Exhibit 99.1
WILLIAMS-SONOMA, INC.
3250 Van Ness Avenue
San Francisco, CA 94109
| | | | | | |
| | | | | | CONTACT: |
| | | | | | Julie P. Whalen |
| | | | | | EVP, Chief Financial Officer |
| | | | | | (415) 616-8524 |
| | | |
| | | | | | Gabrielle L. Rabinovitch |
| | | | | | Vice President, Investor Relations |
| | | | | | (415) 616-7727 |
PRESS RELEASE
Williams-Sonoma, Inc. announces fourth quarter and fiscal year 2015 results
FY 15 net revenues grow 5.9% with diluted EPS of $3.37
Authorizes $500 million stock repurchase program and 6% dividend increase
Reiterates long-term outlook and provides financial guidance for fiscal year 2016
San Francisco, CA, March 16, 2016 – Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the fourth fiscal quarter of 2015 (“Q4 15”) and fiscal year 2015 (“FY 15”) ended January 31, 2016 versus the fourth fiscal quarter of 2014 (“Q4 14”) and fiscal year 2014 (“FY 14”) ended February 1, 2015.
4th QUARTER 2015 RESULTS
| | • | | Q4 15 net revenues grew 2.9% to $1.586 billion versus $1.542 billion in Q4 14 with comparable brand revenue growth of 0.8%. |
| | • | | Q4 15 operating margin was 14.0% versus 15.4% in Q4 14. Excluding unusual business events, Q4 14 non-GAAP operating margin was 14.9%. See Exhibit 1 for a reconciliation of GAAP to non-GAAP operating margin. |
| | • | | Q4 15 diluted earnings per share (“EPS”) was $1.55 versus $1.57 in Q4 14. Excluding unusual business events, non-GAAP EPS was $1.52 in Q4 14. See Exhibit 1 for a reconciliation of GAAP to non-GAAP EPS. |
| | • | | Cash returned to stockholders totaled $60 million, comprising $28 million in stock repurchases and $32 million in dividends. |
FISCAL YEAR 2015 RESULTS
| | • | | FY 15 net revenues grew 5.9% to $4.976 billion versus $4.699 billion in FY 14 with comparable brand revenue growth of 3.7%. |
| | • | | FY 15 operating margin was 9.8% versus 10.7% in FY 14. Excluding unusual business events, FY 14 non-GAAP operating margin was 10.5%. See Exhibit 1. |
| | • | | FY 15 EPS was $3.37 versus $3.24 in FY 14. Excluding unusual business events, FY 14 non-GAAP EPS was $3.20. See Exhibit 1. |
| | • | | Cash returned to stockholders in FY 15 totaled $353 million, comprising $225 million in stock repurchases and $128 million in dividends. |
Laura Alber, President and Chief Executive Officer, commented, “In 2015, we delivered top and bottom line performance within our guidance ranges despite a challenging end to the year. We are reporting record revenue and earnings per share for the year as a result of the strength of our portfolio of outstanding brands, our balanced, multi-channel model, and solid execution. Disciplined management allowed us to meet our commitment as we adjusted to an evolving consumer and competitive landscape. Our brands are highly aspirational and relatable at the same time, and create a platform for growth.”
Alber continued, “Entering 2016, we believe we have the opportunity to strengthen our competitive positioning including our product, service, and value proposition for our customers, which will allow us to profitably grow market share. We are making important changes to the way we do business. We are re-asserting our product leadership, revolutionizing our approach to inventory, transforming our marketing, and changing our approach to real estate and the store experience.”
Alber concluded, “Today, we are reiterating our long term outlook of revenue growth in the mid to high single-digits and earnings per share growth in the low double-digits to mid-teens. We are focused on leveraging our market leadership and talented teams to execute our strategic initiatives and to deliver profitable growth and sustainable returns for our shareholders.”
4th QUARTER 2015 RESULTS
Net revenues increased to $1.586 billion in Q4 15 from $1.542 billion in Q4 14.
Comparable brand revenue growth in Q4 15 increased 0.8% on top of 5.1% in Q4 14 as shown in the table below:
| | | | | | | | |
|
4th Quarter Comparable Brand Revenue Growth by Concept* |
|
| | | Q4 15 | | | | | Q4 14 |
|
Pottery Barn | | | (2.0% | ) | | | | 2.9% |
Williams-Sonoma | | | 0.9% | | | | | 2.8% |
West Elm | | | 12.8% | | | | | 19.6% |
Pottery Barn Kids | | | 0.1% | | | | | 2.7% |
PBteen | | | (12.2% | ) | | | | 3.0% |
|
Total | | | 0.8% | | | | | 5.1% |
|
* See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue. |
E-commerce net revenuesin Q4 15 increased 2.9% to $792 million from $770 million in Q4 14. E-commerce net revenues generated 50% of total company net revenues in both Q4 15 and Q4 14.
Retail net revenues in Q4 15 increased 2.9% to $794 million from $772 million in Q4 14.
Operating margin in Q4 15 was 14.0% compared to 15.4% in Q4 14. Excluding unusual business events, non-GAAP operating margin was 14.9% in Q4 14:
| | • | | Gross margin was 38.3% in Q4 15 versus 40.1% in Q4 14. Gross margin deleverage was primarily related to shipping and fulfillment-related costs, occupancy deleverage from our supply chain operations, and lower margins associated with higher franchise sales. Merchandise margins were slightly down versus Q4 14. |
| | • | | Selling, general and administrative (“SG&A”) expenses were $385 million, or 24.3% of net revenues in Q4 15, versus $381 million, or 24.7% of net revenues, in Q4 14. Excluding unusual business events, non-GAAP SG&A expenses were $388 million, or 25.2% of net revenues, in Q4 14. |
The effective income tax rate in Q4 15 was 36.6% versus 38.2% in Q4 14, reflecting fluctuations in the level and mix of earnings, as well as the favorable resolution of certain income tax matters.
EPS in Q4 15 was $1.55 versus $1.57 in Q4 14. Excluding unusual business events, non-GAAP EPS was $1.52 in Q4 14.
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FISCAL YEAR 2015 RESULTS
Net revenues increased to $4.976 billion in FY 15 from $4.699 billion in FY 14.
Comparable brand revenue growth in FY 15 increased 3.7% on top of 7.1% in FY 14 as shown in the table below:
| | | | | | | | | | | | | | |
|
Fiscal Year Net Revenues and Comparable Brand Revenue Growth by Concept* |
| | | Net Revenues (Millions) | | | Comparable Brand Revenue Growth |
|
| | | FY 15 | | | FY 14 | | | FY 15 | | | FY 14 |
|
Pottery Barn | | $ | 2,074 | | | $ | 2,022 | | | | 1.9% | | | 5.8% |
Williams-Sonoma | | | 994 | | | | 995 | | | | 1.1% | | | 3.8% |
West Elm | | | 821 | | | | 669 | | | | 14.8% | | | 18.2% |
Pottery Barn Kids | | | 640 | | | | 625 | | | | 2.2% | | | 5.9% |
PBteen | | | 254 | | | | 261 | | | | (2.7% | ) | | 5.7% |
Other | | | 193 | | | | 127 | | | | N/A | | | N/A |
|
Total | | $ | 4,976 | | | $ | 4,699 | | | | 3.7% | | | 7.1% |
|
* See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue. |
E-commerce net revenuesin FY 15 increased 6.4% to $2.523 billion from $2.371 billion in FY 14. E-commerce net revenues generated 51% of total company net revenues in FY 15, compared to 50% in FY 14.
Retail net revenues in FY 15 increased 5.4% to $2.454 billion from $2.328 billion in FY 14.
Operating margin in FY 15 was 9.8% compared to 10.7% in FY 14. Excluding unusual business events, non-GAAP operating margin in FY 14 was 10.5%:
| | • | | Gross margin was 37.1% in FY 15 versus 38.3% in FY 14. Merchandise margins were flat versus FY 15, with deleverage primarily resulting from increased shipping and fulfillment related costs, as well as lower margins associated with higher franchise sales. |
| | • | | SG&A expenses were $1.356 billion, or 27.2% of net revenues in FY 15, versus $1.298 billion, or 27.6% of net revenues, in FY 14. Excluding unusual business events, non-GAAP SG&A expenses in FY 14 were $1.306 billion, or 27.8% of net revenues. |
The effective income tax rate in FY 15 was 36.5% versus 38.5% in FY 14, reflecting fluctuations in the level and mix of earnings, as well as the favorable resolution of certain income tax matters.
EPS in FY 15 was $3.37 versus $3.24 in FY 14. Excluding unusual business events, non-GAAP EPS was $3.20 in FY 14.
Merchandise inventories at the end of FY 15 increased 10.2% to $978 million from $888 million at the end of FY 14.
STOCK REPURCHASE PROGRAM AND DIVIDEND INCREASE
As announced in a separate release today, our Board of Directors authorized a new $500 million stock repurchase program that the company intends to execute over the next three years and a 6% increase in our quarterly cash dividend to $0.37 per share. The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.
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During Q4 15, we repurchased 464,608 shares of common stock at an average cost of $61.34 per share and a total cost of approximately $28 million under the $750 million stock repurchase program announced in March 2013. During FY 15, we repurchased 2,950,438 shares of common stock at an average cost of $76.26 per share and a total cost of approximately $225 million. As of January 31, 2016, there was approximately $62 million remaining for future repurchases under this program.
FISCAL YEAR 2016 FINANCIAL GUIDANCE
| | | | | | |
| | | |
| | | 1st Quarter 2016 Guidance Financial Highlights | | |
| | Total Net Revenues (millions) | | $1,070 – $1,090 | |
| | Comparable Brand Revenue Growth | | 3% – 6% | |
| | Non-GAAP Diluted EPS* | | $0.48 – $0.52 | |
| | | | | |
| | Fiscal Year 2016 Guidance Financial Highlights | |
| | Total Net Revenues (millions) | | $5,150 – $5,250 | |
| | Comparable Brand Revenue Growth | | 3% – 6% | |
| | Non-GAAP Operating Margin* | | 9.8% – 10.0% | |
| | Non-GAAP Diluted EPS* | | $3.50 – $3.65 | |
| | Income Tax Rate | | 37.0% – 38.0% | |
| | Capital Spending (millions) | | $200 – $220 | |
| | Depreciation and Amortization (millions) | | $170 – $180 | |
| | * Excludes expected one-time reorganization charge of approximately $10-$12 million during the first quarter of FY 2016. | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
Store Opening and Closing Guidance by Retail Concept* |
| | | FY 2015 ACT | | | FY 2016 GUID |
| | | Total | | | | | New | | | | | Close | | | | | End |
Williams-Sonoma | | | 239 | | | | | | 5 | | | | | | (10 | ) | | | | 234 |
Pottery Barn | | | 197 | | | | | | 6 | | | | | | (2 | ) | | | | 201 |
Pottery Barn Kids | | | 89 | | | | | | 2 | | | | | | (4 | ) | | | | 87 |
West Elm | | | 87 | | | | | | 13 | | | | | | (2 | ) | | | | 98 |
Rejuvenation | | | 6 | | | | | | 1 | | | | | | - | | | | | 7 |
Total | | | 618 | | | | | | 27 | | | | | | (18 | ) | | | | 627 |
|
* Included in the FY 15 store count are 19 stores in Australia and one store in the UK. |
CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. will host a live conference call today, March 16, 2016, at 2:00 P.M. (PT). The call, hosted by Laura Alber, President and Chief Executive Officer, will be open to the general public via live webcast and can be accessed athttp://ir.williams-sonomainc.com/events. A replay of the webcast will be available athttp://ir.williams-sonomainc.com/events.
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SEC REGULATION G — NON-GAAP INFORMATION
This press release includes non-GAAP SG&A, operating margin and diluted EPS. These non-GAAP financial measures exclude the impact of a litigation settlement received in FY 14. We have reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in the text of this release and in Exhibit 1. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our quarterly and FY 15 actual results on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. A reconciliation of non-GAAP to GAAP diluted EPS guidance is not available because the costs and expenses are not yet known.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements relating to: the strength of our brands; our competitive position and market share; our planned changes to our business; our strategic initiatives; our growth prospects; our future financial guidance, including Q1 16 and FY 2016 guidance and our long-term outlook; our stock repurchase program; and our proposed store openings and closures.
The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: accounting adjustments as we close our books for Q4 15 and as audited year-end financial statements are prepared; continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; new interpretations of or changes to current accounting rules; our ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of our merchandise; changes in consumer spending based on weather, political, competitive and other conditions beyond our control; delays in store openings; competition from companies with concepts or products similar to ours; timely and effective sourcing of merchandise from our foreign and domestic vendors and delivery of merchandise through our supply chain to our stores and customers; effective inventory management; our ability to manage customer returns; successful catalog management, including timing, sizing and merchandising; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce new brands and brand extensions; challenges associated with our increasing global presence; dependence on external funding sources for operating capital; disruptions in the financial markets; our ability to control employment, occupancy and other operating costs; our ability to improve our systems and processes; changes to our information technology infrastructure; general political, economic and market conditions and events, including war, conflict or acts of terrorism; and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the SEC, including our Annual Report on Form 10-K for the fiscal year ended February 1, 2015 and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.
ABOUT WILLIAMS-SONOMA, INC.
Williams-Sonoma, Inc. is a specialty retailer of high-quality products for the home. These products, representing eight distinct merchandise strategies – Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams-Sonoma Home, Rejuvenation, and Mark and Graham – are marketed throughe-commerce websites, direct mail catalogs and 618 stores. Williams-Sonoma, Inc. currently operates in the United States, Canada, Australia and the United Kingdom, offers international shipping to customers worldwide, and has unaffiliated franchisees that operate stores in the Middle East and the Philippines and stores and e-commerce websites in Mexico.
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Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
Thirteen weeks ended January 31, 2016 and February 1, 2015
(Dollars and shares in thousands, except per share amounts)
| | | | | | | | | | | | | | | | |
| | | 4th Quarter | |
| | | 2015 | | | 2014 | |
| | | $ | | | % of
Revenues | | | $ | | | % of
Revenues | |
E-commerce net revenues | | $ | 791,903 | | | | 49.9 | % | | $ | 769,840 | | | | 49.9 | % |
Retail net revenues | | | 794,401 | | | | 50.1 | | | | 772,285 | | | | 50.1 | |
| | | | | | | | | | | | | | | | |
Net revenues | | | 1,586,304 | | | | 100.0 | | | | 1,542,125 | | | | 100.0 | |
Cost of goods sold | | | 978,744 | | | | 61.7 | | | | 923,534 | | | | 59.9 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 607,560 | | | | 38.3 | | | | 618,591 | | | | 40.1 | |
Selling, general and administrative expenses | | | 384,880 | | | | 24.3 | | | | 380,708 | | | | 24.7 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 222,680 | | | | 14.0 | | | | 237,883 | | | | 15.4 | |
Interest (income) expense, net | | | 2 | | | | — | | | | (26 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Earnings before income taxes | | | 222,678 | | | | 14.0 | | | | 237,909 | | | | 15.4 | |
Income taxes | | | 81,550 | | | | 5.1 | | | | 90,872 | | | | 5.9 | |
| | | | | | | | | | | | | | | | |
Net earnings | | $ | 141,128 | | | | 8.9 | % | | $ | 147,037 | | | | 9.5 | % |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per share (EPS): | | | | | | | | | | | | | | | | |
Basic | | $ | 1.57 | | | | | | | $ | 1.60 | | | | | |
Diluted | | $ | 1.55 | | | | | | | $ | 1.57 | | | | | |
Shares used in calculation of EPS: | | | | | | | | | | | | | | | | |
Basic | | | 89,760 | | | | | | | | 92,087 | | | | | |
Diluted | | | 90,988 | | | | | | | | 93,641 | | | | | |
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Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
Fifty-two weeks ended January 31, 2016 and February 1, 2015
(Dollars and shares in thousands, except per share amounts)
| | | | | | | | | | | | | | | | |
| | | Fiscal Year | |
| | | 2015 | | | 2014 | |
| | | $ | | | % of
Revenues | | | $ | | | % of
Revenues | |
E-commerce net revenues | | $ | 2,522,580 | | | | 50.7 | % | | $ | 2,370,694 | | | | 50.5 | % |
Retail net revenues | | | 2,453,510 | | | | 49.3 | | | | 2,328,025 | | | | 49.5 | |
| | | | | | | | | | | | | | | | |
Net revenues | | | 4,976,090 | | | | 100.0 | | | | 4,698,719 | | | | 100.0 | |
Cost of goods sold | | | 3,131,876 | | | | 62.9 | | | | 2,898,215 | | | | 61.7 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 1,844,214 | | | | 37.1 | | | | 1,800,504 | | | | 38.3 | |
Selling, general and administrative expenses | | | 1,355,580 | | | | 27.2 | | | | 1,298,239 | | | | 27.6 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 488,634 | | | | 9.8 | | | | 502,265 | | | | 10.7 | |
Interest (income) expense, net | | | 627 | | | | — | | | | 62 | | | | — | |
| | | | | | | | | | | | | | | | |
Earnings before income taxes | | | 488,007 | | | | 9.8 | | | | 502,203 | | | | 10.7 | |
Income taxes | | | 177,939 | | | | 3.6 | | | | 193,349 | | | | 4.1 | |
| | | | | | | | | | | | | | | | |
Net earnings | | $ | 310,068 | | | | 6.2 | % | | $ | 308,854 | | | | 6.6 | % |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per share (EPS): | | | | | | | | | | | | | | | | |
Basic | | $ | 3.42 | | | | | | | $ | 3.30 | | | | | |
Diluted | | $ | 3.37 | | | | | | | $ | 3.24 | | | | | |
Shares used in calculation of EPS: | | | | | | | | | | | | | | | | |
Basic | | | 90,787 | | | | | | | | 93,634 | | | | | |
Diluted | | | 92,102 | | | | | | | | 95,200 | | | | | |
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Williams-Sonoma, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(Dollars and shares in thousands, except per share amounts)
| | | | | | | | |
| | | Jan. 31, 2016 | | | Feb. 1, 2015 | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 193,647 | | | $ | 222,927 | |
Accounts receivable, net | | | 79,304 | | | | 67,465 | |
Merchandise inventories, net | | | 978,138 | | | | 887,701 | |
Prepaid catalog expenses | | | 28,919 | | | | 33,942 | |
Prepaid expenses | | | 44,654 | | | | 36,265 | |
Deferred income taxes, net | | | - | | | | 130,618 | |
Other assets | | | 11,438 | | | | 13,005 | |
| | | | | | | | |
Total current assets | | | 1,336,100 | | | | 1,391,923 | |
| | | | | | | | |
Property and equipment, net | | | 886,813 | | | | 883,012 | |
Non-current deferred income taxes, net | | | 141,784 | | | | 4,265 | |
Other assets, net | | | 52,730 | | | | 51,077 | |
| | | | | | | | |
Total assets | | $ | 2,417,427 | | | $ | 2,330,277 | |
| | | | | | | | |
| | |
Liabilities and stockholders’ equity | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 447,412 | | | $ | 397,037 | |
Accrued salaries, benefits and other | | | 127,122 | | | | 136,012 | |
Customer deposits | | | 296,827 | | | | 261,679 | |
Income taxes payable | | | 67,052 | | | | 32,488 | |
Current portion of long-term debt | | | - | | | | 1,968 | |
Other liabilities | | | 58,014 | | | | 46,764 | |
| | | | | | | | |
Total current liabilities | | | 996,427 | | | | 875,948 | |
| | | | | | | | |
Deferred rent and lease incentives | | | 173,061 | | | | 166,925 | |
Other long-term obligations | | | 49,713 | | | | 62,698 | |
| | | | | | | | |
Total liabilities | | | 1,219,201 | | | | 1,105,571 | |
| | | | | | | | |
| | |
Stockholders’ equity | | | | | | | | |
Preferred stock: $.01 par value; 7,500 shares authorized; none issued | | | - | | | | - | |
Common stock: $.01 par value; 253,125 shares authorized; 89,563 and 91,891 shares issued and outstanding at January 31, 2016 and February 1, 2015, respectively | | | 896 | | | | 919 | |
Additional paid-in capital | | | 541,307 | | | | 527,261 | |
Retained earnings | | | 668,545 | | | | 701,214 | |
Accumulated other comprehensive loss | | | (10,616 | ) | | | (2,548 | ) |
Treasury stock, at cost | | | (1,906 | ) | | | (2,140 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 1,198,226 | | | | 1,224,706 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 2,417,427 | | | $ | 2,330,277 | |
| | | | | | | | |
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Williams-Sonoma, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
Fifty-two weeks ended January 31, 2016 and February 1, 2015
(Dollars in thousands)
| | | | | | | | |
| | | Year-to-Date | |
| | | 2015 | | | 2014 | |
Cash flows from operating activities | | | | | | | | |
Net earnings | | $ | 310,068 | | | $ | 308,854 | |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | | | | | | | | |
Depreciation and amortization | | | 167,760 | | | | 162,273 | |
Loss on disposal/impairment of assets | | | 4,339 | | | | 2,410 | |
Amortization of deferred lease incentives | | | (24,721 | ) | | | (24,419 | ) |
Deferred income taxes | | | (7,436 | ) | | | (248 | ) |
Tax benefit related to stock-based awards | | | 14,592 | | | | 26,952 | |
Excess tax benefit related to stock-based awards | | | (14,494 | ) | | | (26,560 | ) |
Stock-based compensation expense | | | 41,357 | | | | 44,632 | |
Other | | | 149 | | | | 595 | |
Changes in: | | | | | | | | |
Accounts receivable | | | (12,849 | ) | | | (9,366 | ) |
Merchandise inventories | | | (92,647 | ) | | | (76,964 | ) |
Prepaid catalog expenses | | | 5,022 | | | | (386 | ) |
Prepaid expenses and other assets | | | (9,245 | ) | | | (61 | ) |
Accounts payable | | | 60,507 | | | | 4,455 | |
Accrued salaries, benefits and other current and long-term liabilities | | | (135 | ) | | | 8,867 | |
Customer deposits | | | 35,877 | | | | 34,400 | |
Deferred rent and lease incentives | | | 31,334 | | | | 23,297 | |
Income taxes payable | | | 34,548 | | | | (17,034 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 544,026 | | | | 461,697 | |
| | | | | | | | |
| | |
Cash flows from investing activities: | | | | | | | | |
Purchases of property and equipment | | | (202,935 | ) | | | (204,800 | ) |
Restricted cash receipts | | | - | | | | 14,289 | |
Proceeds from insurance reimbursements | | | 683 | | | | 1,644 | |
Other | | | 86 | | | | 267 | |
| | | | | | | | |
Net cash used in investing activities | | | (202,166 | ) | | | (188,600 | ) |
| | | | | | | | |
| | |
Cash flows from financing activities: | | | | | | | | |
Repurchase of common stock | | | (224,995 | ) | | | (224,377 | ) |
Payment of dividends | | | (127,636 | ) | | | (125,758 | ) |
Borrowings under revolving line of credit | | | 200,000 | | | | 90,000 | |
Repayments of borrowings under revolving line of credit | | | (200,000 | ) | | | (90,000 | ) |
Tax withholdings related to stock-based awards | | | (31,790 | ) | | | (56,977 | ) |
Excess tax benefit related to stock-based awards | | | 14,494 | | | | 26,560 | |
Net proceeds related to stock-based awards | | | 2,647 | | | | 4,077 | |
Repayments of long-term obligations | | | (1,968 | ) | | | (1,785 | ) |
Other | | | (135 | ) | | | (760 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (369,383 | ) | | | (379,020 | ) |
| | | | | | | | |
| | |
Effect of exchange rates on cash and cash equivalents | | | (1,757 | ) | | | (1,271 | ) |
Net decrease in cash and cash equivalents | | | (29,280 | ) | | | (107,194 | ) |
Cash and cash equivalents at beginning of period | | | 222,927 | | | | 330,121 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 193,647 | | | $ | 222,927 | |
| | | | | | | | |
9
Exhibit 1
Reconciliation of 4th Quarter and Fiscal Year Actual GAAP to Non-GAAP Operating Margin By Segment*
($ in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | E-commerce | | | Retail | | | Unallocated | | | Total | |
| | | Q4 15 | | | Q4 14 | | | Q4 15 | | | Q4 14 | | | Q4 15 | | | Q4 14 | | | Q4 15 | | | Q4 14 | |
Net Revenues | | $ | 791,903 | | | $ | 769,840 | | | $ | 794,401 | | | $ | 772,285 | | | $ | - | | | $ | - | | | $ | 1,586,304 | | | $ | 1,542,125 | |
GAAP Operating Income/(Expense) | | | 174,218 | | | | 182,031 | | | | 121,446 | | | | 131,308 | | | | (72,984 | ) | | | (75,456 | ) | | | 222,680 | | | | 237,883 | |
GAAP Operating Margin | | | 22.0% | | | | 23.6% | | | | 15.3% | | | | 17.0% | | | | (4.6% | ) | | | (4.9% | ) | | | 14.0% | | | | 15.4% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unusual Business Events(1) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (7,414 | ) | | | - | | | | (7,414 | ) |
Non-GAAP Operating Income/(Expense) Excluding Unusual Business Events(2) | | $ | 174,218 | | | $ | 182,031 | | | $ | 121,446 | | | $ | 131,308 | | | $ | (72,984 | ) | | $ | (82,870 | ) | | $ | 222,680 | | | $ | 230,469 | |
Non-GAAP Operating Margin (2) | | | 22.0% | | | | 23.6% | | | | 15.3% | | | | 17.0% | | | | (4.6% | ) | | | (5.4% | ) | | | 14.0 | % | | | 14.9% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | E-commerce | | | Retail | | | Unallocated | | | Total | |
| | | FY 15 | | | FY 14 | | | FY 15 | | | FY 14 | | | FY 15 | | | FY 14 | | | FY 15 | | | FY 14 | |
Net Revenues | | $ | 2,522,580 | | | $ | 2,370,694 | | | $ | 2,453,510 | | | $ | 2,328,025 | | | $ | - | | | $ | - | | | $ | 4,976,090 | | | $ | 4,698,719 | |
GAAP Operating Income/(Expense) | | | 562,081 | | | | 560,396 | | | | 239,288 | | | | 248,535 | | | | (312,735 | ) | | | (306,666 | ) | | | 488,634 | | | | 502,265 | |
GAAP Operating Margin | | | 22.3% | | | | 23.6% | | | | 9.8% | | | | 10.7% | | | | (6.3% | ) | | | (6.5% | ) | | | 9.8% | | | | 10.7% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unusual Business Events(1) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (7,414 | ) | | | - | | | | (7,414 | ) |
Non-GAAP Operating Income/(Expense) Excluding Unusual Business Events(2) | | $ | 562,081 | | | $ | 560,396 | | | $ | 239,288 | | | $ | 248,535 | | | $ | (312,735 | ) | | $ | (314,080 | ) | | $ | 488,634 | | | $ | 494,851 | |
Non-GAAP Operating Margin (2) | | | 22.3% | | | | 23.6% | | | | 9.8% | | | | 10.7% | | | | (6.3% | ) | | | (6.7% | ) | | | 9.8% | | | | 10.5% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | * | See the Company’s 10-K and 10-Q filings for additional information on segment reporting and the definition of Operating Income/(Expense) and Operating Margin. |
10
Reconciliation of Quarterly and Fiscal Year Actual GAAP to Non-GAAP
Diluted Earnings Per Share**
(Totals rounded to the nearest cent per diluted share)
| | | | | | | | | | | | | | | | | | |
| | | Q1 15 ACT | | | | Q2 15 ACT | | | | Q3 15 ACT | | | | Q4 15 ACT | | | | FY 15 ACT |
| 2015 GAAP Diluted EPS | | $0.48 | | | | $0.58 | | | | $0.77 | | | | $1.55 | | | | $3.37 |
|
| | | | | | | | | | | | | | | | | | | |
| | | Q1 14 ACT | | | | Q2 14 ACT | | | | Q3 14 ACT | | | | Q4 14 ACT | | | | FY 14 ACT |
2014 GAAP Diluted EPS | | $0.48 | | | | $0.53 | | | | $0.68 | | | | $1.57 | | | | $3.24 |
Impact of Unusual Business Events(1) | | - | | | | - | | | | - | | | | (0.05) | | | | (0.04) |
| 2014 Non-GAAP Diluted EPS Excluding Unusual Business Events(2) | | $0.48 | | | | $0.53 | | | | $0.68 | | | | $1.52 | | | | $3.20 |
|
| | ** | Due to the differences between the quarterly and year-to-date weighted average share count calculations and rounding to the nearest cent per diluted share, totals may not equal the sum of the line items and fiscal year diluted EPS may not equal the sum of the quarters. |
Notes:
| | (1) | Impact of Unusual Business Events – During Q4 14, we received our share of the VISA/MasterCard antitrust litigation settlement. This settlement (a benefit) totaled approximately $0.05 and $0.04 per diluted share in Q4 14 and FY 14, respectively, and is recorded in SG&A expenses within the unallocated segment. |
| | (2) | SEC Regulation G – Non-GAAP Information – These tables include non-GAAP operating income, operating margin and diluted EPS. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our quarterly and FY 15 actual results on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. |
Store Statistics
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Store Count | | | | | Avg. Leased Square
Footage Per Store | |
| | | Nov. 1, 2015 | | | Openings | | | Closings | | | Jan. 31, 2016 | | | Feb. 1, 2015 | | | | | Jan. 31, 2016 | | | Feb. 1, 2015 | |
Williams-Sonoma | | | 243 | | | | 1 | | | | (5 | ) | | | 239 | | | | 243 | | | | | | 6,600 | | | | 6,600 | |
Pottery Barn | | | 200 | | | | - | | | | (3 | ) | | | 197 | | | | 199 | | | | | | 13,800 | | | | 13,700 | |
Pottery Barn Kids | | | 90 | | | | - | | | | (1 | ) | | | 89 | | | | 85 | | | | | | 7,500 | | | | 7,600 | |
West Elm | | | 84 | | | | 3 | | | | - | | | | 87 | | | | 69 | | | | | | 13,200 | | | | 13,700 | |
Rejuvenation | | | 6 | | | | - | | | | - | | | | 6 | | | | 5 | | | | | | 9,000 | | | | 10,000 | |
Total | | | 623 | | | | 4 | | | | (9 | ) | | | 618 | | | | 601 | | | | | | 10,000 | | | | 9,900 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | Nov. 1, 2015 | | | | | Jan. 31, 2016 | | | | | Feb. 1, 2015 | |
| Total store selling square footage | | | | | 3,839,000 | | | | | | 3,827,000 | | | | | | 3,684,000 | |
| Total store leased square footage | | | | | 6,188,000 | | | | | | 6,163,000 | | | | | | 5,965,000 | |
11
