WSM - Earnings call transcript Q4 2019

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Operator

Welcome to the Williams-Sonoma, Incorporated Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session after the presentation. This call is being recorded.

I would now like to turn the call over to Elise Wang, Vice President of Investor Relations to discuss non-GAAP financial measures and forward-looking statements. ahead. go Please

Elise Wang

the results afternoon. with Good today. should considered relate be indicated non-GAAP on Thank measures in may measures. measures reconciliation press press financial are most discussed This release conjunction GAAP X to be directly of release. financial to of A will and today the the our our non-GAAP earlier the comparable guidance Exhibit our measures explanation that in non-GAAP based financial of why otherwise, certain you. discussion call and we Unless useful issued

the This that Act of such XXXX and call differ company could also the operation, contains uncertainties statements. forward-looking are which plans and to materially XXXX, from beyond, trends, Private statements financial Reform the to within and Litigation initiatives, fiscal results risks of and of meaning cause business in Securities year address forward-looking subject results condition, the actual of growth prospects

Please recent arise and refer and company to the to may including undertakes reflect these any statements date events no that for this update uncertainties. of to information XX-K, the circumstances or risks The forward-looking obligation the release on filings, SEC revise more or after company’s call. current press most

the to Officer. President and I conference Chief call will Laura now Executive turn over Alber, our

Laura Alber

Yasir Julie and Elise, you, Officer; Chief our Whalen, Financial are our call and Chief Officer; Officer. today Marketing Thank good Carbullido, me afternoon, the everyone. Chief on with Felix our Technology Also, Anwar,

and that are our results date Inc. top over been and ago, time start addressing this Williams-Sonoma, XX evolving by was our has discuss actions From care unprecedented our our to we started financial in are employees company the of Before customers XXXX, from taking priority. at the want and I I years taking we rapidly the

community as ensure protected, of of creating public time they is are the situation continuing are home serve that Over to the and recommendations impacted remain have government to doing employees and in agencies filling evolve our continues health that while to we homes. we all customers and and spread few of all weeks spend the lives more a coronavirus comfortable the to the by their our in been past functional officials as possible for our

order I'm now until ways effect. are Xth home and teams area you've so associates as our by into moved sure from agile I'm the are Francisco San strong by in our who went that in April accomplish shelter-in-place experience mandated that read working this. to new the corporate Bay working by

are and where and our across other implemented and filing corporate And from situation work increase centers, distribution allow. home guidelines, option of voluntary we’ve cleaning measures sanitation and frequency offices we of a the course CDC

America in financial stores X. It goes North you extremely As are close difficult decision with our that made also Canada, health. we we know our plan to also a reopen without focused a to in plan with -- on temporarily the on April saying

over We business our strong action chain, strong XX% large DTC as this team we're aggressive of to resilient for a actively liquidity, believe in scenarios position our situation at are revenues flexible and taking with experienced supply and business balance we evolve. manage an a total multiple and a planning sheet,

suspending preserve year. are business-critical takes softness in expenditures into and in modeling business will and to the we substantially demand. consumer non extended a that the sizable both and strong, on we we are capital that decline all immediately reducing continue we closures. haven't while assumptions, our And our liquidity, e-commerce seen near-term store we factoring overall we an In stay are are possibility impact of that believe account inventory, To throughout nationwide our

and to our continue self-fund expenses aggressively the us term our associates measures will operating also business, allow to throughout company. and customers of change cutting immense serve uncertainty. These are the during support We our

planning passes. flexibility, we this when also are ready pandemic are so We

this outbreak, nature the dynamic decision to guidance. highly the we've Given suspend made of year our fiscal

We it year accurately to are of the on expectations highly impact coronavirus our financial moment. fiscal environment, operating difficult the predictable quantify which at in makes a this

We are to factory in will The have and we a our of very are we closely operations. supply news more you update team following when developments we saw information. as abating Asia the is China result and closures the resuming disruption encouraging is promise the chain

for back to fourth is turn It and results important quarter holiday Now year our season. to I'd XXXX. our year fiscal and the like to celebrate financial strong

our design-led our platform success digital-first and power of our demonstrates execution. brands of level strong As high the of

We X.X% X.X%. The with Pottery growth outpaced X.X% the continued XX.X%. a of quarter. Barn the with of brand fourth the Elm a industry with returned of growth resurgence of in and comp a comp combined comp with comparable West brands Williams-Sonoma brand to a outperformed revenue

in the our and stores The experience of and our drivers innovations more product e-commerce outperformance assortment, expanded supply acquisition across included further relevant, new customer customer an chain.

initiatives growth. cross-brand continue of and design Our to impactful key our and the scale business-to-business, more accelerators crew in-home also became

achieved line winning innovation us at apart of a or from high-end above the our growth have EPS profitability and and expectations and and from these the results competition set we that maximizing continued It we evolution high the clear margin that growth For our full-year, is operating maintaining goal combination. and with expansion. top

$X the growth year progress goal the term, incremental XX.X%. revenues brand. would driving performance discuss by to West remain double-digit of driven to we ended our continued We for make like standout deliver with at opportunity hyper-focused more brand strategies. in as growth detail including our biggest in execution. on strong Longer our results comp billion our I we growth towards now Elm longer-term growth

four competitive whitespace; scaling business to to key all proven axes; awareness; leadership opportunities driving strategies highlighting on product as across growth across our customers, and design execute growth values continue brand differentiator; and our channels into all We'll expanding business. a including

X.X% of delivered In with growth the fourth strength multiple in comp categories. across Pottery Barn product we quarter,

and and growth. and new growth resulting in double-digit accelerated and gain growth. we in customer continued transformation E- had increases Our engagement acquisition KPIs improving with letter digital revenue product performance brand revitalization to commerce traffic, traction strategies including conversion,

growth Our performance. our drove initiatives strong topline also

marketplace assortments with solutions growth apartment an laying curated provide converted younger assortment with space contract-grade has We're furniture initiatives. choice The the guests new foundation of more assortment towards also business-to-business increased and smaller of customers. our our contributing our

life expanded Children's quarter. further Pottery Barn years of GREENGUARD key organic home across comp recent And for be in of solidifying excellent business furniture to in and strongest a across and offering results continue aesthetics our We cotton Our the drivers products sustainable also kids. performance X.X% in its bedding, delivered our leadership certified fourth our with stages growth. saw expansion

our We across longer home will digital growth, the product that and marketplace accelerated term, growth the are confident over acquisitions drive to our differentiate customer continue furnishings in children's and in strategies the leadership, brand.

comp of a of food in to a three and customers ahead. In the cutlery strength We tools, in our branded positive saw Williams-Sonoma years the Williams-Sonoma, results trend are growth in quarter. key we proud X.X%, the and first and with electrics, will remain resonate our fourth drove continue of reversing the so initiative exclusive quarters. We particular products

levels online transformation We content-rich introduction will the as inventory drive and including new sales plan reductions low-volume our are in execution the well SKUs profitable experiences growth. encouraged as further against of

also Our profitability experiences. of evolution drive expense on We're optimization, has such management, our as the and estate inventory on relevant focus been that strategy. inspiring implementing real in focused brand changes content-driven

and business, Our global Graham and year of we customers. another also our comp the our new U.K. In continue they emerging continue with Mark scale Rejuvenation see and growth in brands and operations. attract quarter to strength e-commerce ended Canada as double-digit company-owned to

In in half program, cross-brand We representing revenue complementary the Key, crew our in to our stores. continue million be cross-brand loyalty driver, of sales to The a programs while success year the enrolled our individual brands, over ended service significant our our with addition customers X our of design approximately to design also continued scale.

Together a annual with for the at of e-commerce reflects XX% fourth new adapt, all-time And to in our our ability This increasingly digital digitally-led. revenues, in retail an landscape and growth reached our and than e-commerce customers traffic, more spend; lead quarter. year drove the that's advertising revenues. for we innovate, in high efficiency double-digit revenues our increasing

of and we several for corporate important wins delivered double-digit had clients. future key that an also division quarter show foundation the XXXX, proposition accelerating growth to of differentiated appeal business-to-business Our growth. our In established value another our

a continue ahead, Critical realizing market. Looking to we'll a revenue the to for growth delivering experience customers. opportunity initiatives work our $X our best-in-class the in continued billion on towards we focus of BXB is our success see

crew room planner more In the see fourth pages site quarter, we we as content selling strong continue our digital our sales. we on further functional storytelling between of our more to and room experience optimization the navigation. usage implemented improved design in information correlation powered our improvements outward product Also and and to with planner, quarter,

portfolio us growth-focused we Looking will ahead technology market. that a continue further push to in differentiates the forward

data executing experimentation Our identifying hyper learning optimization and automation And to platform our opportunities. in and our agile will enable for and maturing capabilities be will drive fast machine more business. us

operational reduce in-home chain visibility to importantly, made continue opportunities which the average contributed ahead, increasing service out profitable of led which improvement across X.XX find experience. and network strides further Within In furniture service. costs of better years important to of the we another supply supply more the delivery we improvements, home delivery strong five year growth our drove year our rating customer very of improve an another customer In and to customer to will the chain in in stars. we to

like which our ever. I'd to now now more update initiatives, sustainability on important And than you are

recognized we're most be year proud for of sustainable past running the During Barron's companies. the year one to XXX third as

important impact progress brands. social chain supply our programs We made also our across in

factory, vision And to with factory Barn our Nest brand a third deal Handcraft. products programs workers new and in worker to Ethical launch total bringing Pottery well-being kids and expanded screening became Trade quarter, Vietnam. The we Fair fourth our the offering In certified our XX glasses factories launched for

financial continue enhance all where will natural company continued our presence build stakeholders, which the every a the environment that into communities our to We many so the our corner we of business and have rely. upon lives will sustainability success we of

In their year commitment challenging customers to navigate ahead. would we work and closing, the hard Times first. I all these associates our their for us like remind as comes serving like community to thank that our for

on focused business remarkable our As maintaining are support and communities we the our time. ways, in of customers this unprecedented to change health our during financial associates, lives

we we'll we your you keep as safe and a families and hope updated, For healthy and know more. now you

call I'd to the Whalen. now pass Julie like over to

Julie Whalen

you, I discussing start coronavirus want in challenges doing what by our outbreak. of the Laura weight and the to team navigate afternoon, the is Thank to good everyone.

this during the our continue uncertainty. that customers ensure to health As to time Laura operate our heightened we maintain said, we of to we are financial making way associates support changes to strong and

are We business preparing aspects scenarios. all of a for macro number our of

We nonessential are for cutting expenses all operating in advertising. example,

conversion. We high traffic only are ROI on that initiatives e-commerce focusing and drive

projects short rents and expenses. In deferring remodels landlord technology, spend and other reduce and in partners And we with store term. real are all in working prioritizing to delaying the estate, business-critical and we our relocations other are

We future. have the business travel discretionary for spend also other eliminated and foreseeable all

strong on partners purchases inventory To cut preserve to working substantially our our vendor and liquidity, our with are the year. we push out

half also last suspending with by it our are all was business-critical term, approximately in that are year. plan the of being capital current to our We non cut short expenditures CapEx what

discipline. in it With to our this million resilient the credit, strong overstate our address During sheet our increasing line position, a time strong short-term hard ahead. balance position challenges cost cash volatility, of believe year-end we million importance to on balance the in and of $XXX at and sheet we over cash $XXX is proven are of

us and did and strength enable time, flexibility same market a a XXXX. recovery more financial resilient just our invest in as like At to stronger the business and during opportunistically emerge we

our we in with the proposition challenges, continue furnishings and the are XX% more than in business term. to with our e-commerce-led we total short-term with strong category, outperform longer value home of Although faced revenues believe will that we

our combined on a multi-brand, our year our execution our last with We to note ended over was XXXX strategies as the season. holiday our performance back model strong the outperformance and growth continue high turning year company. outstanding an digital-first year. to Now drive for

at or margin For strong the guidance the end growth, of topline above and high our growth EPS operating range. our results were with full expectation above expansion year,

fourth of would reviewing I our you in included XXXX million $X.XX week, year. our like the year, which year added results Before impact detail, approximately that XXXX in approximately in financial the remind to and fiscal $XX net estimated last per for fiscal more quarter revenues XXrd earnings results and share the a we

billion by $X.XXX double across of our in e-commerce, positive XX% over revenues highest a comp net generated the strength driven all digits brands growth which of during accelerated revenues we of and strong quarter, comparable of fourth the reached For and growth since revenue record X.X%, comp brand and high quarter. XXXX, grew total

of we quarter Kids of top West XX.X% brand, Pottery another with to Elm significantly breakout and momentum, the X.X% XX.X% at growth to a year. with saw brand respectively. comp By The close both on X.X% Barn brands performance quarter their last continued the doubling and of comp Barn from gain in Teen businesses Pottery last and accelerating

to our drove encouraged X.X%. see with emerging Rejuvenation brands growth. another quarter of growth We to returned a were in quarter their And Williams-Sonoma the and also double-digit of and biggest combined Graham year comp of the brand comp Mark

deleverage XX.X% primarily margin of lower occupancy basis to year-over-year points, year was $XXX flat XX.X% quarter less revenues. Gross leverage year. of million week gross by compared driven resulting one basis Occupancy sales to margin of the this The approximately of and costs year. was last XX from X.X% essentially XXX were last points for fourth at

deleverage impact, and quarter. to drop the the in is quarter, by impacted China were this shipping hold tariffs the higher a from selling as the We mix to sales absorbing that were fourth well expensive occupancy selling furniture however margins higher we the able to which quarter, as incremental flat tariffs. merchandise from see ship remaining third due margins greater China pleased are of to despite impact year-over-year a list for of result Excluding were incremental that to costs this essentially more ship, margin as deleverage

as driven this We impact also compared sales of leverage, XX.X% of XX leveraged primarily saw last leverage despite revenues SG&A week to SG&A from advertising and another points quarter of strong employment net XX.X% year. year, the well of savings the across basis to one business less employment-related by revenues other of force costs cost earlier from lower in reduction as the higher continued sales a our savings. saw and well employment initiatives from expense primarily cost We our overall as as discipline. year this result as

leverage. advertising, also margin have spend advertising of our operating more $X.XX. from continued efficient earnings We in diluted to advertising This another XX.X% led quarter per of to which to catalogs shift resulted share digital of and an

balance during million in in operating On repurchases the amount year. of the sheet, million balance versus $XX capital a approximately we $XXX $XX million $XXX which and business we We return $XXX $XX invest with of ended shareholders payments quarter, to dividend generated million. to quarter cash utilized of fourth million million last flow the to the in of the million approximately share and through cash $XX

expansion as made-to-order capabilities inventory. of include our inventory fulfillment well inventories frequent last decrease balance which year. over the and business in-time of to our omni-channel more a as reflects $X.XXX inventory vendors down flow our This the inventory more initiatives, shift for of our sheet. ongoing overseas continued to of drop-ship billion from Moving Merchandise X% success of compared the the were

of freight our at rate we've reach levels backorder As also the inventory these ever initiatives, turns best seen. a result

on financial XXXX. accomplishments X.X% delivered net Now year's acceleration We some our billion revenues since by $X revenue of comparable highest full the to growth of which brand of almost last of moving comp growth X%, for our was a on and significant driven year.

points high all-time year, at XXX XX.X% retail Retail decline revenues traffic. for revenues company, also XXX in accelerated another an basis a a with was year. last despite reached point comp e-commerce comp As the and over to digital-led approximate performance positive total growth accelerating our basis XX.X% of national

growth comps Elm Pottery we and growth West years. XXX biggest significant consecutive businesses. the acceleration our all across in of of growth, by its brand, brand nearly Elm its West positive several led revenue in brands Barn for initiative comp highest to XX.X% points driving double-digit By basis the momentum a year strong continued another drove year XXth the comp accelerated while

from year of higher comp accelerated comp more their highest year since comp last Pottery three XXXX. X.X%, Pottery a Barn than basis The with business delivered comp Barn points X.X%. their which last of a XXX and was children's than times

Our for despite are brand negative quarters. the emerging And traction growth. combined X.X% for a brand first driving comp positive the three and comps Williams-Sonoma in year, another transformation Graham brand Rejuvenation brands in delivered our gaining of and initiatives the the year double-digit of Mark

Our along global performance operational U.K. strong company-owned e-commerce business business driven X.X% last year we margin year. all million to franchise and increase operating grew strength our from the in generate This operations to operating income with operations. $XXX us in drove line enabled top X.X% expansion $XXX a over to and across Canadian over efficiencies by double-digit of million and business our X.X% the

a growing, earnings $X.XX invested to share year. the As return able per be which the guidance XX% the continues our fiscal Furthermore, excluding to at result, average. $X.XX last of above the are from on XX.X%, our or year over to increase capital pleased our be significantly X.X% end to outperformed high week industry impact we XXrd

another which delivered million in including million share of operating dividends allowed to us of of and returns $XXX also cash flow in million, $XXX We $XXX repurchases. provide million to $XXX year shareholders approximately strong robust

to on year fiscal XXXX Moving our outlook.

XX to strong our provide of to had outlook. February XXXX and were comps to at in onwards, with high the prior single-digit we whereby our start in planned XXXX We outperformance long-term for the our Given generating guidance X.X%. escalation including March line coronavirus

the activity coronavirus Unfortunately, our unknown. this temporarily duration outbreak of given made on have the year We to guidance. in of consumer remains the given economic thing the full is believe suspend the to and behavior decision effects largely we unpredictable do prudent the general,

year, to our our at drive strong outlook are growth on high Therefore, growth. the beginning performance with throughout to we remain of long-term confident and longer-term income growth single-digits operating financial based to our growth. XXXX revenue in strategies we be the accelerated in this in expected mid with revenue and term, Longer maintaining line

Before the drives, want and their their over questions, work. I for thank turn call associates to commitments for their hard our I

we've to of proud future we and are our drive platform what growth. accomplished powerful We built that the have

confident and a model proven we ahead, than to operating financial multi-brand coronavirus map. have in with and generating upon a strong challenges platform and the the flow revenues, strong long-term road the to our of our As cash sheet from more look growth in record e-commerce digital-first outbreak short-term we we resilient deliver track strong balance are XX% discipline, our that address

like now you. to would I call open questions. Thank the for

Operator

Thank Instructions] our We question [Operator from you. first Adrienne take Barclays. will from Yih

Adrienne Yih

Good say great on has momentum quarter. is The versus afternoon. me the this been fourth And in store Laura, into tremendous channel. coming e-commerce year. performance question let the my the

in sort in So, about actually to started to talk seeing I to any that that. -- and about XX% can not of you past is of in e-commerce talk demand have include see you the regionally? that if days people regions, when XX impacted know yet the five sort impact Does impact

Would depreciation was merchandise on the your a color And at then at that occupancy margin flow-through sort us we And I'm taking sales? as the able look reported is of quickly. XX%. in rent the give be XX-K any about way Julie, your it very you to looked of lost perhaps

your sort I occupancy and we to want back of and that make So That's have to gross margin. just then correct. depreciation total that sure adding rent

to about getting we're for margin. XX% So

much. Just wondering ballpark. the you very if Thank we're in

Laura Alber

Adrienne. Thanks,

comment e-commerce. me about clarify So my let

we had strong. and Julie? what was I mean... QX comp great And a then just X.X% February pre-corona So was

Julie Whalen

X.X%. was it No,

Laura Alber

Yes, X.X%.

still about and but single-digits you categories. market, the down, selling sure at the it's there's how up business -- type it you it in I'm by of like we're mid People and have when regardless look wondered it's And that came some have of for positive. our teams slice been homes. times stuff So this it, holding it's people's but post-corona, information

much up, online. lot industries types resilient baby and I way is of to business, than other more our And -- obviously a it's we business food have Our business. happen think cleaning our

position but So, think consumer a it's we have I we're to the in what's a demand channel in business goes, of -- that that where not with happen we're also that going split and who of in. knows categories good pretty terms

Julie Whalen

And you Then includes in past. about margins, caveat your question then to one which the include margin does thing those the the But the merchandise the to selling we've talked take that's of selling there, would way cost depreciation get from yes, costs a however, right rents out margin you and to look and list. the I it on is occupancy at answer all costs. which shipping --

come you have to So, up.

be not to disclosed amount, shipping one a margin. get actual higher assumption to you merch out would have have the pull that cost our which but would We you

Adrienne Yih

times. you very of during Thank much Great. luck best these and Thank you.

Operator

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

Chuck Grom

Hey thanks.

geography. P&L follow-up a Just on the

remind much us versus of fixed Just structure cost can A variable? your you how is SG&

Julie Whalen

associated I at of don't the and in the we've play are past. in up those the there's you given that labor probably retail trajectory and come biggest the there's I we lot the that advertising probably have so the variable But with look assumption that take certainly, Obviously, a costs could dollars think a say. the when would on quarter more an with variable, fourth that. into buckets sales, are come

Laura Alber

to retail have we don't have is that assumption even we're going Just that retail if sure payroll the make though sales.

past in So, just you use at models But about -- -- extended it's made in we as a based and And going to can't think of look decisions we're do. you what on for the proxy what you doing. past haven't that. any not what we're the closure. can -- can't everything weeks that That's two different

Chuck Grom

store our clarify Okay. you and February mid-single-digits just to up that was running you're includes said and X.X%, business online? but up And both to-date,

Laura Alber

I And post-corona strong I then -- in X.X%. say e-commerce with e-commerce stores what that's I is mid-single-digits. total said been the no. with comp has e-commerce no, and what and said -- didn't the

Julie Whalen

in And I high my remarks said pre-March. single-digits

Chuck Grom

Okay. All right.

Julie Whalen

it because least. with business I that going think on detail. at -- it's eliminate all get it real But normally helps So, to our give you we bespeaking what's don't and we'll

Chuck Grom

business your solid. very is No,

I over Five from just was So, Below. coming

when And do back you've quickly the take about from little for think you do you I think bit a thinking -- about to ability to back you the Just mean mean you about Laura about just recover I'm at how here, company just and So, are late. the think you step time. long then been I a stepping consumer's a some the will you going about you take X/XX, or time is it? X.X, today? damage think do think consumer How back curious come think when when how here?

Julie Whalen

So a I hour, might mean, next ask me I have different opinion.

therefore multiple So running scenarios. we're

to that this have, was one, happen which now guidance And but recovery. year, we next going then So what happen? would scenario. what going is the our be it be scenario that in becomes does when full was That's Does year? budget that unlikely question be, our to beautiful

short-term Then decision very scenario And look prolonged make then at then recession. and look you at recovery you you severe after a a can about that that.

can ready them. of We're most the cost looking the scenario immediately, if that the then worst be all have the to flexibility things we better. are serious we're at for cutting so so And and

Chuck Grom

Thank luck. you. Got Good you.

Operator

take McShane question Kate next Goldman from And we'll Sachs. our with

Kate McShane

afternoon. could the into supply give my good any taking for I you if Hi, was more curious insight question. chain. just Thanks

inventory are the QX in an into world, prevalent knew of much area do you to impact when in your and was of you how what If and much virus you disrupted QX? seeing think it maybe how the was that has still more

Julie Whalen

amazing. it's Yes

worked worked they recovered. committed were there from home we're had They very we're regular I very think quickly. out our very teams focused. to now. The operations how business and almost And seeing quickly

really would a long lot delay had We But one weeks at of a point happen of was how and back-to-school. would how that now. of abated about products. couple the it delayed scary has affect And

Kate McShane

Thank you.

Julie Whalen

Thanks.

Operator

question take we'll next Baird. with our And from Benedict Peter

Peter Benedict

holding Good guys. here. the hear in Hi, great question. well Thanks and taking XQ up reasonably business to for

of you What any can you're regionally in? you are showing it's by see starting the the set give extent to start to us concentration category up? or some where color seeing As of brand product or kind to this slowing, on that

Julie Whalen

Yes.

of So just I our think early still we Remember all we're days. closed stores.

So can you have one sales. no bet is we thing store

real. So that's

do that stores, already are something wear up can previously service to shipped. have to to they because was may the going going pick we're some We where our to in-store operate, customer people

that So to to keep do because provide something that in we're going stores time in some so in people to a areas that we We're our want be through safe very careful. right going need this everyone way we them get to but is and things out sanitary can now.

biggest that's So the impact.

would else, Everything tomorrow. I what today could you change tell

So strong. been happened you are I if yesterday. be could that the – categories extremely it's moving I I'd so days for quickly. told what that say and what are there had happened it two same ago some might not But

The with to mentioned are. I'm ones I earlier hesitant go of competition. much further detail just because

and on you there trends can what's surprising are some interesting When think they're going eating at not it's stuff. relevant seeing People we respect -- they're trends. very you -- that So I home. but hope are about

as space So, pleasurable about and to these thinking be possible they're during times. how be that to going have that as

Peter Benedict

much. Okay. Thanks so Understood.

Operator

from We'll Nagel Oppenheimer. with take Brian our next question

Brian Nagel

question. my taking for Thanks afternoon. good Hi

First start all, Great congratulations. congratulate to -- add last this to like of year, great my I'd year.

I with could as we nice The have, this So it's last. stores how closed look the not a long really job. at period knowing question and store the now closures, it

stores? look are be much operating which structure almost say very company that of consumers I new how weak that could And new is, up what to advertise a likely part your could the sales focused? of sort to in the How -- or online your this much hopefully flex to Maybe more extent online you very very powerful, much the then what just temporary at to to second you shift marketing, your operations offset with business obviously the capacity if its question. two-part of

Laura Alber

sure. Yes

you're So I that a want we've We've modeling crystal when there. they're done based And make that's assumptions closed sure right? few closed, to when what are just they'll stores the scenarios done. So, your can you and make open. on ball

channel key and online And is it's going question. on answer Felix so actually the of I'm who's really marketing the let to course and our call important

Felix Carbullido

Sure.

the So obvious mentioned, aggressively where to cutting results. are marketing in throughout more DXC strong flexible we said, invest How continuing some as Laura items. are question others. nonessential our we your a number expenses including to of That than line we? business we see said, are are still company That

As team even during changing few allows dynamics and react quickly market past we've a times. and own years, advertising consumer the in built our to over to in-house us these the reminder which behavior

back cutting an of investing confident we where efficient understand see and very for feel we So, ROI. we where business-critical not it's

Brian Nagel

Appreciate Okay. much. It's helpful. Thank it. you, very

Operator

take our Michael Lasser We'll question next UBS. with from

Michael Lasser

Good taking Thanks question. for lot a my evening.

you for going about are XX% as for decremental the What be XXXX, a First decremental comp it we Laura. we that be model looks stores? looking rate in Thank a to margin experienced. your declines second experienced reopen this you you year? And business margin you. for your Should on Julie, similar like for to using signposts run

Laura Alber

to reopen. Signpost

that are think our doing? the I You the What how announced people are we safety malls obvious in stores do small feel. ones, Simon -- just the feel we running saw how today. about and closures

government the control. totally could that makes a not It our all it's So, in be decision. also

our lot of out opinion, control. I So this this of is a my think but is

Julie Whalen

This And modeling difficult and do obviously a this models. I time and not necessarily XXXX exactly to is think for like is XXXX.

We got stores close which have relatively is we've where situation here, unique. a obviously

And on got at much e-commerce that you've we're a have the We've and e-commerce strong home. got situation. people staying are also side. we However, bigger

had model could out. different a simply wouldn't scenarios that come I what many flow-through XXXX So be XXXX perspective. and from again, there

Michael Lasser

So better worse are saying or it be that? than you should

Laura Alber

that's guidance exactly this I not why mean, giving we’re at time. -- not we're

Michael Lasser

very much luck. Thank Okay. good you and

Operator

with America. Curtis next take our Nagle of question We'll Bank from

Curtis Nagle

Thanks for my very afternoon. Good questions. much taking

Just guess quick I first on one a capital.

bit or being the time the decisions cutting least by you CapEx back? guess made at a makes you're little half, suspended So sense. or Would buyback? which on for Have the pulled be that perhaps I any

Laura Alber

increasing our monitoring the At strong the is best from liquidity Obviously, this light time our coronavirus determine business for short-term operations. to of in to cash. our use uncertainty of maintain in priority situation we're continually of needs the our the the

under expected our our million appropriate when price to business, opportunistically outlook stock our have remaining certainty. when long-term our prepared of outperformance more dislocation buy of accelerated to growth and we shares back significant authorization share our the given repurchase we our relative $XXX and are pre-coronavirus However,

Curtis Nagle

makes then That the And business. just right. All quick on a sense. one

the saw nice anything brand, kind business. quick quarters. of reaccelerate initiatives point XQ what you a to gifting I business. you seemed again looking it just a you turn Was the to? that? parse measures? maybe at of bunch a more the happen drove strong looking fairly in really And Specifically have Sonoma could Was internal past few you had in guys it season bit little could competition, fallback place But to predominantly know the

Laura Alber

them Yes, I stories important focused messaging made and content difference our the the few think more our we on and and or clarified season. big is very for really really relevant we -- things improved holiday

I think season merchandising. well lineup of products strong we respond a people had and holiday strong to exclusive this

than larger the Sonoma although, in-store So percent they see also than year. saw have we We online to had expect a a in start resilience the resilience brands, Sonoma. other lot XXXX. in nice of in to a they And

for that as brand an interesting dynamic well. So it's

Operator

question our from next Marni Shapiro with take Retail We'll Tracker.

Marni Shapiro

people Hey, outstanding future. a guys, hopefully and an babies spring to that the It the going hear then and will home Barn at and stuff in congratulations. Pottery about to to Kid's strong bed holiday buy they're and glad start making was eating really

about you at seems could As today? I word. would of but what us -- little are your know it's openings for Could year? for a the of landlords and be And stores percentage about seem year, leverage say best be very, hard closings to is the talk in closings think bit what next understanding store next the to openings to moment is I malls? And of you lot your plan There here. a and remind

Laura Alber

Yes. think this of for I fortunate. do us and heightened together we work uncertainty, our partner business in are important it's with time to

this. brands have can one portfolio a and person landlords, think realized I of they burden of very We high-quality shoulder that the the not

be working to closure, aggressively back. with looking we will retail we'll mitigate because and store them so And this be

have so up…. malls and Freeing as great delaying our much stores. are relocations And great say we right we delaying doing now. not in that also that that are we we're are we we and I'd remodels also can

Marni Shapiro

quarter the kind Or pretty on stores first year the quarter, ahead hold that were complete? now? were open moving on in scheduled that Were say still there because the are that any all and they're second during to for -- closures you're openings with for of

Laura Alber

are that some are they're much complete. as And There but almost as can done. not moving They're opening, then we're we out

Marni Shapiro

Thank Okay. you. Fantastic.

Laura Alber

Dynamic situation.

Marni Shapiro

least. the say Yes,

Operator

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

Jonathan Matuszewski

the like March, or nice in the any get for average the my Appreciate ticket units related when slowdown driver uncertainty? for primary terms first color of February was stores traffic I per the for or maybe of whether Thanks traffic was transaction anything but slowdown of on comp questions driven with Thanks. taking the a the color performance. few were imagine basket probably consumer trying Great. weeks the quarter. Basically the or sense that? of open to and

Laura Alber

sure. Yes,

crisis, that the total or holding a it close, about right? well. you a So in certainly strong, pretty it were reductions you why about were there was to wasn't such more serious value outbreak wasn't would up was even store to closure X/XX of was But there's -- than store everything clearly It our talking really but talking a pre-corona decision extent positive we after close I'm is and That's lot when nothing expect. sales still hard either. other which lot pretty in because happened the a have So then saw traffic. that. became retailers some We to

Jonathan Matuszewski

BXB on Got contribution been business a to recently. the And you. Helpful. that's then comps just nice

or that hospitality that? of efforts. struggles an sporting Just kind us Thanks. with And on venues some things any helpful. like environment in of in be update how those there may of kind impacted would and outreach terms be channels update Just experiencing of your

Laura Alber

still It down are and gain an last the way yet. market. actually, requests you mean recession some staying at But to have accelerate aggressive to businesses was of minimal. was displacement pipeline needs in and look People their are much the proceeding to adapt quote furniture. have market I And they XXXX X% market over have plan connected. remain less with haven't needs. heard actually we things growth actively share projects And a and if we new we're than buy to because the their there up. in lot The XXXX the impact this BXB continue of on

Jonathan Matuszewski

so Thanks much.

Operator

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

Seth Basham

your Thanks a cut is question and good around lot afternoon. ability costs. to The

planning helpful. that bit You if to little lot a costs, of cut talked clarity, provide would you about more be but could a

of paying understood in I and thereafter do employees, them all, closed. terms I for of decided you're haven't First stores these two that weeks think to retail what you your

advertising, buckets do if secondly, look cost at can how you near-term? out take And the you beyond think major much your rest you of SG&A

Laura Alber

about Yasir to approaching going talk I'm tech pass how Anwar the to spend. Sure. our to he's over phone

Yasir Anwar

Hi.

an e-commerce chain flowing on step, non-essential care business We reducing websites, that which customers as be think the some and technology running. time I capital some is news our supply the good the for So, throughout and expense the works across to is immediate primarily company. have and aggressively we to capital the things reduction expense centers, on had we and our able the scenarios to been are all keep proactively. focusing plan And

we time, same be the at to going are And balancing.

we come up, we and out of back when back gear our that scenario growth. are this of going the communities to So,

plan is So, the technology that's doing.

work a project be have able we able week, as with month, financial and our by be have We by needed in technology. to model flexible agile workforce created to to very to respond

Julie Whalen

you, Thank Yasir.

already, of costs about terms our talked we've talked about ad the approach. other real areas estate In I we think

a is shipments of in, The haven't that, we're vendor partners when other and to the you put inventory our away. have lot with while it have and that capital, it yet. to bring you that's you on spend when it money working left area And receive delay to

have little see. have the for we We're making So, that and think the good progress break we can demand amount there. appropriate we'll sales a

Operator

We'll take with Oliver Wintermantel ISI. Evercore next our question from

Oliver Wintermantel

Yes, hey. Thanks guys.

going regarding Just the your quarter comp buy buy stores how or ship that if quarter holidays. we from Is closed? us you impacted do trends up completely a you pick are where store, in-store pick from the ship or accelerated it fourth Thank you. can up? throughout the the now could in online stores the again, the of question are online has or secondly, And that if rollout? And it people then away that on give into maybe still that some

Julie Whalen

quarter. trends, they're comp the pretty during actually the as far strong As month for every

a was QX it strong really, really us. So, for

Laura Alber

you decision made there's long as in buy we is We running pickup we're that for but unless this terms keep recently, online in BOPUS, still the can't our then And very of BOPUS, this working out. store the operate. intention can regulations to as

Oliver Wintermantel

Thanks much. it. very Got

Laura Alber

picked curb outside be It'll up as imagine would side. you

Oliver Wintermantel

much. Thanks it. very Got

Operator

Steven take our from Guggenheim Securities. Forbes We'll next with question

Steven Forbes

I next right revisit Good you to afternoon. to about sales prior the channels regarding the between stores the want question think weeks. e-commerce a potential couple transfer of during

has a conceptualize begin we when spoke out sort this model we in a in closed good what about the you And remind whether transfer location can the year? and think in it as you the right, I sales permanently region? baseline a of So for that's past to past, particular been but us us expectations

Julie Whalen

So not it's I know because information past as totally relevant the much in now which different situation. I'll I – that is the think but don't you that that's give transferred a

if those there's other online. see option we'll So and buy products we the to best store become no

difference of convenience I if And was stores mean, the store to. are could other market The there's then all no to store store a was, there's totally in But it changes you there go probably closed to. game. the another stores. go play

holds how the see we'll up. So well consumer

and have cross-brand mean the of a of out I market of to e-commerce work share our customers. our and because strong relationship this get with brands we our lot my is our going guess and platform we're

what times. that's a loyalty is times it's built these them during tough focused people think, we're like where and how of I And treated on. you remember lot really

Steven Forbes

of best luck. Thank you and

Julie Whalen

you. Thank

Operator

and question answer today's concludes session. That

Julie Whalen

I your strong stay you. you wish to questions your how and it's I And than things communities know the about your you. appreciate you. other thank will and lot better care. really best Well, to this. families of the we these I promise and healthy We out the and side the with and good learning before. around and very for a everybody And run your are times business difficult Thank we'll come even through you get support

Operator

Thank presentation. today's your concludes for you That participation.

now disconnect. may You

Williams-Sonoma (WSM) 18 Mar 202019 Q4 Earnings call transcript