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 | ||||||
| Beth Potillo-Miller | ||||||
| SVP, Finance & Corporate Treasurer | ||||||
| Investor Relations | ||||||
(415)616-8643 | ||||||
PRESS RELEASE
Williams-Sonoma, Inc. announces third quarter 2017 results
Net revenues grow 4.3% with comparable brand revenue growth of 3.3%
Diluted EPS grows 8% to $0.84
Raises full-year revenue guidance
San Francisco, CA, November 16, 2017 – Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results
for the third fiscal quarter ended October 29, 2017 (“Q3 17”) versus the third fiscal quarter ended October 30, 2016 (“Q3 16”).
3rd QUARTER 2017 RESULTS
| • | Q3 17 net revenues grew 4.3% to $1.299 billion versus $1.245 billion in Q3 16 with comparable brand revenue growth of 3.3%. Net revenues reflect an estimated $7.0 million impact of lost sales (or approximately 60 basis points) associated with the hurricanes in Texas, Florida and Puerto Rico. |
| • | Q3 17 operating margin was 8.5% versus 8.8% in Q3 16. Excluding severance-related reorganization charges,non-GAAP operating margin was 8.9% in Q3 16 (see Note 1 in Exhibit 1). See Exhibit 1 for a reconciliation of GAAP tonon-GAAP operating margin. |
| • | Q3 17 diluted earnings per share (“EPS”) was $0.84, reflecting an unfavorable impact of approximately $0.02 from the impact of lost sales associated with the hurricanes, versus $0.78 in Q3 16. Excluding severance-related reorganization charges,non-GAAP EPS was $0.79 in Q3 16 (see Note 1 in Exhibit 1). See Exhibit 1 for a reconciliation of GAAP tonon-GAAP EPS. |
| • | Cash returned to stockholders totaled approximately $95 million, comprising $61 million in stock repurchases and $34 million in dividends. |
LauraAlber, President and Chief Executive Officer, commented:“Our third quarter results demonstrate the effectiveness of our strategic priorities to deliver value, quality and excellent customer service. During the quarter, strong execution against our product and digital initiatives drove new customer acquisition andtop-line expansion in a competitive and dynamic retail environment. Importantly, our demand during the quarter exceeded or was at least equal to net revenues across all of our brands – most notably in Pottery Barn and PBteen – which is a strong indication of the health of our business. Additionally, our investments in digital innovation and cross-brand services, as well as continued optimization of our supply chain, position us to further differentiate our business and to deliver long-term profitable growth.”
Alber continued, “All of our initiatives are underpinned by our vision to create a high-touch customer service platform that is truly transformational for the home furnishings industry. Our acquisition of Outward, Inc., announced today, will enhance and extend this platform and enable us to create highly engaging and interactive shopping experiences that set a new industry standard.”
Net revenues increased to $1.299 billion in Q3 17 from $1.245 billion in Q3 16.
Comparable brand revenue in Q3 17 grew 3.3% compared to a decline of 0.4% in Q3 16 as shown in the table below:
3rd Quarter Comparable Brand Revenue Growth by Concept*
| ||||||||||||
| Q3 17 | Q3 16 | |||||||||||
Pottery Barn | (0.3% | ) | (4.6% | ) | ||||||||
Williams Sonoma | 2.3% | 0.1% | ||||||||||
West Elm | 11.5% | 12.0% | ||||||||||
Pottery Barn Kids | 0.1% | (1.0% | ) | |||||||||
PBteen | 3.0% | (10.9% | ) | |||||||||
Total | 3.3% | (0.4% | ) | |||||||||
* See the Company’s10-K and10-Q filings for the definition of comparable brand revenue
|
| |||||||||||
E-commerce net revenuesin Q3 17 increased 6.4% to $690 million from $649 million in Q3 16.E-commerce net revenues generated 53.1% of total company net revenues in Q3 17 and 52.1% of total company net revenues in Q3 16.
Retail net revenues in Q3 17 increased 2.1% to $609 million from $597 million in Q3 16.
Operating margin in Q3 17 was 8.5% compared to 8.8% in Q3 16. Excluding severance-related reorganization charges,non-GAAP operating margin was 8.9% in Q3 16:
| • | Gross margin was 35.9% in Q3 17 versus 36.8% in Q3 16. |
| • | Selling, general and administrative (“SG&A”) expenses were $356 million, or 27.4% of net revenues in Q3 17, versus $348 million, or 28.0% of net revenues in Q3 16. Excluding severance-related reorganization charges of approximately $1.2 million,non-GAAP SG&A expenses were $347 million, or 27.9% of net revenues, in Q3 16. |
The effective income tax rate in Q3 17 was 35.3% versus 36.6% in Q3 16. The year-over-year tax rate improvement was primarily driven by the overall mix and level of earnings, as well as the incremental benefits we are seeing from improved profitability across our international operations, which are taxed at a lower tax rate.
EPS in Q3 17 was $0.84 versus $0.78 in Q3 16. Excluding severance-related reorganization charges,non-GAAP EPS was $0.79 in Q3 16.
Merchandise inventories at the end of Q3 17 increased 10.6% to $1.177 billion from $1.064 billion at the end of Q3 16. A large portion of this inventory growth, however, was associated with inventory that isin-transit and not yet received at our distribution centers. The biggest drivers of inventory growth are associated with our higher growth brands, particularly West Elm and Rejuvenation. Based on our estimates, we believe that inventory growth will be relativelyin-line with sales growth by the end of the year.
STOCK REPURCHASE PROGRAM
During Q3 17, we repurchased approximately 1.3 million shares of common stock at an average cost of $46.84 per share and a total cost of approximately $61 million. As of October 29, 2017, there was approximately $256 million remaining under our current stock repurchase program.
2
FISCAL YEAR 2017 FINANCIAL GUIDANCE
4th Quarter 2017 Guidance Financial Highlights
| ||
Total Net Revenues (millions) | $1,610 – $1,675 | |
| Comparable Brand Revenue Growth | 2% – 6% | |
Diluted EPS | $1.49 – $1.64 | |
Fiscal Year 2017 Financial Guidance
| ||
Total Net Revenues (millions) | $5,225 – $5,290 | |
Comparable Brand Revenue Growth | 2% – 4% | |
Non-GAAP Operating Margin* | 9.0% – 9.2% | |
Non-GAAP Diluted EPS* | $3.45 – $3.60 | |
Income Tax Rate | 35.0% – 36.0% | |
Capital Spending (millions) | $200 – $220 | |
Depreciation and Amortization (millions) | $185 – $195 | |
* Excludes certain items affecting comparability. See Notes 1 and 2 in Exhibit 1. Including these items, GAAP operating margin guidance would be 8.9% to 9.1%. See Exhibit 1 for a reconciliation of GAAP tonon-GAAP EPS.
| ||
Store Opening and Closing Guidance by Retail Concept*
| ||||||||||||||||||||||||||
| FY 2016 ACT | FY 2017 GUID | |||||||||||||||||||||||||
| Total | New | Close | End | |||||||||||||||||||||||
Williams Sonoma | 234 | 4 | (9 | ) | 229 | |||||||||||||||||||||
Pottery Barn | 201 | 8 | (6 | ) | 203 | |||||||||||||||||||||
West Elm | 98 | 10 | (2 | ) | 106 | |||||||||||||||||||||
Pottery Barn Kids | 89 | - | (4 | ) | 85 | |||||||||||||||||||||
Rejuvenation | 7 | 1 | - | 8 | ||||||||||||||||||||||
Total | 629 | 23 | (21 | ) | 631 | |||||||||||||||||||||
| ||||||||||||||||||||||||||
* Included in the FY 16 store count are 19 stores in Australia and one store in the UK. FY 17 guidance includes one additional UK store, and does not reflect the temporary store closures due to the hurricanes. | ||||||||||||||||||||||||||
CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. will host a live conference call today, November 16, 2017, 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.
3
SEC REGULATION G —NON-GAAP INFORMATION
This press release includesnon-GAAP SG&A, operating income, operating margin and diluted EPS. Thesenon-GAAP financial measures exclude the impact of severance-related charges in Q1 16, Q3 16 and Q1 17, aone-time favorable tax adjustment associated with intercompany transactions in Q4 16, and tax expense related to the adoption of new accounting rules related to stock-based compensation in Q1 17. We have reconciled thesenon-GAAP financial measures with the most directly comparable GAAP financial measures in the text of this release and in Exhibit 1. We believe that thesenon-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our actual results and Q4 17 and FY 17 guidance on a comparable basis with prior periods. Our management uses thesenon-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. Thesenon-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.
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 progress on our strategic initiatives; our growth drivers; our future financial guidance, including Q4 17 and FY 17 guidance; 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 Q3 17; 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 ine-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; the impact of potential corporate tax reform; 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 Form10-K for the fiscal year ended January 29, 2017, and all subsequent quarterly reports on Form10-Q and current reports on Form8-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 retail 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, the Philippines and South Korea, and stores ande-commerce websites in Mexico.
4
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
Thirteen weeks ended October 29, 2017 and October 30, 2016
(Dollars and shares in thousands, except per share amounts)
| 3rd Quarter | ||||||||||||||||
| 2017 | 2016 | |||||||||||||||
| $ | % of Revenues | $ | % of Revenues | |||||||||||||
E-commerce net revenues | $ | 690,045 | 53.1 | % | $ | 648,743 | 52.1 | % | ||||||||
Retail net revenues | 609,291 | 46.9 | 596,642 | 47.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net revenues | 1,299,336 | 100.0 | 1,245,385 | 100.0 | ||||||||||||
Cost of goods sold | 832,269 | 64.1 | 787,162 | 63.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 467,067 | 35.9 | 458,223 | 36.8 | ||||||||||||
Selling, general and administrative expenses | 356,254 | 27.4 | 348,244 | 28.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating income | 110,813 | 8.5 | 109,979 | 8.8 | ||||||||||||
Interest expense, net | 594 | — | 488 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings before income taxes | 110,219 | 8.5 | 109,491 | 8.8 | ||||||||||||
Income taxes | 38,906 | 3.0 | 40,113 | 3.2 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net earnings | $ | 71,313 | 5.5 | % | $ | 69,378 | 5.6 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings per share (EPS): | ||||||||||||||||
Basic | $ | 0.84 | $ | 0.78 | ||||||||||||
Diluted | $ | 0.84 | $ | 0.78 | ||||||||||||
Shares used in calculation of EPS: | ||||||||||||||||
Basic | 84,940 | 88,382 | ||||||||||||||
Diluted | 85,384 | 89,144 | ||||||||||||||
5
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings (unaudited)
Thirty-nine weeks ended October 29, 2017 and October 30, 2016
| Year-to-Date | ||||||||||||||||
| 2017 | 2016 | |||||||||||||||
| $ | % of Revenues | $ | % of Revenues | |||||||||||||
E-commerce net revenues | $ | 1,901,348 | 52.6 | % | $ | 1,824,660 | 52.1 | % | ||||||||
Retail net revenues | 1,711,101 | 47.4 | 1,677,571 | 47.9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net revenues | 3,612,449 | 100.0 | 3,502,231 | 100.0 | ||||||||||||
Cost of goods sold | 2,326,911 | 64.4 | 2,240,952 | 64.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 1,285,538 | 35.6 | 1,261,279 | 36.0 | ||||||||||||
Selling, general and administrative expenses | 1,030,667 | 28.5 | 1,004,499 | 28.7 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating income | 254,871 | 7.1 | 256,780 | 7.3 | ||||||||||||
Interest expense, net | 974 | — | 587 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings before income taxes | 253,897 | 7.0 | 256,193 | 7.3 | ||||||||||||
Income taxes | 90,112 | 2.5 | 95,433 | 2.7 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net earnings | $ | 163,785 | 4.5 | % | $ | 160,760 | 4.6 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings per share (EPS): | ||||||||||||||||
Basic | $ | 1.90 | $ | 1.81 | ||||||||||||
Diluted | $ | 1.89 | $ | 1.79 | ||||||||||||
Shares used in calculation of EPS: | ||||||||||||||||
Basic | 86,111 | 88,906 | ||||||||||||||
Diluted | 86,582 | 89,764 | ||||||||||||||
6
Williams-Sonoma, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(Dollars and shares in thousands, except per share amounts)
| Oct. 29, 2017 | Jan. 29, 2017 | Oct. 30, 2016 | ||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 90,779 | $ | 213,713 | $ | 75,381 | ||||||
Accounts receivable, net | 92,282 | 88,803 | 96,386 | |||||||||
Merchandise inventories, net | 1,176,941 | 977,505 | 1,063,747 | |||||||||
Prepaid catalog expenses | 22,992 | 23,625 | 25,329 | |||||||||
Prepaid expenses | 65,326 | 52,882 | 74,195 | |||||||||
Other assets | 12,141 | 10,652 | 12,176 | |||||||||
|
|
|
|
|
| |||||||
Total current assets | 1,460,461 | 1,367,180 | 1,347,214 | |||||||||
|
|
|
|
|
| |||||||
Property and equipment, net | 931,131 | 923,283 | 918,020 | |||||||||
Deferred income taxes, net | 131,793 | 135,238 | 136,558 | |||||||||
Other assets, net | 56,999 | 51,178 | 51,540 | |||||||||
|
|
|
|
|
| |||||||
Total assets | $ | 2,580,384 | $ | 2,476,879 | $ | 2,453,332 | ||||||
|
|
|
|
|
| |||||||
Liabilities and stockholders’ equity | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 470,783 | $ | 453,710 | $ | 450,144 | ||||||
Accrued salaries, benefits and other liabilities | 103,349 | 130,187 | 111,445 | |||||||||
Customer deposits | 288,569 | 294,276 | 289,737 | |||||||||
Borrowings under revolving line of credit | 170,000 | - | 125,000 | |||||||||
Income taxes payable | 48,865 | 23,245 | 1,122 | |||||||||
Other liabilities | 55,985 | 59,838 | 53,423 | |||||||||
|
|
|
|
|
| |||||||
Total current liabilities | 1,137,551 | 961,256 | 1,030,871 | |||||||||
|
|
|
|
|
| |||||||
Deferred rent and lease incentives | 195,220 | 196,188 | 192,948 | |||||||||
Other long-term obligations | 75,439 | 71,215 | 70,031 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities | 1,408,210 | 1,228,659 | 1,293,850 | |||||||||
|
|
|
|
|
| |||||||
Stockholders’ equity | ||||||||||||
Preferred stock: $.01 par value; 7,500 shares authorized; none issued | - | - | - | |||||||||
Common stock: $.01 par value; 253,125 shares authorized; 84,478, 87,325 and 88,014 shares issued and outstanding at October 29, 2017, January 29, 2017 and October 30, 2016, respectively | 845 | 873 | 881 | |||||||||
Additionalpaid-in capital | 557,198 | 556,928 | 547,513 | |||||||||
Retained earnings | 623,170 | 701,702 | 623,243 | |||||||||
Accumulated other comprehensive loss | (8,314 | ) | (9,903 | ) | (10,772 | ) | ||||||
Treasury stock, at cost | (725 | ) | (1,380 | ) | (1,383 | ) | ||||||
|
|
|
|
|
| |||||||
Total stockholders’ equity | 1,172,174 | 1,248,220 | 1,159,482 | |||||||||
|
|
|
|
|
| |||||||
Total liabilities and stockholders’ equity | $ | 2,580,384 | $ | 2,476,879 | $ | 2,453,332 | ||||||
|
|
|
|
|
| |||||||
7
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
Thirty-nine weeks ended October 29, 2017 and October 30, 2016
(Dollars in thousands)
| Year-to-Date | ||||||||
| 2017 | 2016 | |||||||
Cash flows from operating activities | ||||||||
Net earnings | $ | 163,785 | $ | 160,760 | ||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 135,473 | 127,745 | ||||||
Loss on disposal/impairment of assets | 1,299 | 1,852 | ||||||
Amortization of deferred lease incentives | (18,987 | ) | (18,789 | ) | ||||
Deferred income taxes | (11,884 | ) | (14,461 | ) | ||||
Tax benefit related to stock-based awards | 15,439 | 23,571 | ||||||
Excess tax benefit related to stock-based awards | - | (4,817 | ) | |||||
Stock-based compensation expense | 30,164 | 37,975 | ||||||
Other | (416 | ) | (647 | ) | ||||
Changes in: | ||||||||
Accounts receivable | (2,341 | ) | (17,400 | ) | ||||
Merchandise inventories | (197,757 | ) | (82,410 | ) | ||||
Prepaid catalog expenses | 633 | 3,591 | ||||||
Prepaid expenses and other assets | (20,001 | ) | (29,205 | ) | ||||
Accounts payable | 7,544 | (17,403 | ) | |||||
Accrued salaries, benefits and other liabilities | (26,883 | ) | (507 | ) | ||||
Customer deposits | (5,815 | ) | (7,445 | ) | ||||
Deferred rent and lease incentives | 17,000 | 25,969 | ||||||
Income taxes payable | 25,677 | (65,915 | ) | |||||
|
|
|
| |||||
Net cash provided by operating activities | 112,930 | 122,464 | ||||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (135,821 | ) | (127,169 | ) | ||||
Other | 458 | 370 | ||||||
|
|
|
| |||||
Net cash used in investing activities | (135,363 | ) | (126,799 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Borrowings under revolving line of credit | 170,000 | 125,000 | ||||||
Repurchases of common stock | (154,321 | ) | (115,167 | ) | ||||
Payment of dividends | (101,928 | ) | (100,854 | ) | ||||
Tax witholdings related to stock-based awards | (14,836 | ) | (26,518 | ) | ||||
Excess tax benefit related to stock-based awards | - | 4,817 | ||||||
Proceeds related to stock-based awards | - | 1,532 | ||||||
Other | (20 | ) | (48 | ) | ||||
|
|
|
| |||||
Net cash used in financing activities | (101,105 | ) | (111,238 | ) | ||||
|
|
|
| |||||
Effect of exchange rates on cash and cash equivalents | 604 | (2,693 | ) | |||||
Net decrease in cash and cash equivalents | (122,934 | ) | (118,266 | ) | ||||
Cash and cash equivalents at beginning of period | 213,713 | 193,647 | ||||||
|
|
|
| |||||
Cash and cash equivalents at end of period | $ | 90,779 | $ | 75,381 | ||||
|
|
|
| |||||
8
Exhibit 1
(Unaudited)
Reconciliation of 3rd Quarter GAAP toNon-GAAP Operating Income and Operating Margin By Segment*
($ in thousands)
| E-commerce | Retail | Unallocated | Total | |||||||||||||||||||||||||||||
| Q3 17 | Q3 16 | Q3 17 | Q3 16 | Q3 17 | Q3 16 | Q3 17 | Q3 16 | |||||||||||||||||||||||||
Net Revenues | $690,045 | $648,743 | $609,291 | $596,642 | $ | - | $ | - | $1,299,336 | $1,245,385 | ||||||||||||||||||||||
GAAP Operating Income/(Expense) | 142,865 | 150,164 | 42,804 | 47,080 | (74,856) | (87,265) | 110,813 | 109,979 | ||||||||||||||||||||||||
GAAP Operating Margin | 20.7% | 23.1% | 7.0% | 7.9% | (5.8%) | (7.0%) | 8.5% | 8.8% | ||||||||||||||||||||||||
Severance-related Charges (1) | - | - | - | - | - | 1,185 | - | 1,185 | ||||||||||||||||||||||||
Non-GAAP Operating Income/(Expense) (5) | $142,865 | $150,164 | $42,804 | $47,080 | $(74,856) | $(86,080) | $110,813 | $111,164 | ||||||||||||||||||||||||
Non-GAAP Operating Margin (5) | 20.7% | 23.1% | 7.0% | 7.9% | (5.8%) | (6.9%) | 8.5% | 8.9% | ||||||||||||||||||||||||
| * | See the Company’s10-K and10-Q filings for additional information on segment reporting and the definition of Operating Income/(Expense) and Operating Margin. |
Reconciliation of Quarterly and Fiscal Year GAAP toNon-GAAP
Diluted Earnings Per Share**
(Totals rounded to the nearest cent per diluted share)
Q1 17 ACT | Q2 17 ACT | Q3 17 ACT | Q4 17 GUID | FY 17 GUID | ||||||
2017 GAAP Diluted EPS | $0.45 | $0.61 | $0.84 | $1.49 - $1.64 | $3.39 - $3.54 | |||||
Impact of Severance-related Charges(2) | $0.04 | - | - | - | $0.04 | |||||
Unfavorable Tax Impact from the Adoption of New Accounting Rules(3) | $0.02 | - | - | - | $0.02 | |||||
2017Non-GAAP Diluted EPS(5) | $0.51 | $0.61 | $0.84 | $1.49 - $1.64 | $3.45 - $3.60 | |||||
Q1 16 ACT | Q2 16 ACT | Q3 16 ACT | Q4 16 ACT | FY 16 ACT | ||||||
2016 GAAP Diluted EPS | $0.44 | $0.58 | $0.78 | $1.63 | $3.41 | |||||
Impact of Severance-related Charges(1) | $0.09 | - | $0.01 | - | $0.10 | |||||
One-time Favorable Tax Adjustment(4) | - | - | - | ($0.08) | ($0.08) | |||||
2016Non-GAAP Diluted EPS(5) | $0.53 | $0.58 | $0.79 | $1.55 | $3.43 |
| ** | Due to the differences between the quarterly andyear-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. |
Store Statistics
| Store Count | Avg. Leased Square Footage Per Store | |||||||||||||||||||||||||||||||
| Jul. 30, 2017 | Openings | Closings*** | Oct. 29, 2017 | Oct. 30, 2016 | Oct. 29, 2017 | Oct. 30, 2016 | ||||||||||||||||||||||||||
Williams Sonoma | 234 | 1 | (2 | ) | 233 | 241 | 6,700 | 6,600 | ||||||||||||||||||||||||
Pottery Barn | 204 | 1 | (3 | ) | 202 | 202 | 13,900 | 13,800 | ||||||||||||||||||||||||
West Elm | 101 | 5 | (1 | ) | 105 | 97 | 13,100 | 13,300 | ||||||||||||||||||||||||
Pottery Barn Kids | 88 | - | - | 88 | 89 | 7,400 | 7,500 | |||||||||||||||||||||||||
Rejuvenation | 8 | - | - | 8 | 6 | 8,800 | 9,300 | |||||||||||||||||||||||||
Total | 635 | 7 | (6 | ) | 636 | 635 | 10,200 | 10,000 | ||||||||||||||||||||||||
| Jul. 30, 2017 | Oct. 29, 2017 | Oct. 30, 2016 | ||||||||||||||||||
Total store selling square footage | 3,998,000 | 4,031,000 | 3,966,000 | |||||||||||||||||
Total store leased square footage | 6,428,000 | 6,468,000 | 6,381,000 | |||||||||||||||||
| *** | Q3 17 closings include two Williams Sonoma, two Pottery Barn and one West Elm temporary closures in Puerto Rico and Florida due to hurricanes in these areas. These stores are expected to reopen in Q4 17. |
9
Notes:
| (1) | During Q1 16 and Q3 16 we incurred severance-related reorganization charges due to headcount reduction primarily in our corporate functions totaling approximately $13 million, or $0.09 per diluted share, and $1 million, or $0.01 per diluted share, respectively. These charges were recorded as SG&A expense within the unallocated segment. |
| (2) | During Q1 17 we incurred severance-related charges associated with the previously announced departure of the former President of the Pottery Barn brands, as well as other severance-related charges, of approximately $6 million, or $0.04 per diluted share. These charges were recorded as SG&A expense within the unallocated segment. |
| (3) | During Q1 17 we incurred tax expense of approximately $1 million, or $0.02 per diluted share, associated with the adoption of new accounting rules related to stock-based compensation. |
| (4) | During Q4 16 we incurred a benefit of approximately $8 million, or $0.08 per diluted share, related to aone-time tax adjustment associated with intercompany transactions. |
| (5) | SEC Regulation G –Non-GAAP Information – These tables includenon-GAAP operating income, operating margin and diluted EPS. We believe that thesenon-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our actual results and Q4 17 and FY 17 guidance on a comparable basis with prior periods. Our management uses thesenon-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. Thesenon-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. |
10