WSM - Earnings call transcript Q1 2020

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Operator

Good day. Welcome to the Williams-Sonoma Inc.

First Quarter 2020 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. recorded. being is call This I would Elise discuss call to turn financial like Vice President to Wang, statements. to and the of measures over forward-looking now Investor non-GAAP Relations, go Please ahead.

Elise Wang

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

Laura Alber

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

Before your of who safe we deep healthy and QX taking to on communities people the we results, are want time during I the to this care sincerely the thank partnership our Williams-Sonoma, to for against you of this this fight agility, and our started all crisis. associates in our and are commitment Inc. pandemic. in our all gratitude get also hope goes families incredible responding and

In company, are of in people all by Our customers are our an the quarter, X.X%, of serve we half overall are to how quarter. proud our the of these than heart the times. inspired and closed stores having we for comp more adapted despite first to at they've XXX growth company our deliver

though From in pay been decision have core people, environment and care taking entire of to support of and us have we than weekly digital. closed. hours we results, and this regularly ways that swiftly engage close priorities. the mid-March, value who've give stores working favors our benefits continuation institute serve work-from-home reflect And associates, and our powerful the Our all store and personal the true advantage service. pay prouder more to leaning customers teams food, XX% have made to comps corporate new first products driving disrupted local have for policies acted stores been our our Digital-First key XX into this online, innovative more employees. staying donated To also our the take to And for years surgical provide The communities, In We’ve to our and people time and DTC made makes we company's onset all and across health of safety maximized the our our a responsibility competitive very for care than to superior customer sustainable our on me for of a while that customers These and to our efforts over we feel of results We our relevance to our to people kits stakeholders workers be our frontline. care have and high-quality, platform care masks pandemic, been of our communities. we fortunate $XXX,XXX communities. seriously. No Hungry. take relief to than the brands, Nothing strategic of virtually, investments of our over position achieved made in Kid the in our demand quarter. the our

financial We on are focused also our very health.

continue In bolster aggressive while made the addition will priorities. position, company and the expenditures. across expenses, to with maximizing to capital prioritizing we'll strengthen you to our And strategic financial have Julie detail, in cuts taken investments, actions e-commerce, our sheet. share in in we've inventory we balance

strong position. As call, fiscal new we our the mentioned on with we last year entered

crisis brand West strength an was the brands, comp in children's which Rejuvenation combined of drove e-commerce Barn's and into business, our nearly comp of X.X%, delivered when Mark the strong Pottery long-term of breakout comp outbreak a and to accelerate, delivered has accelerate. quarter. a Total X.X% to and was brands our Elm the health extremely month drove growth, on and stores emerging closed from continued and our our growth, the the gained momentum particular comp with all throughout Pottery the impact of a comp through went Graham, positive XX, across growth, our began effect demand single-digit line March March comp with closure our retail while XX, stores, Williams-Sonoma and including had X.X%. e-commerce of business After in comp February the with For Barn high X.X%. escalated outlook. we

in quarter. of brands, led product We also promotions, margins for improvement level reduced the our our our which to an across

personalization, in To retail experience online. online, visualization market even with a innovations, online convenience omni enhanced And our These accelerated We've XXXX. of long-standing Pickup customer, and this we Our enhance And digital connect ability the in demand part the to of launched Design experience knowledge source to a services Also our the We've of culture These which our our grow services online including a technology. redeployed Store, also number Design our Virtual platform. of shopping Chat, our rooted of organizational success time, online. expanded digital new our deliver early buy long-standing and services an we of the customers key innovation. is business serve power to our superior further. in speed to we our In innovations un-muted. virtual leverage ways. discovery, agility to as checkout. not have site merchandising, sure faster we've multi-channel include and their With Inc. these perhaps and outward search someone our operator. speaks a of appointment who I'm our and improvements brands Difficulty] associates it's our in [Technical including has culture in in our expertise in the the for well me, differentiation Ask of for that the line store important enabled and product Expert, is, site to XD Digital our associates, leveraging and pivot them excuse e-mail as -- maximize experience

going. keep guys, Sorry, I'll

to digital pivot Digital, content the we've creation. deployed With resources more also to

social publishing increasingly media, on campaigns leaning spend more in sheltering content our are more place, channels. and in social trend while user-generated into we time, consumers by As this

encouraged are and particularly digital our with real dramatic to across our time. customers customer producing continue take traffic, This initiatives to are live of growth our online. and customer confidence substantially us such as and first more loyalty with attributed online to to We our The in counts majority interact trajectory shopping acceleration program. We're engage also brands. have events balance for new gives our a also ability in in customers more and time the KPIs, These only conversion see year the us online DTC retail share. cross-brand our customers growth the members key, our previously of even now of our to up

always have cross-brand of in program. importance retention the loyalty We understood key, the of our

is retention the cross-brand the always center We shopping. importance of in the understood of strategy. And have our key at

cohort doubled program pre driving this growth, of from they power also indication the members sales in while nearly incremental our online total seen customers earn our shopping to also wherever they year, rewards their an the in realize quarter, existing compared closures. shop across key of half despite eager levels second increase across offering as the brands us. breadth As the with We've of maintain our of last store sales portfolio to growth and are

ingenuity we particular saw Our efforts this the food strength brand and significant digital our categories, realized have teams. thoughtfulness could merchandise in all during the and growth without our of and not houseware. in In brand, optimize nearly with cookware, Williams-Sonoma to tech been electrics, time experience

as such topics channels digital family our across more at strategy and pivoted content live quality for relevant home, time to activities. demonstrations Our recipes,

which in primary was a profile, growth by driven and retail online was new dominated change Our customer cross-channel by customers. our

that traffic further quarter. rates Growth season. accelerated Teen to and also Kids in even our and Barn We conversion were peak also this achieved similar Pottery holiday

demand a parents that's furnishing meet as and to nationwide we children's closed As turned in centers are already for care business study surge and primed us predominantly the home solutions. to schools online, playroom child for and

of than good To in continue for market bedding. quarter functional At betting closures, the our saw enhanced focused assortment the in health experiences acceleration product office further to growth, strength in and in editorial we also in furnishings new amplifying time our furniture. planet. ever, our our that our inspiration quarter demand are offering channels. products accelerate materially in Barn and we growth a is are see engagement and material e-commerce the as the quarter the home lead more in Pottery accessories. social In West demand as content results. tools room in business saw for trends positive organic introduced Despite and began outdoor, the also room we GREENGUARD Certified well our inspiration with retail We offerings strong to for furniture have important outdoor furniture in offering baby divisions content safety with home and digital we kids through the we safe In continued home and strong cotton the expanded and children's channels. Furniture when on Gold and brand, continued office, our Elm, leadership in sustainable all first our meet

incrementally. contribute also merchandising. including experience, our improvements to continuous curated product The Our assortment optimization growth our and quarter marketplace apartment DTC and digital discovery of from initiative in benefited also continue site oriented

significant look we there are our As the rest favor year, optimistic the to we that lifestyle changes that of business.

However, there uncertainties. considerable also remains,

a of have rest the for factors form of and the economic this the prolonged for of future. foreseeable in include cost economy and business impact XXXX of incremental that takes are Some whatever doing modeling pandemic the we could reopening the

we are result, full year a guidance As issuing not today.

you an to date. give to like update on However, second would I quarter

a We strict stores, regulations. continue our for Xst, response fulfilling have in masks sanitization, to of brands. pickup, Since customers store, with by our a have see which in and in the only now Customers' through acceleration In e-commerce trends total and we of safety associates May orders on stores, shopping in so these reopened we place appointment stores, retail supply of by across XXX launched and of all government robust gloves such strong limitation shopping. curbside number protocols, as XXX We're driven customer frequent reopened in consistent associates. nationwide. also has been been far appointment our our locations has

stores. in social continue our However, measures place, will limits with customer in distancing constrain to strict sales

we accelerated where this than more June and retail continue locations keep closure through provide pay extended been and restrictions for e-commerce regularly believe large of has industry new given and for sustainable e-commerce to to those well-positioned. business, working of been benefits lifted, are home. products our associates, period hours design-led crisis have that For appreciation this XX who and with differentiated not long-term, the high-quality, stores value a we found have We XXth rise Reflecting will our weekly. shift the closed to on for proposition, our

platform of of the multi-channel and commitment resilience stakeholders. during time this exemplifies unique, advantage to multi-brand, our Our all our our turbulent

enhancing online model, continue channels. to will of strengthen invest digital-first to convenience the our our We

moments entered we the apart these from to at out our in the also these clear and competition growth and prioritize We across West Its our crises including moments ability initiatives of positions and our continue cross-brand We brands. with that us year financial the the Elm initiatives, laid business-to-business. that outperform. set reinforce strong key to the like beginning end

the over we you more financial that now details. will crisis, the to an confident for Thank call this even you for of Julie, and We will continued are emerge company. your I support. I your the from wish best. stronger turn families And

Julie Whalen

our Thank Most strength to and digital-first quarter, stakeholders. results in adaptability performance maintaining of We our the achieved execution our unwavering of you, the delivered Laura, and and are good and afternoon, we the commitment strong a of importantly, model, of agility first our everyone. while fortress sheet. solid these highlighting to resilience the have balance an proud all teams

Before the I you I pandemic. detail, impact into wanted more COVID-XX go to our to results team on an how financial in responding update has the been our of give

market travel the the remodels and strategy, have negotiated have with this discretionary landlords. with vendors, various priority macro preparing a our While our and and a to we expenses, maintain focused $XXX on business in relocations technology, have have financial continue over professional always And reductions traffic our the increased that highest initiatives are immediate in support allow various in have competitive non-essential we rent the real technology, our associated flexibility, draw and strong of costs COVID-XX business These our and projects and we strong take future. performance we have to From across financial In with are order heightened decision part position. all our have financial have also operating of perspective, as store customers cut existing foreseeable profitability, us to down business-critical that our health despite our those improve strong our business is only other estate, In safety all our scenarios. period And services. now bolster financial in other e-commerce reductions we prioritizing uncertainty. health as elimination to liquidity and are positioning we will also of of million of negotiated for almost steps in ability speaks business, of our To expense to response s to incremental culture maintaining cash taken spend in the investing share. been our during chain supply our in associates drive and further and possible discipline. delayed a on number returns continue revolver. further in we our have and our resulted including advertising, result we for And to We conversion. we in our other

$X.X believe our in unsecured additional to term through of revolving banking million were of facility. to With long-term. us XXXX, liquidity current but business we our will global the also million liquidity extension additional the support business and this able January XXX-day as loan crisis, $XXX to an health only partners, the not us invest even also of to We obtain $XXX billion our position of support an allow emerge an resilient and an the operations stronger for in credit during allow will the more and continue business to our

in X.X% of at By driven to of with more business of $X.XXX quarter of of brand, line X.X%. of Growth our impact XX.X%. accelerated the quarter. acceleration by e-commerce of stores the fleet, quarter with overall growth comp in the having well a further pandemic a number relatively were of end prior total back strength despite to in as as stores closed turning strength despite business, quarter our last comp largest all half our closing the COVID-XX the first were which comp delivered in for billion, the with while performance. the our Now, our revenues our stores growth Williams-Sonoma, across Net to first both the than the was year

quarter. Pottery negative X.X% Home to of growth business comp, comp resulting X.X%, accelerate, Furnishings solid the to a second e-commerce Pottery in comp to a a quarter to comp and Elm drove has had last positive accelerated X.X%, in business continued compared of Barn Barn a Children's while West date. sequentially Our significantly their X.X%

closure our e-commerce in XX.X% relevant, leverage ongoing to stronger in from leveraged also to of quarter in of was $XXX.X impact sustainable cost higher occupancy XX.X% to with the well the multi-channel of investments to was income million as the first and was higher primarily impact XX.X% It that driven business quarter shipping our basis the positive a compared the last our last down gross to which initiatives, year, costs the reflecting to deleverage revenues the more merchandise COVID-XX. on of and total efficient aggressive impact SG&A and The shift from expensive Occupancy first recorded to Moving advertising XX% are of by from board total ship. as are The year-over-year the XXX stores due relatively more our in incremental revenues advertising from design-led and our to of of approximately revenues facilities driven along occupancy. the margin year margin furniture year. the points of to deleverage of cost the million across by as Their or up catalog from revenues. and costs XX.X% sales Gross our appeal our for promotions sales, reductions returns tariffs incremental year compared reflects enduring China substantial gross less power stores, basis shift $XXX.X quarter, digital impact all at margin XX clean quarter result the partially of offset by were in spend response XX.X% model. margins within or of advertising on products. of higher the statement. the the last flat net to

our spend customers to and non-essential this support we with of $XX earnings and As margin of and operating resulted ensure drove we a cut per through bottom-line compared profitability to of that million and early diluted $X.XX. previously communities quickly acted digital associates, to time. difficult self-fund we perspective, continue X% last all business X.X% to $XX income year. mentioned, This our an million or operating From in to maximize share

are costs during to gear to and help services of our We continuing to pleased associates keep protective across associates levels pay these able pandemic, increased our sanitation and providing and profitability, while incremental be achieve operations. this including incurring various safe our to customers

boost the of of sheet, facility measures credit revolving the million to our on cash million. a balance full includes $XXX existing balance drawdown liquidity million, the This took during approximately last compared the $XXX strong precautionary we On a quarter with to ended $XXX our year. quarter with we

Excluding quarter along which was this $XXX our drawdown, strong million million. reflects last in than year. the $XXX we ended over balance in XXXX, This positive with with our flow higher performance, the operating almost $XX as enter we cash cash, QX million with our strength cash of of over resulting

In $XX business, this our to payments the to as the balance reflects also million of $XX operations over expenditures, million as in the dividend addition shareholders. cash quarterly continued of form well returning in funding capital investing

inventories compared reflects our preserve Moving inventory last for the to in the $X.XXX purchases and to business. of were and down This balance a our to outperformance e-commerce our subsequent out liquidity year. to X.X%, sheet, of merchandise the our billion and COVID-XX push cut efforts impact decrease response

this seeing impact a health guidance as today. on full year not reflection of category, fuel value us at discretionary term, such the regarding permanent uncertainty as of a have model customer to home behavior spending benefit the activity in our drive gain the continue we will are critical. digital-first given consumer our likely but pandemic categories, Now, in the not providing allocation, long-term. could in are year more short-term, with crisis that to our in business, we In believe trends, full in over suspending to remains and will unique confidence rise our the given non-business unchanged mentioned, the impact growth, global strategic shifts even and to visibility fiscal invest of regards the combined ability for This long-term. in accelerated to turning home the is proposition range are and business. balance current has share business that which Longer leading in the this initiatives capital related this the in we demand, time the trends to the rather to we of that economic while spending Laura E-commerce in outlook, future year. to of balanced are the we cooking. and outcomes With our and home economic future of we capital lack visibility this our exists our shift adoption has more accelerate, that wide crisis home, accelerated give to market These while category, growth, and expenditures approach continue our consumers that of

a to have as into have We buybacks temporarily quarterly suspended testament per shareholder our business, we until as in to we share. of our cash announced confidence from another the $X.XX stock well But returns, also impact better have commitment today the we visibility longer-term COVID-XX. have as dividend

strength growth. continue Going to forward, our accelerated our long-term the in drive strategy in to see remain business, based we on confident we

As our income be the a revenue are -high and with growth. to digits line operating in with mid-to outlook growth single longer-term result, we financial growth in revenue maintaining expected

during for quickly to unprecedented my adapted how challenging with crisis. challenges our They to and have Before presented, these who this the and has resilient health been performance by key questions, customers, a And commitment safety. over turn the always financial I reason our I have risen a serve behind appreciation to want to are to call express our times. associates business

communities strategic our ahead, stakeholders, staying associates, for our to and in our Looking and manage our focused keeping top mind shareholders. business our to always business will on long-term, customers, our strengths, priorities we competitive manage our continue our our for of the investing

demonstrated now to this proven and Thank balance subsides. like of track to we now I call our has multi-brand open agility questions. discipline our of would pandemic the dedication an financial as like emerge with strong fortress will you. digital-first a once this our and would crisis for sheet, company record I stronger response model, the that Our teams, even

Operator

Seth Instructions] we'll Basham go first [Operator with of you. the from question ahead ahead. go Thank Please Wedbush. And

Seth Basham

good Thank you and afternoon.

Laura Alber

Good afternoon

Seth Basham

quarter. on in a comps recent trended to around fulfillment faced secondly, good comps? challenges? then supply is relative have And sales trends, any Congrats demand have chain question you My particular, how

Laura Alber

Sure. It's Laura.

obviously. than been So, stronger has demand that,

We And to of as our I see are constant how adapting very brands. continue prepared self-inflicted, chain to sensitive was happy too what we're very chasing to we outcome a to mentioned receipts all in in challenge trends, to have back happened, accelerating across But our on be relevant thing inventory inventory. and first and remarks, our is didn't with a time, we that stay during this and long are right thought little these when times looking are would some tone be we we chasing some what our things thing for going the and them to and The that world at to pulled to because are the them home. that know they're lead do now than the we inventory the and better much. to right while customers interesting giving supply be

story. so, for stock. ever by more what's to that, versus times longer stock showing seeing on, We, that pushing But us, And us and of promotions we've they really that be through the out we course, have than see that balance the are are year. do in half robust. the by have And the right I've thing. great strong in to can vendors and going you’re into the of partners, been on gone results doing all but that doing pull back I have past. that some will demand there's our desk -- And move and have this the trends -- We'll we're lead the quite continue to seen willing more back products are

really past. customers flexible about now in are quality think they seen more them and so one than I've want in particular sustainable the I our products right which

areas some We not that of course, some to struggling world of it can, as reality we're just of still them but some they're really these are fully is And to some but up Most supporting areas now, we and of have the there's as there's where much running. pockets. open.

Seth Basham

luck. good and you Thank

Laura Alber

Thanks.

Operator

will we please next [Operator question from Nagel moment Instructions] one Brian our please. ahead. And Oppenheimer, And now take go

Brian Nagel

Hi, good afternoon.

congratulations really to tough environment. a too my add I on a quarter So, want nice in

Laura Alber

Thank you.

Brian Nagel

I nice in have numbers, question The online clearly and your comp was the acceleration there obviously, have, we a business.

that, far. your what that early a I Can help into underlying business? the then, stores QX? of mentioned that half And QX, you place. say are -- second further the understand As opening, e-commerce so it's here you trend stores of better in was really, then us Laura, in closed acceleration the you've guess, sort mentioned rate and of measures in recognize XXX exit there out I And coming is QX.

You're those begun you. store? have as stores. many sales opened, in -- have not where if markets But have how customers getting stores at to into and is transition, how those online in all? Or that Thank between

Laura Alber

last two that. much short it's wouldn't stronger, brands. say because I and you weeks' significantly want to you so, relevant It's such all is mean, it. think a I'd comps into giving is It window, the I don't too I across Yeah. read

So that's good.

by In are the vary location reopen and brand. e-commerce, again, terms really, and they on impact results, of by that stores

seeing to the since strength a pandemic it's total It But draw demand started. conclusions. strengthening, the strengthen. are early total to little we So just -- continues

Brian Nagel

Okay. Thank you very much.

Laura Alber

You're welcome.

Operator

And of Griffin, your ahead. our question we'll Griffin take next go Please Raymond James. is open. Bobby line from Mr.

if Mr. your you may Please Griffin, is And go You ask muted, your can please ahead. Mr. line question. Griffin, yourself? ask your question. unmute

Laura Alber

operator. don't go next you let's person, mind, if to think the I

Operator

Please Sure. from go Baird. ahead. Benedict We'll take Peter

Justin Kleber

is my Kleber guys. Justin afternoon, Thanks on Pete. question. Good for for Hi. taking This

may your does of Just were should given size future successful what that fleet I you future? change of at how closings? store closed. And the view recapturing store the the the sales, in ultimate pace all look stores mean, with the of be

Laura Alber

such good a That's question.

fleet. who adjustments you of our are to store make all story, We we time. our those regularly For the new newer, review

our bar careful furnishing customers. brands part products experience very associate talented company. new a an to love We of making as And we've our with continue in in our stores. important been And Customers for do high decisions and be know, in stores person. you helpful extremely profitability. to have our is opening But

to However, three our pandemic see has the our shift next renewal, over as from up this you accelerated numbers, can we have the and half for years. fleet digital,

So looking up landlords be make the sense. crisis with will where we'll economics at have that during each partnered where fleet we and carefully. comes renew this us, And

that the up of expected stores close to year, And three for see double terms renewal. stores. And for approximately we next In the renewal. years, said, as being over XX In five I this up pre-COVID, next XXX come come XXX now. we stores, number

going to able lot we have strong and walls the partnership be on think, store. malls, So I every a and that decisions a be that And what four in very is, each to in. based to position of the we're make happens, the

Operator

And next Wintermantel Evercore we Please ahead. take ISI. of our Oliver go will Instructions] question from [Operator

Oliver Wintermantel

Thank online, quarter? e-commerce in-store online introduced a time. a Yes e-commerce as How regarding into and a of buy of of is And in good you pickup up end then, Congratulations at that the also in good What you afternoon. question percent now sales. the high on had mentioned, you. curbside new pick had you store. quarter curbside? was tough pickup I buy a percent

Julie Whalen

XX% as about you as to e-com XX% trending been first as revenues and it of for percent total So, revenues, jumps the jumped far know, the it from, we've of in quarter.

Laura Alber

numbers given we haven't our And yet.

So, I'd today. give prefer not that to

Oliver Wintermantel

very Thanks Good it. much. luck. Got

Laura Alber

more to our get and trend it be. say, it's BOPUS open than not comfortable, as we probably And huge we it a lower a used people It's number, safety think. you to will It's measures. than I'd just with continue lot particularly think

it's We BOPIS grow. will continue see pretty small number a to But still.

Oliver Wintermantel

you. Thank Okay.

Operator

of ahead. next Telsey Group. our question go take now We'll Advisory Please Fernández Cristina from

Cristina Fernández

also money; wanted on is stimulus Hi, to stimulus some congratulations Do I the versus can perhaps about Thank that in helping business? also been more there's markets thank loosening ask trends seeing. And of the you. other you the your think government you and you're you quarter. restrictions? and have the talk where urban suburban and impacted performance

Laura Alber

helps Yes. stimulus everyone. I mean the certainly, money

to of haven't continue who much really their for I to particularly keep people of all paying question becomes the so a they able lot how us, think I is support long concern retail teams. in think which unemployment, a been that can

it's that And economy. for so, been the has that say. whole our affects specifically, to How good a harder demographic thing

and seeing glean shutdown keep places not We and orders homes. and you’d very, looking it some for doing at be at That's very are our urban safely. feel least not specific to their trends, I trying are to to be goods, of well still suburban. those it, lot demand versus -- fulfill in able something any very of really a doing we And really fortunate surprised

Operator

our go take ahead. from next of now Please Morgan Gutman Stanley. We'll question Simeon

Simeon Gutman

remarks, I the prepare improvement? quarter. closed? with Thanks. Did and rents in then quantify were have stores merch and absolute during have I Hi you what guess change Julie for as everyone may or margin missed leases you this first. part And the which done maybe nice just two, quarter

Julie Whalen

impact incremental actual that did and costs pure quantify was last not the but higher which tariffs indicate the some merch did did quarter. helped than the within We we last it year, higher had was the margin, higher shipping than with the indicate from we that of it that China offsetting

So the margin we're been line. intentionally gross and less within big it's for win a us being promotional,

Laura Alber

we're And with how our landlord working then partners. terms of in

have partnered regarding far at look generated future in closures We bear We're good customer as make as that sense. landlord landlords stores. the of call, by during during to landlords the negotiate party revenues relocations, as from We're have really decisions to of a as realize they we stores. time shifts a been the our out, been to during rent many And payments closures permanent thing the of sharing take rise us. much for the solution, openings, well appreciate lot working played stores launch that And this ones no burden. very our that want whether them crisis not as deals to do no financial they one I it given this see really our negotiations. pleased are willing fair And one and landlords' with -- difficult on on this unfolded, And the that partnership very doubt into right economics times very is how has to them of we how this And as each to account thank impact. depends the direct there's for all them. we expect as what's behavior. the And we our crisis in the our during the a been with closed. us has what release, have crisis going our

Simeon Gutman

Thanks comments. Laura. Nice

Laura Alber

you that -- asking Simeon, want to I a make different think you your I question. weren't I answered but sure, question,

Simeon Gutman

what yes. I No. No, asked, answered you

Laura Alber

thank Good you. Okay.

Simeon Gutman

you. Thank

Operator

Grom go Chuck go we Instructions] ahead. with Please Haskett. will [Operator ahead Gordon of And

Chuck Grom

Hi.

forward? banners, big wondering key it. wondering should a line numbers advertising about am some across me, SG&A just just I for behind on we could just about think shopping Laura, program. then that just be? if you opportunity the utilizing your going efficiency put more so So an we you How that, And contextualize of couple the could talked can customers how

Laura Alber

going to that. to Carbullido I'm Felix Yeah. answer let let Felix?

Felix Carbullido

Sure.

earlier, we said Julie organization as managed -- are including throughout the spend. expenses aggressively our We marketing

by we that still the we we where are look had on at based as said, spend brand, that you customer metrics just and see includes, So And investing, channel, greatest behavior. we by know, ROI.

think see hitting high. did new growth, leverage we customer as We're while incredibly there. with said, Laura all-time also our I an pleased,

than find increasing So that, the a quarters reflection best XX we marketing or past it's digital, more towards our the mix of of payback. where

Laura Alber

to you want do Felix, the about key? comment

Felix Carbullido

Yeah.

mentioned, even level throughout the I growth, closing, of quarter. the as they And some the Ly same stores think, incredible the maintain quarter. Laura throughout key over results, with had

brands. purchasing we we be And untapped our into of opportunity. so, number that efficient and tapping But very messaging, we who is an And shoppers now program. part the across opportunity. and have can also key foundation critical just our a that marketing of around number is and we particular know combined focused the that's events mix another promotions, profitable, The of are We're a reason of our where that theme. the

with have to our products in our portfolio. Design across Crew customers from install We

see the times number these shopping we're to customers thrilled during I about of opportunity other the is that So, think across our brands.

Julie Whalen

the And that do that continue for to expect mean advertising about question cost SG&A SG&A done, to similar see Obviously, Chuck, efficiencies. expect with just a with while. been continue, cuts certainly, where these we do generally. I we've to to incredible we we’ve answer to

Chuck Grom

business Okay. in talked ticket significantly banners you wondering And more one on just stronger across the if been items so anything XQ, of and bigger quarter-to-date? in, far that’s just could if here I Thanks. then just sneak about pace within PB,

Laura Alber

Yes, what it across Yes, question? is And then second was banners. sure. the secondly,

Julie Whalen

PB.

Laura Alber

picking Yes, Big categories. ticket. ticket. been of those up. interestingly one It's Big it's

strong, to it's it's I trying big incredibly our where upholstery outdoor strong. been we're but so, across Really, And very as has been going, board. mentioned of judge all the ticket

Chuck Grom

That’s great. Thanks a lot.

Laura Alber

Thank you.

Operator

Raymond from [Operator next question James. Griffin will Bobby Instructions] And of you. our I Thank take

Bobby Griffin

earlier. and would reduce a health me, do they good operational the labor congrats think is guys. you quarter. of whatnot, you’re I are assuming you Everyone, or or issues down requirements or on allow be strength, hope with I'm the the different continue to the more about But to all about I mix safety if first afternoon road. hours stores thinking when up now openings, vastly question hours, my than maybe guess levels Hi, slowly, because opportunities sorry store distance hear demand What can I e-commerce the ask at open? to dark stores kind you seeing the at. full just good scale have keep some the still of business store wanted that

Laura Alber

strong stores Right even results in we're open seeing very appointment our only. now, with

some the right? have both. them for let time decisions, to been we scale We've have it's well so and them we and anyway, manage but them reasons different there, back that stores make areas we paying small for payroll. the not as those Remember, we're So, paying might working, I here whole

on they are really this doing closing reopen small I and time early service definitely all, a It keep the is January incredible -- dark not a customers giving open. that wonderful And having I ever end are even the as the more couple the were during marks are paying they from get if couple the it's really They doing you But to that's close our well sense we've time. than and thing such that to it's than so, that And reopening. in them dark getting service. proud the a a them are the right well those. planning and to said, At sanitation been stores our weren't now, to There have see to couple that which make we're it's us we for there closing. are them There's pandemic, are where a -- gives year, phenomenal. of to things, year. tell I'll closing are were didn't their very and there definitely higher population. worth

Bobby Griffin

you on the helpful. guys? I I and And of good maybe hearing for coming fiscal and heading what customers you of story was kind on you're there. pretty more BXB approaching, guess pandemic give side a into the the that's opportunity things, a of Okay, can It lastly, how year mean, success this of from they're detail little kind those out

Laura Alber

Yes.

So i.e., our were impacted, I down BXB in were heavily have and BXB QX. hospitality, mean, impacted as verticals you expect, and some of sales been our industry

now, things spruce things come we're and However, this we're build using pretty do are remodels time to and ready and pipeline people them seeing back And some the get up. seeing substantially.

requests. a we're a been So been than better of fulfil, -- competition, lot and whatever our right to current able fulfil we're of also who of getting from we've some because And we're volume up lot those operating now. able that we're for to reason haven't picking

people's So well. we're picking up some business as other

Bobby Griffin

the your of Thank I And of you second luck through detail. rest quarter. and appreciate best

Laura Alber

Thank you.

Julie Whalen

Thank you.

Operator

from our next our -- question Michael go take Lasser of ahead. will question Please UBS. We

Atul Maheswari

a question. lot Maheswari Atul Thanks Michael is This Lasser. on for evening. for my good taking Hi

simply So if Williams-Sonoma that as that's you would and in as And comps not open probably slow home demand strong forward? at up, case, forward center you and stores? pull more to going kids furniture trends that some given invested the consumers saw home. furnishings lot repeat even you and in Do you a they of PBteen might expect the think necessarily

Laura Alber

look, possibilities. you, mean, anything. not It's tell happen. more And learned that. You I'll count of the realm anything stores? we've open I on believe don't I can can't

to a it's -- learn beginner skill, generally people pretty And one move cook. chef, they -- for. is to how cooking things. new hooked. a learn It's to learn see they when they wonderful they those get real someone a passion And from of you people, often, who think to how I

entertain, And have it enjoy and along learning doing so all to how at be and virtual it's all joining way to to educated. our wonderful have but cook our bases brands taken cooking the both and been that different home, more online people of the online

that go So that see don't and don't these come quickly. things I

-- even people small seeing decorating -- seeing ticket, want about have time we're think people think they their to I do projects. the also We're I mentioned high now but to homes.

going while, a the of time I and we had in runway many I think a these shift on be to And on longer a continued home. other very very, travel, we term, I'd people have strong very, still began homes. that believe, more roadmap very And some positive that their I for say, before for a more then there's this now into areas future. are so think spending growth, it's even

Operator

And we will take next Shapiro ahead. from our Retail go Please of Marni Tracker. question

Marni Shapiro

are from on, And a now bagels. I to buy bagels. But do cooking. quarter. made congratulations Laura, on I people guys my think great like I'd really Hey more

Laura Alber

The sold always out. bagels they were

Marni Shapiro

I I curious, was as that amazing were could stores bit. at while everybody your working. just was stores in a open. Williams-Sonoma them and they staring me wanted then productivity And They like? the to was What all there look I me, And mall little does through anyway. walk of us them, was the loved The and I'm you make at quiet. are sitting they're again. opening, one yesterday, was

to taking just But, a bit through was lot Everything lot right judge. is to little a out retail to is taking now does a anything is moving like even harder longer, a molasses. do it it like check longer. little bit feel So

people rich. to come sort start what just as curious bring you because buy to I'm the is to to feel products, items in stores is And is, your it open, So more a adjacent I'm very people your of then, like curious, process? as for of sort online compelled follow-up experience stores even what question

them curious in to what And versus so, come people the I'm items you're online? buying it buy seeing

Laura Alber

Marni. question That's this a question. good that morning, I really asked

Marni Shapiro

I way. the bugged by your office,

Laura Alber

are I scary. -- god, mean, stores that's our

I'll Our And open mean Yesterday, store are stores if -- little you and back comped, are short-term our stores they're thing, proud associates customers. amazing. one with be tell. so tell total I they to I these working can positive are our comp.

Marni Shapiro

exciting. So

Laura Alber

in, we're people. big wonderful is shorter them like the And of where customers today another look visits So extremely conversion it called importantly. get people store but very doesn't tell having tomorrow, what more coming we you and right? we thank high. yes, that feedback wouldn't the the those in is they the their all but that focused and power they're to But to they very thing hear and they're -- me it, -- quiet, what coming is It looks are who talked they like did know want,

it's is us. So only Appointment working exciting. for

I think traffic. you need stores a more different of that kind business other lot we're where than at a

about think we careful the structure And and where anything happens granted, we becomes for year stay excited our holiday the really relevant and we're why too times expense for some that's not I during traffic to everybody. of getting what but take those is question want results. pause like phenomenal on seeing really

Marni Shapiro

sheets new in -- bread couch? and more to coming across? buying and are the a they they Are looking are Like, buy they is it Or makers towels?

Laura Alber

makers, any I mean you journal. read the -- trade can Well, boy, the that's in been, bread as

Marni Shapiro

Bad example, yes. but

Laura Alber

everybody. great It's category a for

maker, of for SKU on of in, variation what in not They for, one. want pops ever -- that the looking out Outdoor things. looking they're furniture depending for. a wants So cream There's a what there's come us. an they're one machine. everybody and And there's those big ice they is bread a lot then kinds

furniture way only to been outdoor outside. know, for your someone you a other family has safer all be win than You us. it's Maybe the can big and own see so

Marni Shapiro

Fantastic. summer. luck with the Best of

Laura Alber

going. go like person, We they where they're us, for see can in to so things stores

Marni Shapiro

are to want to display they're display. be finish they in very saw before people every in bag. shopping. They to there going when mall are going for I the I'm mall But People -- it a COVID patient a like And Yes. shopping. and person somebody the be damned, shopping will yesterday. very They're they at wait had don't respectful. the

Laura Alber

respectful experience, Yes, our proud of our it’s and that too, customers that's our are moment. employees very a been very

Marni Shapiro

Best summer. Congratulations. luck for of

Laura Alber

Thank you.

Julie Whalen

Thank Jonathan And Jefferies. will Please our Operator: Matuszewski from we take you. ahead. go of next question

Jonathan Matuszewski

Hey guys, for nice question. my taking Thanks quarter.

household new your customer Can Any mentioned the acceleration would similar of different there. been your DTC channel. anything that noticing How you you the have robust levels maybe Thanks. some that are over profile weeks. in or be base customer comment demographic who strong things past the they from reactivated just with the growth on You shopping new Obviously, customer or helpful. of or like and of few pre-COVID? in are income terms

Laura Alber

I Sure. am take that Okay. question. to going Felix let actually

Felix Carbullido

population. brands, familiar with offering to our Okay. in and we're shift pre quarter, yeah, I say, place the Elm Gen Sure. all U.S. these that Xers our Great, shop customer definitely Millennials, starting brands for in younger and a And more to differences for the and more becoming are initiatives put are starting will I'll our And kitchen, take are QX general, after. post our and our that. But West to the more in PB at we see Williams-Sonoma we capture offerings. see the apartment, brands,

to usually a of is acceleration middle customer. online, household they're and the see formation. not core much did Gen the to because see customers see slightly Xers We As they're did than similar closures the more in pre I it significant, online. we performed more which relates of those not of surprising, That West saw store quarter. our affluent very anything the closures. And towards your stronger demographics and not but little end store regionally, of that answers think But the come we after closures question? customer, like the it some looked post are a We dramatic,

Laura Alber

to you what Felix. said, add just I'll Yeah.

we our and marketing presentations, fragmented just say online, we're industry brand our industry, and the investments, in underpenetrated right are becoming. you that, key I is online So taking we of content digitally a highly sustainability you important it you all a because what trade much increasingly and under how competition. And shifts become why whether our has estimate proposition, baby and us choose to chain guys across are important see are business. as just sustainably differentiator because is transparency well-being. our materials. know our really our our over that today's high also this supply it's you commitment source for expanding And And this value exclusive fair us can worker our like brands And cannot our can programs customer. And of service it's but products, in customers our

And our so and they're they to reasons see feels coming you are why But over advantages exciting lot come it's elsewhere. us the versus now. not to down the when that very break surprising it. there to that And a it's going years why brands would of we

Jonathan Matuszewski

Thanks It's for the really color. helpful.

Operator

Adrienne next Please go And ahead. Instructions] [Operator Barclays. question take we now of will from our Yih

Adrienne Yih

I performing margins well. exceptionally Laura, through you're environment income you the to. less for Hello the by made intrigued as less move And that customer everybody. was higher and my And let me the a need obviously, add about tough promotions, commentary up. quarter, merging promotions, coming you obviously, the congratulations, and

for seeing something are want it like is inventories. an to quick pricing broad category the And afterwards. As one going base -- home, people buying Williams-Sonoma you specific are sounds at is? go they be to chasing brands? you seeing need so it to specific those that regardless the and is it to your home. They what at kind half, that we a back and are Or just be you're increase wide-spread of to be of Julie then a or What

Laura Alber

Sure.

So value remains of our I priorities. first just our top that is commitment to one -- the thing

more making clearance in that are price winners. that working We're busy time been higher. value we building to as competition. not categories, as our stronger The regular making into We have a we’re price we having previously, on sure design sure the position much and and of winning have is our we this spend that did than relationship sell-throughs So, quality lot differences begin. are

won't I hearing So, previously, SKUs changing. working started just SKU yet we're because a of demand getting It's talk those on rid and to productivity on short But to the and inventory and because that success be do we more able drive of there depth very we've possibly we've selling, early us that this, the promotions for than testing too you've the have the and front call carefully. it while. as a effective about it waters in simply term. to is been much as is we'll been the we've been aren't mean,

-- those things an us thing it's going buy drive stock. important the get be to the that's to have for So to we promotions, margins and them balance that do up in

Adrienne Yih

about And hearing in Asia into great I expensive. from Freight, I you in we're then very out Okay, question and going helpful. of in that sourcing being Julie, and I know but of Asia, reducing specifically. initial tied kind more outbound of markup down, were a assume, coming is making freight general. guess that China

cost kind that the us you of puts with takes line, help on the of please? So, goods, and of can cost product

Julie Whalen

by with reduce of in end going the the production we about XX%, year. I Sure. do we we mean perspective, before that are said where that had to by were we China this from China

target products on has do nothing changed to developing as so And we're from we're also many standpoint. that into China, So, that. not

seen of have higher not coming China. out shipping We cost

down. coming they’re fact, In

to on the not the that. shipping know which in so questions. perspective, we the higher spoke but a hopefully, from able significant if So that earlier still obviously, merchandize still that and but topic, to I But side, thankfully we answers offset have have margins lower tariffs is QX be that have so amount that that China you we flip the absorbed it's your you cost, to

Adrienne Yih

best luck. and Yes, you much it of Thank does. very

Julie Whalen

you. Thank

Operator

for of like And do hand you. over Thank this closing I'd portion it Q&A Laura for today's concludes back technical remarks. to apologize difficulties. We now sincerely to today's the call. Alber

Laura Alber

to look all and of the the wish giving your very today, you and friends thank end forward Well, you I another you and and QX. us sincerely joining we families at best, for update

Operator

this We participation. concludes today's And your call. you for thank

may everyone. Take wonderful a You care. and disconnect have now day your lines,

Williams-Sonoma (WSM) 28 May 202020 Q1 Earnings call transcript