew 30% last year.
Globally, the company continues to ramp up. It recently signed a definitive franchise agreement with Liverpool, a 100-year-old department store company in Mexico, and “we are also pursuing other franchise partners in a number of key regions, and we are finding significant interest from high quality partners.”
The first major entry with company owned stores has been in Australia, where Williams-Sonoma currently operates 13 stores to date and plans to open six more this year.
Source: Home Textiles Today