WSM - Earnings call transcript Q3 2018

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Operator

Welcome to the Williams-Sonoma, Inc.

Third Quarter 2018 Earnings Conference Call. [Operator Instructions]. This call is being recorded. I would now like to turn the call over to Ms. of statements. to President measures non-GAAP Vice forward-looking and Wang, Investor discuss Relations, financial Elise ahead. go Please

Elise Wang

Thank you. issued This the Good afternoon. press conjunction considered release with in that we earlier call today. should be

non-GAAP uncertainties. subject press and most may This will reflect why uncertainties release. meaning trends, press The to results our also relate Please Securities I contains the explanation Reform of beyond, that the or the President in risks and call non-GAAP no of and company X business XXXX, arise on Officer. of or guidance, information this may events current conditions, of the Our over company's after within date statements differ circumstances Laura call discussion be and and will prospects risks SEC XX-K on most the for financial forward-looking discussed these statements now the measures. to of from Litigation more recent could initiatives, forward-looking to results Alber, refer such our revise materially call. measures plans Exhibit of update to any operations, undertakes turn to to reconciliation financial to are conference obligation Chief Executive forward-looking Private statements. the today filings, A company measures including of measures the release growth cause the actual the and and which useful and GAAP in to guidance Act are that non-GAAP of results based address financial XXXX certain comparable financial our the and

Laura Alber

everyone. afternoon, good and you, Thank

Carbullido, power quarter of Financial Marketing guidance strategic growth. are our EPS multibrand the Chief our our and third execution, at performance the end Anwar, delivered Technology Officer. me Julie On of Yasir with initiative the Officer; our with ongoing our benefits strength customer in and Chief today model. This our Chief continued demand team's and the call high We Officer; of and Whalen, demonstrates strong Felix multichannel,

made Given holiday and believe our track inspiring progress year this and prepared and or this to deliver remain of we've we the business meet we substantial on full year in our are to innovative season pipeline compelling well products content, our guidance. beat

quarter the caused by as let net a orders longer results. higher, quarter guidance share, shipments at comp, for fulfill. of the revenue growth importers X.X% amount our as accelerating revenues resulted X.X%. of this before well comparable provide congestion a tariffs -- delay between placed their total share X.X%. Now me product earnings difference this XX.X% disruption, end quarter, the $X.XX the for unexpected customer Demand summary our went Despite in high and from range. that was The per China of financial in accelerated grew third quarter sequentially as to higher-than-expected with U.S. demand Net total which many at dropship grew of accounts sales into customers effect to to take out receipts per

again digital once team's of strategic strong innovation, four our were leadership, driven quarter this by priorities: and results transformation financial Our excellence. retail our operational product execution

in with leadership. highlights Let me some start digital

of customer of driving an high acquisition e-commerce total growth all-time and are efforts innovation to XX% Our revenues.

to initiatives cross-brand our continue quarter. two of this We the new leverage launching portfolio, multibrand power

launch in Crew August, actively Planner Design phase. its will shopping experience, who've October, Collective. associates, our Outward-powered from our for professional initial been Pottery Since Williams-Sonoma In also to design the stores. functionalities in in-store the part become as our design cross-brand First, was Crew application activities using the and West Elm feedback named cross-brand have our home we called this over Barn, Ensemble in launched released design launch this was application experience the positive of overwhelmingly customer-facing and initial or users and continue by Room tool it version Design created add met of customers. our This with We Registry engaging features an room The with we of One and XX,XXX integral enhance thousands been planner the believe more registry rooms weekly. to we'll program called during

customers Elm, in all now a and create Our includes West Barn Barn items Williams-Sonoma, can place. Kids registry from that one Pottery Pottery

to added on easily whole items addresses the This personalization strategic customer convenience together for for millennial-driven for are by response unlock their sorted recipients' increasing allowing categories, brands are selected grouped the home. audience. shop is registry as For demand convenience, a and by and a strong. it for our reads program gift-givers Early

In addition our cross-brand a loyalty momentum sizable saw to in these Key. The pickup in program, initiatives, we

more pickup quarter, a customers capabilities branding are of as Pottery program the stock in the to and the that West we in last and is continue for of shopping Elm our we Barn particularly same for compared items store and at introduced seasonal loyalty will enrollment the last brands, a cross-channel Also program business. and for in Total online sales overall through to made e-commerce grow this and than the and out choice revenue During easier now Xx channel, is time our the with strong year. gift in items We and The and improved minute. are and design for Key strategic membership to offer driver QX, up ever. customers engagement we holidays. convenience shop expanded that time buy seeing online,

choice expectations our We are taking to testing multichannel for more customers' of platform shop. and growing way advantage our meet they more the in options shipping

about innovation. Now talk to I'd product like

gifting. partnership and decor One the product Potter Pottery our Harry X PBteen, Pottery with second Harry the the and furniture, to franchise collaboration of all Following success we've decorative includes Potter of brands. the categories tremendous Home such collection expanded accessories across in In Barn releases expanded the Barn brands, new coordinated as our our holiday

Barn Basics, This cross-brand to Design brands. of shop us. us a our fashion collection seasonal In our allows is of our the essentials wherever start with available the power purchasing Crew offer collection off introduced brands also and high-quality holiday strong across a the as to combine choose low-priced, portfolio is a of they customers Pottery brand, multiple story home assortment. our greater proprietary the We to for plaid value

also continue We Apartment brand. to see to customers Barn the and attract new Pottery accelerate

customers us In that price which curated addition, to new total inventory close Marketplace In be to we strategy, replicating We'll build company ability children's points, core our new of in growth revenues X% products, assortment baby the collection. continue augment an the aesthetics entry to our cost. and without this marketplace be a high-quality continues to out attract to and is gives to accelerate segment strategy time. products revenue expect test over other brands of momentum point and brand. Pottery early the Barn broader our our opportunity our as new gain and businesses,

As in and a collection safety commitment baby and highlight, quality. with the to QX modern unique performing contemporary already is design launched plan ahead strong its of

long-term available at our to which a Scanpan, unique off products strong with into strong Williams-Sonoma drove partners, and performance cookware in and business. We reads Williams-Sonoma. are seasonal We All-Clad early the an with In a assortment vendor continue holiday exclusives categories, product customers headed are the very holiday exciting brand, to and of only gifting our many newness to two and introduced across start. innovative respond

campaign television exclusive the first our for launched ever also Thermo-Clad We lead the our ad holiday. up time featuring cookware, to

and and and is holiday to favorites. prepared needs continued ahead gifting lineup growth and with as product the The Looking accelerating compelling our Growth aesthetic, our brand's e-commerce categories team the West all as traffic entertaining returning improved conversion. to are customer Williams-Sonoma well regions driving as ongoing strong new and customers to holiday. price Williams-Sonoma on digital and respond very particularly deliver of point. deliver Elm across many channel ready QX, is strong all continue to innovation offerings cooking, this as customers' and is also to scale in acquisition

furniture drive less our businesses and balancing with considered a expanding seasonal with and holiday on conversion these and focus assortment between are We purchases. traffic to decorating nonfurniture entertaining this our

modern continue and brand drive profitable products, West growth, leader are in time. to over biggest capture our continue becoming the we to affordable quality to As Elm's potential double-digit market to and high in home confident share

Our is transformation. third retail strategic priority

selectively stores in new to our remodel new continue on execute three stores quarter. successful while in stores. investing We strategy We the opened remodeled and five

Our prior the remodeled double-digit is and averaging store. stores over fleet of annualized relocated growth sales in

our to with and performance sales in brand. as new distinctive Our this the future This our of are the Elm in into store global of look to we planned XX plan the we've stores a on for today, early partnering we entered for we focus expand our perform another outperforming in average. the Kids upon e-commerce announced as to Williams-Sonoma first optimize Home introduction enter Brands, underperforming three process in partner Reliance tests by stores closures XX customers In earlier than with of U.K. continue transform Barn our bring locations. running we we of and brands Reliance We one brand, stores stores Pottery expiration and year where year with our our by close part excellent and India, XX% fleet operations, and our the of to the in the In And expand To the total. John partnership better to with their the quarter total to in franchise successfully intensified our growing further forward year. retail to fleet in will continue introducing India. have presence several on QX in closures retail impaired lease store strategic to and new stores our a plan service of profitability, Lewis the XXXX. West

to an to on excellence In new pursuing our finally, And and customer the focus strategic on you improving operational development, are actively our opportunities other also exciting global I'd expand further give we like experience. addition to business. this update

efficiency been has were we and every point rating customer drive that X.X both chain. improvements continue key shipments touch company-wide of a throughout Production up facility X focus. stars reductions for manufacturing improved star the year-to-date. measurement in-store domestic quarter, and delivery. while encouraged our to high service also at in-home during Performance We are XX% out the from And our XX% average is customer a damages cost of supply at

the September. inventory, annualized executing we one plan, the are one in $X inventory transition program Regarding sales volume crossing ahead of through to of threshold our billion in

processes transition helped bringing to flow completely cross-channel, chain. one year, allow improving believe levels, ever us, ahead inventory significantly increase the last DCF quarters we in three inventory season. improvements Despite us reengineer to costs supply tightness and wage in down we multiyear by Our our peak incentive seasonal in in the inventory operational behind recent that headed are pay teams into the With efficiency DCs. the allocating of are than will and inventory hourly market, better are hiring our in prepared our labor versus optimizing

fundamental Our focused and a our teams to they discuss outstanding And company. on point every expect the few customers experience tariffs. are I our minutes touch flawlessly the holiday service the now from great executing give to to that delivering take China at want

vendor While looking vendors, integrated tariffs We're other remains resourcing to teams reductions we're volatile, due aggressively cost through are the relationships also vertically with the our multicountry to of our our progress. parts the impact And partners. chain good trusted renegotiating business. our the in long-standing and our situation and supply cost mitigate given making with

we on exercise few. our have processing, we've as to name work example, a exhaustive reduce For areas utilities an and nonmerchandise identified costs such where in sizable and consolidate vendor with contingent opportunities data janitorial, undergone labor vendors expense to recently

a look pipeline our compelling strong the forward content products, we are commitment innovative position to engaging of quarter, customer in service. and fourth As we to exclusive with

platform, multibrand differentiated us what multichannel, apart. sets and offer merchandising lifestyle high-touch Our truly are product

to a forward market year, the serve our accelerated Financial strengthen are pursue call with to time most customers, turn to all you to of updating the Officer, And discuss prepared Julie Our to experience a better growth. I profitable exciting of ready us, to to creating now and gain goal has the results. year all next drive with opportunity year our we and Chief like now and the of Whalen, for I'd look our share team over worked customer. financial our every ahead business just

Julie Whalen

afternoon, good and Laura, you, Thank everyone.

of quarter all results momentum and discipline. are our continued reflect operational third Our initiatives our to in strategic the commitment gaining we

total XX% product of outpacing to receipts over line the We are pleased of revenues X% high that results top in despite delay our growing in a quarter, delivered an all-time and experienced the range; quarter last within guidance demand we second below e-commerce share year; we comps strength of our inventory growth; double-digit balance the margins, high retail continued with per our guidance substantially a again and revenues; strong growth. operating across expansion; at revenue growth e-commerce including range end and margin with operating and growth sheet earnings

Before results of the quarter. I discuss basis with implementation remaining reminder of shipped improvement upon our a dependent impact recognition certain for the a a our reclass include improvement of revenue margin point during into that our and impact accounting timing financial in with performance which third Similar point primarily in The SG&A the impact XXX results associated into approximate revenue an basis the quarter net XX week in new to of quarter, from revenue is from recognition. detail, our SG&A is merchandise gross with to customers, more swing margin. the last associated to last income our standard associated the revenues from resulted other the XXXX

our were accelerating not X.X%, review are in comparable sequentially revenue which last financial let's quarter year-over-year Demand fulfilled, a last by was year. orders of at include yet $X,XXX,XXX,XXX higher customers results. that third were Net growth and on brand X.X%, third comps, revenues top X.X% and placed versus growth for Now the quarter of X.X% year.

XXX they of and comp by a see In this softer highest the business, from X.X%, pleased are for was the was is Elm last comp not in Pottery unproductive to over which promotions pleased combined quarter strong a though points with past X.X% year. X.X%, comps which highest at results brand they XXX four demand. We the to an flat the X.X%, years. West Kids brand, year. last basis double-digit strong are year-over-year of Barn a Year-to-date, are on decision even anniversary By resulting growth another revenue and was that at customer includes Pottery up strength continued however, demand to have some XX.X% driving they of Barn top this last we with in their seen of Pottery to driven one had comp our a largely delivered in year year-over-year higher Teen growth. Barn basis Comp quarter comp, year, points in growth quarters. e-commerce impressive has two several was see seen our comp

the Rejuvenation X.X%. sequential brand, seen the a saw a also of comp represents basis finally, solid we e-commerce year which second as And our another revenues high our XXX Mark growth last all-time Williams-Sonoma grew growth. total of and quarter and growth Graham, X.X% in another scale year-over-year, channel, by By We and company this highest points. global was deliver revenues company-owned net strong double-digit two quarter operations E-commerce revenues delivered XX% was as in years. our well comps quarter continue and net newer an of X.X% of This outpacing retail and X.X%, quarter. acceleration of from reached businesses, at have to year's over three

We results enhance mix shift our e-commerce seen shopping years. in we in success of the reflect and efforts have the the experience also These high-impact to several highest digital our comps to quarter advertising. digital third marketing drove

and net occupancy was income The the down content pleased basis due hourly efficiencies. point a reclass was increase Last XX last higher initiatives margin was statement. chain with Higher costs the compensation deleverage a selling higher success employment-related above XX.X%, XXX wages. year. the the XX.X%. rates of or UPS was or income which XX.X% higher were in to value in quarter of expensive of million reduction our revenues our This XX we to and which quarter to levels, the recognition to incentive primarily We margin the of and from supply this revenues. margin Gross products for ship, implementation of chain new XX.X% XX.X% gross from was the further year, reflects streamline SG&A that costs the to point quarter to grew third which third with of more leverage year's compensation The offset effectively. revenues supply that was was last had year's includes also compared standard. savings into benefit lower mix margins increased revenue in versus of higher continued net for promotions costs. at strength inventory year reduce last of quarter basis earned. shipping overall into $XXX associated deleverage develop costs also in reflects XX.X% tax see and the X.X% is million a by selling performance-based basis our last efficiencies, not furniture, margins, Moving the points Occupancy line communicates from other result of drive $XXX reinvestment and completely strategic our more

competitive labor market, attract investment people talent so year retain our able be positioned for much that to to this to Given and our the we better increasingly accelerate we are in pleased this are future.

a third to deleverage reflects was rate revenues, to percentage X.X% of the as XX result revenues quarter other third driven net the third unallocated income This lower implementation quarter from the The year. for which also deleveraged SG&A quarter by the incentive resulting of expense primarily Operating last from in X.X% revenue corporate standard. margin reclass by was as expenses, recognition points a the deleverage X.X% of basis into driven costs a general compared last employment-related compensation of year. predominantly new costs

the last reclass XX.X% implementation the year. basis across from deleverage partially general expanded margin selling deleverage and the third margin tax primarily also revenues from our XX% margins due XX% the operating to to lower strong margin reduced other last channel, primarily Cuts favorability income both tax In retail compared margins to Jobs to by rate into rate XX.X% reflects primarily driven financial optimization, expense operating gross channels. as from deleverage, tax in This driven lower basis channel was by advertising year-over-year the within retail XXXX occupancy Tax the rate of offset by associated partially offset The improved, discipline, The and points was X.X%, predominantly expanding by and retail with e-commerce new federal the e-commerce income higher standard. margin by versus overall the would've revenue XX The recognition of point XX% a driven leveraged in year. quarter this SG&A Excluding was operating operating Act. sales. effective XX deleverage XX% catalog

Third and able quarter guidance of growth to XXXX overall in in earnings quarter, of to diluted strong delay range double-digit pleased last the and to the $X.XX continued end driven compared we reach in discipline. XX.X% $X.XX representing EPS share deliver were year-over-year. further margins, per year, receipts product Despite were the EPS, growth financial selling high our chain by efficiencies supply healthy to be

of year-to-date the strategic the give of demonstrate and our results revenue EPS to growth, and growth initiatives our us our growth, revenue confidence ability financial overall X.X% growth shareholders. for in XX% including e-commerce Our long-term X.X% success profitable deliver

invested in almost the an the This share balance and a is year-to-date end of the at in repurchases; increase Moving $XX results Cash $XX business and year. million last return we $XXX million share million $XX In of XX% was million, dividends, last versus quarter $XXX stockholders $XX to $XX third in million million to year. over through of returned to the million dividends. quarter, sheet. in repurchases comprised the shareholders and which

growth. was of X.X% which than third our end level inventory the merchandise $X.X only and at quarter billion lower approximately was higher significantly than revenue Our year, last the

all our our and focus We made across continue of customer we've build with across improving progress efficiencies on all inventory on network supply chain year initiatives driving to a the service.

discuss like quarter and Now I XXXX to our would fiscal year fourth guidance.

year We reflects are our raised strong XXXX year-to-date reiterating fiscal which previously our performance. guidance,

range with range grow remains All anticipate operating within of the to earnings diluted in comp of of previous We $X,XXX,XXX,XXX be X% to in $X,XXX,XXX,XXX guidance. in the release revenues from press to with growth X%. X.X% net $X.XX share per to the expect $X.XX. other margins We a our range to guidance X% of to financial the to range unchanged

we of to be revenues diluted range of revenue to range XXXX, to X expect For to of to $X.XX. the $X,XXX,XXX,XXX per fourth net growth with to of expect the grow we share brand range in X%. $X,XXX,XXX,XXX earnings $X.XX quarter in comparable the a And

to As X% assortment we balanced XX%. of season, and at in head execute, remains into capital ability comp EPS unchanged. and guidance, range With holiday which year of the our of given our confident are end represents strong growth approach high the the fiscal growth our product our we regard to allocation, proven

our and will excess the first We cash our strong growth the our return to flow to and in highest to repurchases the areas dividends. business operating cash will form utilize those invest returns shareholders and provide of in in that share fuel

continue will earlier prepared monitor liquidity, and increase to did and we financial We are strong year. sheet our share rate we balance level of as with buybacks buybacks our this to of our opportunistically

the for holiday done throughout the our you we we for they for thank to us the prepare work have team Before to year. the want open questions, call and season to say

portfolio sheet customer demographics on cost, and in with balance gives home, flow, strengths, cash track integrated With sourcing the platform strong industry-leading along able a record heritage, operational with we we a and superior beyond. to strong our confident range of competitive a will that brands and over deliver work are XX% multichannel proven world-class financial a chain be customer and holiday of quality this penetration, well a and a discipline, experience service most flexibility e-commerce of their supply commitment loved and hard serve as control as us a vertically including and unique a that aesthetics,

questions. with to opportunities our sustainable happy value shareholders. and profitable long-term And Thank growth to let's like for you drive see wish would to I many continue holidays. call deliver you. the for We to all that, open

Operator

with [Operator from first Instructions]. question Lasser We'll Michael our UBS. take

Michael Lasser

squeeze to in in the parts two definition. It's it going to come under

X.X% in So that the is of of to working to given reported comp mitigate from the should that demand is understand first you're just add we due between point congestion of issues And estimate? delays? we and you tariffs. are difference the your the X.X% comp and the comp can potential impact subject consider to should And potential basis all you with So spread to to XQ China? dropship said year those that due part previously said tariffs? then us next impact about our aggressively But the you currently help XX% sales XXX

Julie Whalen

Okay.

So on the first question fulfillment. XXX to -- Michael, this is X.X% Julie. Basically, is yes. the to due The points, complete spread X.X%, of basis

fact there's higher so pieces in and we a And the we China a to product sales. associated also two congestion to There's receipts, that the dropship have that. that ports in with had sales delay shift caused

So longer to fulfill. those take

And those into quarter, within are so course, fourth should our of the those come in assumed guidance.

we looking remarks, to from as the said far to We our vendors our lowering And after company. of by resourcing the China then actually out in to as are every products of savings offsetting tariffs, by way going clarify, obviously impact impact throughout of us. prepared that of and total source cost just said cost we goods is sales. said possible find from you we for the our where XX% As XX% cost it's aggressively

Laura Alber

as you, go And they clarify assuming the to just to tariffs that have Michael, communicated. XX% also been for we're

that if But right great. that scenario. course, now, changes, the we're would worst be Of assuming case

Michael Lasser

in is have impact meaningful going XX%, to to margin that they your a do if XXXX? go on And

Laura Alber

a my of aggressive in very tariffs the and been against we remarks, we're the And said vertically that executing of very plan have to impact lucky integrated. risks. ahead we're stay prepared future I As mitigate

really multicountry we vendors. relationships our have supply We and chain, have with a great

We're vendor And partners. at targeted. really And we're a we cost long-standing Chinese renegotiating part as moving to business other of lot our of our pleased So we're goods other earlier, find with China. we're then looking offsets. out what mentioned I with every of have

mitigate to intention. dollar every looking that the is risks, next possible are we year So of tariff our

Operator

Peter our from Baird. We'll now from question take Benedict next

Peter Benedict

XX maybe for up the fourth from be operating imply margin X.X. to to a XQ plan revenue range look correctly? margins hundred it of Are in anywhere to question maybe to in driver midpoint have what basis to would even X.X level of so, would for quarter? be just that quarter, the thinking that fourth the into guess, the we a And just year. the I the the kind of that seem if guidance to at X on the X.X of we about If the would expansion points get year. couple curious for that

Julie Whalen

think correctly. of that you're I thinking

have selling I the in we've a think obviously, way we the year. the revenue, of the end op all higher play beginning the margin, and come If of the and continue at we P&L the in on that that revenue. the drops it's to healthy seen margins, obviously, leverages down

you that op margin assumptions. it should the depends So revenue range, on your But if at expansion. you're high end the of see

Peter Benedict

mishear to that decline Or the that, the third of say comp I hear the that? change? say EBIT you Julie, follow-up XX basis of points, margin incentive quarter all as just you in a did I that was And did did

Julie Whalen

No, you heard that.

year that look XXX compensation due is unallocated So all higher this if to the almost lower we have this last deleverage of points, that from year. at you of basis corporate compensation

our for channels, operating margin total expand. e-commerce would if the you And because that, company both look so they have but retail expanded at and

where incredibly one last time incentive of health the had moment year. the difference strong. because it earn in we a this So compensation didn't We just have we business in is

Peter Benedict

year-over-year, fourth And that's similar it's more expected the it. point? the then Got to be quarter,

Julie Whalen

Yes.

Operator

with Chuck from our take question Gordon next now Haskett. We'll Grom

Andrew Minora

for This on is year on sales outlook. question Andrew a I had full Chuck.

help acceleration going little So the to year in you drive Can us on your that to fourth and get the follow-up. to pretty what's quarter? the like I then across midpoint And quick two guys of bit a the a it comp implies XQ biggest brands. have understand guidance, a acceleration material

Julie Whalen

you basis, of our we're essentially year on look the at our if year-to-date mean high one end a at I Well, performance guidance.

have, no yes, reason especially customer feel second business. day, the is drive momentum mean, the the accelerated in want the at year of own to can't from our But still the they and at just conclusions of we come strong I all top line continue e-commerce so that believe strong two So from you can demand have, we seeing again, our that. to we what And at that traffic quarter, count to we business have of confident end on look strong. health given the the customer and we we're your it the

You a bigger saw the quarter, and accelerate of second year. next they pie Williams-Sonoma also from piece become the

fact with in than increase the end. So given talent season. strong product lined to lineup that hit We been of very this an able ready we for the the all more be that high teams hourly wages, the get can ever pipeline, holiday our incredible feel of our them we've to up, are ready

Andrew Minora

That's the guys That's the second line, if then revenue, can rev impact, versus ex margin a components sense And on I magnitude could you give different add gross But rec know us quarter? gross the talked you I helpful. great. this of just quarter of the about components. of margins

Julie Whalen

typically perspective. It line you Well, up was We an XX was up XX items. basis points. from go so tell all typically margin we don't selling occupancy the through basis points

total For up margin, gross XX.

what's another incredible comp had it's again able accounting, supply the these were margins, higher important to is demand I we that we higher, offset had we But with and back quarter to healthy across that flat you was it chain If because think of drove the realize we board. essentially costs were and that efficiencies. shipping out

our margin. our and it to both margins fact to that the continue selling really to streamline to company drive initiatives speaks hold across promotions our efficiencies enabled gross and to us So the

Operator

from question Instructions]. [Operator We'll our Horvers next Chris with JPMorgan. hear

Christopher Horvers

demand And curious have West for on product comp wouldn't of Barn? you Did comp. in relates this mix. I'm X Williams-Sonoma Elm type would a X West Elm, to X mean, I to the actual to half have then And year? that Was Why that guide, it's year. as a mainly if versus Elm West Pottery I in did impact? versus not, demand and out pretty X comp just the similar the the fourth widened to quarter mean it first of

in already out XXX expect visibility that the demand this you to bag, -- so further incremental So comp basis to widen much? it's an Is speak. if you Why points, the so have issues? do guide

Julie Whalen

So on impacted were China. brands of the out by Elm delays -- the other brands West and the all

brands, for higher. were And smaller demand had comps of that brands, so all one except the

been So what's fire would've they down, were. they your That's on even how on higher. question

I read wouldn't anything into that. So

as this the we just As all, year. of far things raised on twice a the guidance couple year held We already. mean, there. fiscal range, of there's I first going

the math, is guys the our we equal given quarter. sort and prudent that fiscal to was guidance, to that's So to implied hold saw guidance you thing the gave of which our we do last hit we year, just

the way the watching which So and a as there. it's that in range, still we're obviously couple could it's of delay, lower that the by that mentioned basis, could with is trend. line two on you at not was a end But the to of to on event do to weeks. that China doesn't, cleared we next We front I in that that point big mean the closely. our up fact year I the earlier, thing have be be us only cause story the do in expect this

Christopher Horvers

just then follow-up. And a quick

So up benefit? XX, accounting margins, includes the that the selling

Julie Whalen

Yes.

Operator

Gutman now from Simeon with Instructions]. Morgan hear [Operator Stanley. We'll

Simeon Gutman

Julie, And on Sorry that should there out? I balance the said down customer it customer sheet. but flow quarter? I delays, then sheets it, the demand balance assuming think also Will on all like looks you question, you history rate? why are I on -- second customers realized, mentioned of that back think deposits it at different product for about also put comp, Like, through it one noise. the on the in gets this anything I'll the is this. one. all demand more guess,

how reconcile? those do So

Julie Whalen

from perspective a Yes. between isn't all cancellation at anything I look from missing unusual anything that We perspective, demand perspective. receipt matches a you're we look and come There that about mean, when net a the it or delta in. expect like at to that, demand from do the what is up. and we thinking

that year, when the and down remember, is been come perspective, you a anything that read delay that at income the accounting so deposit just through cards. the now account from timing for at beginning run the It's sheet year, And receipt. of So last the of showing I into that look through customer that it all. it's in. account, balance had reason it's relative of We all to would at of that reason. QX we not down that just the biggest piece our is gift expect a because change. to of it's in the to -- From bunch a that's down

Simeon Gutman

looked would at have same-stores it and or the of inventory, the Say the looked the more have the And was had end demand inventory still would Right. been than up flipped? sales? different better the same, quarter the would comp have that

Julie Whalen

than customer inventory No, because should fulfill is this looked sales have better demand. still remember, it to

order. back on and so would they're it around so waiting it for been have flipped it They're in then our out, inventory. it, we have would So shipped

Operator

with our Jefferies. Jonathan We'll take question from next Matuszewski

Jonathan Matuszewski

you one. first price opening quarter, Just some new at Elm. mentioned Last points West

line of pricing conversion Pottery the there just giving brands new the of opening Design existing color been be kind the that more kind from of more with Crew on you've price or would this just Basics think your customers this on share these Barn is elaborate I you across customers? strategy? too. helpful. coming introduction and points some Maybe progress for Any Could

Laura Alber

the We a you our and Williams-Sonoma for strategy. your testing And Pottery scale love be to last afford had of said, price never in selling. can't most we always and and work "We point, the quality in at for it." we simply point Thank looked expensive. of all brand Barn. set of And the who best Sure. We're but out refining we our And we're increasing customers brand, set the best, the our pricing did to some lot of also question. so year to products have We opening out the brands, that be we value. to our the

that at in And our price. to great Crew each And buying a program so Basics these basics knew each talking one of power, what we're bring And of that able great brands, of Design our specific that's this because have we'd brand, then strategies. we quality to be they about. we've done across all

Elm really in Pottery and younger knockdown for business, in growing you're you that's brand, a clientele driving it's categories, the demand. so see not scale, again, but And but you've that Barn, lot smaller is attracting West is go its Williams-Sonoma, a introduce to yet In us a to Pottery furniture Fantastic and sofa new you Open more And looking business if which So buy more example, in there's for increased furniture. just continues grow awesome. then Apartment, Barn want other seen vase, across not customers Kitchen. to incremental which and of value-oriented, a offer.

and with And customers point market attracting so younger price coming only mix. customers the not they're but into

Jonathan Matuszewski

be it. And helping program. follow-up about on quick Any probably program. any you easier then benefits the that member the what helpful. would thinking of just color enrollment Got is terms you in seems loyalty Are there? are of a kind But expansion of higher? driving there It new like enrollment thinking the

Felix Carbullido

close year's rate. actually for easy go the in enrollment online, our year's quarter and implemented Xx the rate. of Buried were numbers is some we up half rates to enrollment we saw last close mentioned, to Laura the latter those where As October, numbers XXx of last

basically we're our as option which of enrollment now not that's QX customers, click of driver our just make join across Julie no encourage for program. was mentioned, alternative retail key to to And our online stores, our a -- business. headed into the will XX% platform So with a a but it that no click enrollment,

So we this growing anticipate program dramatically.

win most sweeps home This in is a Crew. which a we're with number makeover ultimate customers introduce encouraging quarter, a Design one repeat an initiatives. our by brands our different we're excited program of I the guess exciting to to across to price

number across our in a have will for brands encourage frequency of that holiday. place we the So programs

Operator

Cristina Instructions]. with Telsey We'll Group. from [Operator Fernández hear Advisory now

Cristina Fernández

a to you're question impacted? there that costly meaningful as heard that's had delays. the are more And with Are categories if it's just bring any wanted seeing And retailers product? I see from change backlog, on the more to any in other cost so follow-up we've the are you inventory that something well. seeing

Laura Alber

our on an the bit said, sizably where net But Sure. comp of more greater We than little actually Julie impact business, even affected. comp. a kids brands were was had demand all as more

Asia. terms price, In favorable contract shipping we out have really a of of

their So few began ended, Depends as not to contract even shape. on exorbitant. spot containers, I think, people's where in were and rate much. or it's It good we're what on, if rates a doesn't a paying we're up add and

Cristina Fernández

and could I revenues that On this that follow-up, the Teens, something onetime Kids we quick -- are the is carry a unproductive Pottery affected a into forward accelerate? see just may. And Barn that promotions or if fourth quarter quarter well? should and as Or

Laura Alber

amount thrilled Running to it's tight, just we of the I online, And that comp am in and stores, that run and inventory. into reduced inventory healthy particularly the but it. our kids didn't is business. buy have way we very didn't clearance teens a the really also the

up over gave sales So of looking little very And, carry stocks. improvements profitable in sizable but and to to drive not course, businesses. in we saw more we're those margin sales meantime, the

Operator

next Wedbush. from our with Seth take now question We'll Basham

Seth Basham

can still hoping driving furniture on provide the category you was disproportionately color some more I strength. Is account?

Laura Alber

of a across categories. strength seeing lot We're

us of business, and to these where some Open important incremental to the in see earlier, said we business, the Modern very apartment are And our and I businesses strength excellent, those that exclusives we baby it's Baby, innovation have Kitchen, are whether Williams-Sonoma earlier. continue As and quite see and strong. talked we business be then about then furniture upholstery to all I

difference. faster. it's deliver We get It's And our we're upholstery America. have here quality, most customers our able in competition. and custom. that to high able our to very of It's a quality higher faster them all own an than advantage And make because understand to quality really we and

Seth Basham

characterize current you and get hoping the follow-up, you around promotions going to your terms forward. a of promotional fared how some would was changing environment do as I might how And what and any on year-to-date you differently color in

Laura Alber

that say we And effective promotions as have have Sure. less more I versus said we I this would last. clearance. earlier, year

as Friday for holiday Black competitive in It's people it's are ready are a been getting in past. and As been we're change. the we. in the midst you don't And can tell of see season, years out I competitive. environment, material the

Operator

our question Bank. from take Baker next We'll Deutsche with Mike

Michael Baker

with quarters. like release, about $X.X X the last ask million. helped the you to your to press it's Exhibit each understanding has strength week, change, EBIT looks do it timing last dollars said the that But the by I'm your been help wanted of accounting about of with it I three think the in helped a the it the in -- And week. I and last if

of quarters, but is just is So sort that that you to when how I that quarters of weeks? And, make three be timing your year. head that? does last strong the really extra cycle itself? the the week reverse everyone's not explode, next does or will last all question the off of And just related had guess, weeks the impact Because

Julie Whalen

Okay.

account and exactly third look for for same. the think they're the mean, they're to way the can't account the is in you third it first in very, not especially quarter. of it, quarter that to quarter, the basically, quarter, the I then accounting the change means were this about accept or you So in if second third if think second fact you sort quarter, the which similar. And the I will into quarter very the at quarter, come second change

we're in or on customers impact and the question, see, there's our given So have last two well, the we products. seen quarter. to quarter of reacting no the quarter, from as which this your But yes, absolutely strength to answer very promotions to that that perspective, week pleased our

that can't week. XXrd see there the something as week impact be the I a asked you don't about Going result of forward, a I accounting. should -- on any XXrd

Michael Baker

But timing that incorrect is helped the think -- on is so But number Again, it in the last for so any Okay. number? was just quarters? X, million. it add I it about a X end. the way to the of to Exhibit of year-to-date quarter, there three mean, that quarters when by third Exhibit up $X.X Well, just each

Julie Whalen

out one it, other you about either it then if comes Yes, quarter out you get quarter. mean, it each it right? I reverse in would think quarter the you So because and

the you you at then in So would you to it's and if between have the QX, so QX and that a you reversal look out QX, quarters, that take QX been comes and have out. to -- would've have take consume in pulled

as you three a sum can't it look quarters. at of And so

Operator

our final take from with Retail Shapiro we'll question Marni And Tracker.

Marni Shapiro

of just so stores to a an the with scale end. one about absolutely your Can little bit us I luck we registry give the in of beautiful idea The you look holidays the dig registry if don't across best the businesses how and Can have at brands? remember like looks your I guess, span business? your it significant and be? could registry find the across the of you which the that is value customers much years? And biggest brand higher then what lifetime a also, do

Laura Alber

brands. our really take often that. customers' a And are is to important point Sure, they lifetime. our Registry entry best I'll

given of never is. it have what the We number

in because largest offered offer plus kitchen the Williams-Sonoma. But haven't linens whole we we together. the competitive the we it's house realized wasn't and the as course, didn't been have Of also that

ago. weeks we you registry across register our this is that time. and I a And couple launched over huge And of that Registry that of can each that double brands, offer just a Collective this have so One experience the And will business great with them. we our brands all believe of it did across in our we've unlock. actually, just

you. growth time. So But it's really creation also and I expect too but early both that to registry over see total read value we'll for

Marni Shapiro

it businesses? a it kind is and significant as, as significant say, of thing? And enough of smaller a Graham Mark time. Is your of of the one to business part the Over level

Laura Alber

don't... I

Marni Shapiro

registry are company? registry Graham a sales -- are your as at mean, because Mark I and the stand-alone sales, of, your say, level

Laura Alber

way how That's an big me interesting it to ask is.

Marni Shapiro

is very businesses it as without giving of -- important me business? giving guess new I I new guess? I or a as I it. it Without rephrase let as Well, me the numbers, mean, the important, one exact birthing me is guess, important,

Laura Alber

didn't been upside we the as unlock. because obvious which important. very got is I because lot think It is a we competitive don't could of be as It's we've cross-brand, have it

we platform do the that using how that now phone, platform, house the with so Registry taking plus to we all and against have one And imagine this things that Collective. the Key know The our

it's be the be think an we own serve going been can I So to across to we we platform brands area in leaders where where the because these our them. we've and an but have strong clear house area customers

Felix Carbullido

is new a Kids. for And customer Barn key Pottery brand, driver it every of including growth

customer to our as mentioned, other the new in Laura start we growth more lifetime we market brands, of as relevant So the as major see to a that there one. introduce benefit customers value

Marni Shapiro

brands new the a dorm also Dorm growth? see ask Do of well? you growth? PB area into customer Is customer I an Can your as coming follow-up for new to because customers

Felix Carbullido

new incremental participate, businesses Yes, also going after customer These market. earlier existing talked after are but -- going our focus absolutely. they're terms on Yes, of white space strategic customers meant acquisition. in about that the we in to

Operator

our any today. that for And additional concludes over back Alber Ms. I'll or question-and-answer session turn remarks. the conference for closing to

Laura Alber

And for fires I what us communities. you And wonderful out after we're last you off I'm neighboring know of an that, in thoughts the go difficult want happy as it's donations of based all company all base relief our a forward all with a to to yours, call like here talking today. we're devastating looking in but And are you for time to our thank for for need. the we using can a know and I that's the I our California. Great. Thanksgiving celebrate California, some Thanksgiving, those assistance holiday. to to year. in efforts, all doing did here And to to affected just going by headquarters and as joining provide we on those to extremely we the

Operator

for Thank call now our thank your conference We conclude for today. disconnect. participation, you. you may That does you

Williams-Sonoma (WSM) 15 Nov 182018 Q3 Earnings call transcript