WSM - Earnings call transcript Q4 2020

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Operator

Please standby. Welcome to the Williams-Sonoma, Inc. Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. [Operator Instructions] 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

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

Laura Alber

drove the where challenges everyone. Thank year in the substantially accomplishments dramatic prouder of It's I QX In dedication delivered us. shipping growth; changes revenue adapt to and way vital year end comp of year strong growth. low was joining revenue ability afternoon, year combined with also at gain Williams-Sonoma. of accelerating we This expansion XXXX not quarter profitability were and a our and Their we and retail you year clarify another substantial that and the the important year. comp is last EPS our of record we doubled operating was growth, outperform pushed XXXX it with XX% traffic, XX% that was throughout highest share. live. the Good here industry outperformance market the and the and to despite quarterly us. could our constraints almost for margin what the of team of fiscal be EPS to of part all

the ahead to in are we profitability. growth improve and ability As our company, look and year to our term the our confident we of future forward longer drive

second values. our We good key increasingly our and have want I to in-house to third, that digital three goals which apart spend of our first, big achieve relevant. believe design, Today, have channel our bulk are, and talking and about reasons time us They them. become we set strategy, the our first differentiators will

start capability. design Let's with our in-house

Our bring in-house to to quality, vendors sustainable products, create our and work our market. with original team’s design aesthetics own products talented

very that so significant year have products design our is the material very cannot this have we It's Throughout do a Given equation model. our to value we elsewhere promotions reducing all strong of that others bulk of our deliberate the and been change and power found and quality brands. not. in be pricing

is work of consecutive We Pottery to year. in to change the product proposition this and our Barn, last paying with have into In content tested including clear promotions results value compared margin off. change this inspiring replacing of multi-year effectiveness quarters site-wide expansion improve is our the

are the brand point relevance our with view. furniture famous casual increasing modern proprietary lifestyle collections of and launch We our of successful rustic aesthetically

are value attracting Our products new customers. engineer

value introduced pieces points market. significantly best furniture have the more We opening price in finished high and multi-step the are our quality

and is to XXX to renovation million model bath of adjacent years. design and and billion One growth. assortments new or drive Pottery will furnishings and children's and in-house business. nearly the The development we We teen, categories next home XX% the year XX three example sustainability an renovation our contribute renovation. business U.S. of bath proven XX% market. to growing is per at of projected In incremental Barn improvement over continue product leadership develop amplified our a in market rate kids is is home bath in the have Through marketplace our this incremental

are good for the proud planet. promise of with products is Gold XXX% wooden now aligned offering say and good our furniture certified of are We that GREENGUARD to for that our kids

In over XX% addition that added brands. new our to to strong core growing modern is at introductions attracting and we of a aesthetic furniture, customers have new

of baby example our Another growth business. is

business Elm become and market. targeting choice truly furnishings Our for baby minded people. millennial saw year home last billion West has and registry the baby we actively growth plus millennials X are XX% of the brand

continue build business and categories. space and We by underdeveloped to out the filling design original with white

business in products strong expanded of of In launch, volume weeks the maturely out sold to the décor; For incremental brand. built holiday for seasonal within into the this foundation we the years couple first a the small come. further example, for year season, which many with we historically a

an business West are growth category than is would Barn Elm Currently aggressively the Pottery West incremental for outdoor half business after we Another X% doubling brand. size of less outdoor. is the drive going Elm's and this

brand. relevant the to that William-Sonoma. like strategy marked implemented a driven change content and about of marketing stories in the dramatic We This exclusive talk year strategy featured products I'd instead for promotions. Now lifestyle

has exclusive which grown our William-Sonoma the of to also This from initiatives mix key only business. XX% available products in one five our to We last strategic has to been XX% products years. of XX% total our grew at increase of the

aggressive exclusive we to our be ’XX. end over total we'll expect which business product, growing of the of ahead reach by XX% in our even FY Looking more

high-end in that underdeveloped are market. luxury opportunities the including We also categories significant see furniture

is Our and William-Sonoma share represents market growth the gain opportunity significantly brand. home substantial a for and in underrepresented market this William-Sonoma to brand drive

In addition customer have growth such in as our also and we in brands, business new growth to home business segments category. global the to

sales over We this XXX we business-to-business In five in life as our to year Elm to expansion plan drove e-commerce through million and led team in million is mighty in business capital model. accelerating double Last revenues the We year. we are the continued building West years and expect in are surpass by business our industry we across as of verticals. our well this multiple XXX global our growth next franchise franchise business. for the growth of strategy Canada revenues our globally our operations volume

second Our digital differentiator is strategy. first channel our

to we was at was key e-commerce our able serve of One our reasons scale. because outperformed platform the customers

uniquely share We to as shifts market are positioned industry take the home online.

to the and channels XX% already new in our one the the are among and e-commerce. retailer e-commerce all record customers. been played year furnishings our top is in our industries customers e-commerce number digital at home In retailer continue acquiring we improve new U.S. business have over XX non-pure retention and all metrics We customer rates today across

to the even push higher. our the platform, infrastructure, and supply the We growth have tech chain the e-commerce stack talent and

not first, but digital We only. digital are

customers reasons prefer buy business were the our leverage season products higher we total advantage hubs. our Our is expected person fulfillment sales the as than stores who to This fulfill omni-channel unlock XXX% we gridlock for to distribution experience for are support store retail competitive of source volumes our want In online that and over ship it online, our network of this a quarter as convenience able industry. for holiday increased as past in our our well huge impacted issues the is who those the by that and as and despite operations pickup services. from one we

As we predominantly ahead, look driven will growth future e-commerce. by our be

advantages new already on are to is key We enhance adjust customer built several our that quickly and customer of and based conversion in-house the platform to having have further planned and online. of test feedback. initiatives engagement tech we initiatives able implement One

constraints This to generate close to demand we a layouts the capability functionalities fulfillment created we in usage XXX customers and explore shipping by room to of supply also increase delivery space expanding industry-wide our marketplace. new mitigate this To enhancements delivery XX% of including multi-product room a and are as life to U.S. see support XX% furniture. aggressively We many immersive year. adding and In feet currently come and digital X also crew costs our AR in-home as us new in year leveraging our as and our are and planner Also expand XX% saw our network. significant sales first important to we to plans You These last twice including small will million design elevated associates offerings capability models enables our to in packages chain utilize total experiences. as sales. tool tool help year our network. omni-channel addition by this XD to degree include to business distribution our such next will higher visualization over square design our with Being test manufacturing drives particularly because introduce tool those who this non-users. compared this

quality total just as sourced of we marketplace website light. marketplace was base. the also five the Our and in the of exclusive our our business This are to leverages is and almost and superior planning our Marketplace its rest socially size from our years. assortment same often trusted is triple responsible capital vendor X% of year over products next reach

our is associates care action, third about work. our sustainability, equity We communities deeply the Our and values. differentiator in where we supporting

sustainability customers one over the main commitment choose is our to us of reasons our competitors. Our

the increasing focused customers and Barn There times a be area. three example, world for Pottery direct a doing between the customers top relevance that our to are we likely with in our survey work are we recent and in in environmentally For be this good the households. is work our are the recognized correlation to found more thrilled

only ranked last the from companies XXX are entire last we as Barron's on XX on retailer we list. the Just sustainable XX at our were furnishings home year continuing up number month Barron's recognition most and

sustainability to look the will commitments our we future, further. deepen As we

made a XXX% wooden with in off trees we'll brand wood supply who Diversity, chain. our cotton Company-wide commitment Most equity our goals and Year is company. furniture ambitious selection upcoming years announcement source operations plant to a New to essential reduction Pottery of public piece of our is Our carbon kicked of we inclusion meet goal exciting and responsibly entire are an across products. million will our for for every sustainably throughout grow our three as and sourced Barn we X where a also tree responsibly plant we sell. the indoor XX%

Achievements We this continue Bloomberg's we lead in Index be our and Equity gay talent, proud in year culture for workplace equity are and Gender gender across policies. to to included Gender-Equality

the Equity we have In Index. also Equality Corporate is We measurable made action LGBTQ progress. a to in equity order to established and equity, or and still score lot Human we've lead more although our Rights Campaign's XX% plan racial there do higher continue in improve to

Black have partnerships the committed of of increased that through our cannot and local XX emphasize course we hiring, national organizations associates. our and We racial collaborations, and to support justice African-American for value and our advocate ongoing over equity nonprofit over and have representation

associates to our business. frontline COVID pay pandemic heart workers and financial over increases supply to months people our to In Inc. stores XXXX were wage Our our our hourly and provide the to this our have throughout continue and closed year. continue we COVID XXX experiencing store given in we offices of chain associates testing our safety associates initial the we of bonuses through the protect Foundation during several provided our gear of associates and hardship COVID while are To and personal the and communities, our year. protective help to William-Sonoma at assistance

ever positive and was primary our also we year initiatives leave provide evident parental to policy caregivers. the addition benefits, The of enhanced holiday execution time in to unwavering have all these best including impact paid dedication off for these more secondary COVID-related team's both we throughout had. In the our

in to company inside will our through action We serve. both and plan we follow communities advance equity to equity on continue our racial the commitments

which in progress. diversify workforce, We further despite and committed reflects we believe excelled and share. have on differentiators to XXXX our collaborators our providing aggressive three gain set are invest our operating vendor market the to business and we to continue goals extremely to environment. summary, difficult partners We in power the drive our key will transparency of In this growth

very and seeing for business. Looking financial our our about But are runway and into let some outlook, I what growth ahead provide XXXX in give insight profitability. me we before our currently to we optimistic are beyond

year All continuing higher of expected and our recovery seeing brands retail our are e-commerce in strong. starting traffic the sales than We're comps. and

Easter us people for categories into Outdoor and are trend families driving and entertaining as this confidence us welcome that giving strong Our the entertaining such back friends as their post-pandemic related results accelerate home. very will lifestyle

continue Our BXB business week. e-commerce to Canada. partners by business in our franchise our is Growth sales business trends building our strong momentum week global and also accelerate also in after demand from driven

promotions. have In addition, as expand our merchandise substantially we reduced margins continue to

to container weather February due shipping delays congestion the will to inventory We to continue port chase experiencing and COVID-related and additional to south due a shortage. unfortunately shortage delays firm inclement we slowdowns, a the in are and

doing customers, but is QX for and also inventory in-stock it is a that strong pushed demand. are our challenge most to We can recovery related likely our we to flow very while is our now all expedite to this one

We of factors. number the based strong through on to XXXX demand continue and a expect beyond

ongoing three the share. allow growth is the from continue to us set strength that key will initiatives differentiators market apart and and take First of competition our to us our

business. channel working importance we revenue to consumer in Second, a confidence, the trends market, throughout inventory retail replenishment e-commerce, deliver strong continue confidence drive digit that favorable home continuation high work a the and of that our shift And and expansion third, This values will XX% the benefit to design, in us we pandemic. Julie levels path the the market want this to call our in-house and of to our the our and and workers to I to distribution our gives as manufacturing in turn recovery is move gratitude associates our and next digital it in accelerating the growth our strategy, continuing we high housing from three can sustainability and through who expected it to These speak over financial particularly my I hybrid billion include of to single our beyond term, operating mid growth. detail tirelessly before revenues clock Longer more profitable the will years. XX drive in margin five our values additional customer. margins will the is the the outlook express frontline her gains the but will first year sincere XXXX. that our around macro believe traffic differentiators; key and to share operating work

to and call in performance over work. they with pass past innovation, accomplished been not and would our And like that communities. incredible Julie. have team's the could be all now customers, other, year without proud could that of achieved over the our have of Our collaboration, hard to taking not our I each care and our associates I

Julie Whalen

in To making health the people impact to onset disruptions, for operational widespread everyone. Thank their and our as an to work store also by Williams-Sonoma the a All maintain year continue over resilience our begin over comp of of comp the of in accelerated Graham place demand of strong I XX.X% associates includes preserve liquidity navigated and accelerated the to you E-commerce traffic comp to last the challenging quarter. environment the kids higher XX%. XX%, Laura top want of managing past financial at our on for XX.X% fourth changes the at not store of and fiscal XX.X closures year's higher report growth. expectations enabled filled online our record revenue we XX.X% expected and Elm a thanking negative XX.X% X.X of comp. of good brands all a growth all national even and and retail extremely hard restrictions of revenue fulfilling substantial overall combined that orders, an shipping we delivered yet focus afternoon to while quarter another comp outperformed stakeholders, taking quarter pay and of Barn XX.X% continuing in Barn %. revenues quarter reached Pottery pandemic. with us West than placed fourth and comparable that our This drove throughout comp accelerated in today. a net supply volumes with comp approximately emerging and and stores strong and Mark brand stayed this and of quarter associates, given sequentially nearly grappled ending the COVID and results on our to the delivered quarter. of Pottery which quarter, as a of improve our growth net year to was customers, X.X%. care caps billion the In grew a partial the and and decline fourth to we to over focused with XX.X% it were teen shareholders comp our rejuvenation brands our chain but XX% of in relentlessly we

Moving resulting points resulted promotions all activity higher in million. dollars of expanded across by margin sales Higher year-over-year to relevant leveraged down merchandise substantially significantly fourth XX.X% at from XXX quarter relatively with points XXX flat higher merchandise replaced basis and Occupancy gross another as XXX brands. from the reduced income leverage. basis our statement, we content quarter occupancy and approximately site-wide occupancy quarter in of promotional the margins margins the driven

less renegotiate leverage. occupancy dollar Our to occupancy to and growth profitable us and our close deliver minimize this rent efforts to enabled to stores have

we the points shipping which peak surcharges include shipping year-over-year our by again While of of pandemic costs employment home particularly XXX from basis third to than work workers, pleased quarter from given sales a variable higher fiscal for XXX quarter was our compensation expanding higher compared as revenues from year-over-year associates last our our as shipping across points year our points facilities. incur Despite higher sequentially SG&A improve corporate XXX discipline frontline sequentially our from hourly and and which XX maintain SG&A higher these were substantially bonuses net these driven increased teams from to quarter year-over-year levels able fulfill costs to cleanings low leveraging this volumes incentive mix of the incremental stipends pay SG&A compared see and chain and margins, in and below and and quarter. PPE from costs dollars for improving to strong XX.X% financial higher work overall basis due SG&A year such shippers our a XX.X% third-party sales in the volume supply the year during growth. of our sales to outperformance, grew we costs kept primarily are e-commerce basis the fourth rate as our our did increased incremental related selling XX.X% costs to basis third a strength we rate last quarter. growth higher points expected

These than at outperformance with the fourth another that $X.XX of result record of we XXX of per performance points resulted financial XX% year. results us a on This profitability or seen margin deliver XXXX to in growth basis to income of XXX diluted $X.XX. operating quarter allowed combined delivered operating the with quarter million record earnings throughout of share we As in expansion to have XX% higher XX.X%. XXXX

at growth net XXXX include highlights XXXX year in revenue all-time fiscal comparable at brand our XX%. including highs X.X of billion of nearly revenues Some

to national a or our delivered the our XX.X% COVID a year e-commerce substantial severely XX.X% In grew of X.X store of XX% we about despite at revenues. our year comp comp closed mix overall negative disruptions XX%. billion stores throughout and traffic with business decline taking limited of total over Our e-commerce or this retail

XX.X% role In acceleration our on delivered at the on By Across comp addition integral Williams-Sonoma fulfillment our e-com driven with XX.X% and well Pottery and last significant our costs by a business all Barn growth revenue above growth team stores XX.X% Pottery top design this year comp. we and Elm across double-digit year double-digit delivered accelerated XX%. omni year in brand, of X.X% and through in double-digit of comp brands. to Pottery largest consecutive XXth online Barn kids accelerated our at played another an Barn brands comps XX.X% supporting growth year's virtual services. at their year top of a comp. growth XX.X% of children's West last XX.X% comps initiative

Our emerging brands Graham delivered combined another and year Rejuvenation Mark growth. and of double-digit

loyalty XX% higher fiscal XXXX gain over year over income our than XX to XX% year continue was over last all incremental our strong top-line expansion XX% crew to most XX% points million or accounted brand approximately of bringing initiatives our almost of scale services of design which we performance almost business complimentary double in financial basis In almost year discipline key, year comp. brand million X customers record resulted delivered for XXX $X.XX to enabled operating and contributing our XXX in margin and of XXX XX.X% business XX us operating the total cross points for generate with along which basis to million to revenue. XXXX. EPS This million the notably and that in-store This XXX total XXXX. of an membership over program cross our our enrolled nearly division company revenues up members our our momentum and Additionally, is to

improving this of outperforming Additionally and substantially us XX.X% capital increase all invested brands with our significantly to media. substantially return to earnings set our level allowed on XX.X% growth peer from

which was XXXX balance double year. On the of a cash in the operating reflects last with balance million billion strong performance financial sheet, more billion, cash our cash of year almost to X.X and than which we over with X.X flow ended compared XXX a

shareholder to we through fund chain allowed line purchases. XXX $XXX and This of returns our nearly our including dividends expenditures business in strong and of the of e-commerce million to cherry year and outstanding million us support ended with balance, capital growth the technology to provide over cash our operations addition to in amount supply primarily position liquidity strong credit. no also the In on

quarter in to all increasing an their dividend this suspended companies continued of payout past shareholders to we many including our pay to While dividends XXX shareholders for dividend XX% by XXXX, year our annual dividends million. payout

initially the as of XXXX. approximately also, at after XXX the shares in XXXX same repurchases, suspending We or half repurchase level million share back

sheet, for billion Moving which were decrease from X.X% X merchandise balance inventories improvement million was a X basis the down point of third year-over-year XXX the quarter. a

we in and to order net quarter to While are continuing in sequential position normalized to stock the through our quarter half of and the a levels are this high see in last improvement our back narrowing to be pleased of gradual inventory compared work vendor and gap our levels between cost expect XXXX. more the demand back with back we to partners

turn ahead year let our beyond. expectations and the Now me for to

in recovery strength move business, be previously that macro X% of our our XXXX the our as year single-digit will X% year-over-year high margin we as trends and line the enter levels ongoing operating expect to mid as business of outlook in benefit our with long-term well inventory the to expected financial or throughout Given and business expansion. we retail XXXX, provided as growth we to to continue revenue the

to except our As XXXX cash in return allocation we in shareholders. first capital business and invest the far our plan then as to

the e-commerce in two with are incremental well and throughout operations. and drive growth. In as business as on speed and online focused to supply technology initiatives to XXX spend provide capital automation enhancing spend on approximately addition planning we XX% support in We capacity to our prioritized customer in the XXX conversion million feet various are support chain that an technology, distribution million invest of expect our centers efficiency primarily engagement new supply on DC square of primarily of two growth to investments over million to our elevated and the we to chain

the consumer our more business levels continue related e-commerce capital to so shift online of spend. and our As have

we this five we of related have years XXXX spend from levels expect these shifted XX% to XX% alone, in our shift estimated now to Over less hold and over going spend e-commerce than forward. the last at

of We quarterly went of of also in payouts that increased cash the XX.X% dividend following levels and per announced $X.XX increase quarterly into another to XX% dividend last to increase shareholders in plan our effect form share. return repurchases or excess the earlier double-digit today share our increased dividend to quarter, $X.XX we quarterly

our a also which As announced we increase approved sharing far over new as last Today purchases share authorization. of board that will billion program our has remaining under dollar the repurchases level we supersede prior plan our repurchase to year. outstanding

our all-time highs remains profitability. is and we projections for hovering given staff believe While that undervalued to it around growth our continue

credit drive $XXX XXX our As flow returns. in we day finally, line of stock in long-term for and investing another facility May strong our our own a operating $XXX XXXX. our believe off naturally million year position expire result paid and generation financial will million let also expectations term And our given liquidity robust we of cash early loan to expect

the be driven summary, by size million, expansion perspective, over more From product overall our of focus our the confidence favor business agreements predominantly lease in given term marketing of our financial initiatives discipline in leases core and next as fueled Barn to decisions now the Barn business as brands for margins term business Longer our more in should Elm kids long overall revenue doubling well X.X and XX% value-engineered by key accelerated of and XXX strong occupancy on West to record for grow over see these is expand margin shareholders. products doubling double-digit of of and unwavering power further a expanding that profitable closure faster to along and X values. a as shift revenues, billion. and revenues mentioned, growth our XX our expected reach from will strength retail with in global will design, profitability growth. sales renegotiation to growth our the over acceleration growing leverage as our we of efficient a and first reflect for including our profitability levels almost of commitment operating the ongoing in-house operations our three of growth business in billion fleet that be our in a our to business, top-line channel from our All an sales reach and almost from the to our combined million growth differentiators; in three business maximizing come higher a continued maintaining five to expense path outlook our macro to costs and revenues. teen our Pottery Pottery margins and more more today strong will this up operating growth returns number to grow double our a key continued renewal, revenues marketplace XX% million. X.X size to to our XXX than expanding performance and and times strategy, teams our long-term year content-led in estimate company our addition almost in our in and digital across BXB XXX Laura In our the billion net should of sales the our continue digits billion years. Williams-Sonoma to trends to our will in in emerging billion billion. X.X We business reduced e-commerce below high-quality size strength testament approximately almost the the will of This sustainable anticipated a

e-commerce, growth the beyond strong including profitability and capacity growth in being I financial working As are share uniquely for increasing and now optimistic combined to to sustainability brick year and market to a home shift long-term you. our the double-digit and our the and and our differentiators; of track the continuation accounts some proven loyalty our we of cash the returns of for we and given with about open favorable resulting a would are we a discipline, strong long-term of operating we at positioned accelerating growth members, the trends from in flow and drive and liquidity, company business importance financial disruption values our driven macro strong believe strong mortar, initiatives, and customer an record market, like shareholders. key call Thank and housing look and post-pandemic, next new questions. our gains expected

Operator

Yih Instructions] question will first Adrian with come [Operator you. Barclays. today from Our Thank

Adrian Yih

I it difficult the but Laura, first sort this space afternoon. a you like You it the extraordinarily launch of to of foreign my you hitting Europe is sweet of so of question a in about accelerated for as Can through kind topping bit of yet kind into a what was phase stepped some growth and nice players made looks businesses? the well. next really are their Europe obviously here brands all Good spot Congratulations. so growth. into year, the It mean, is seeing we're little in haven't talk U.S. TAM you.

the first Julie, group And mean your can about that sales foremost? is then that incredible really XX% and it's your talk occupancy So occupancy interesting you I is and on line. that pretty flat.

as are changed so again. go of levels we margins the Should that of won't like trajectory historically such back then you looks to we And side revert promo? at understand historical you the I assume that you we back, flattish the wanted low nature levels won't full permanently on flip And mean the what March and really we business then for of occupancy through on much. have So and Thank clearance go XXXX. QX of into year? line congrats kind the it's of to the

Julie Whalen

Thank you.

we're great e-commerce recognized well have, business we we've particularly no in big are Middle partners markets In and bringing travel great as e-commerce what the success very these of the terms really with some we who so one didn't the have doing franchise to partnered a East. world doing had of people global we established, but that is we and else in

We have operation. a really sizable

last around announced partners higher also growth a In yet franchise this there. phenomenal hasn't fact Williams-Sonoma opened we'd business We these haven't of example Two sales one the off that's then in the our of with There one in new a start ever markets. week great still Expression building be Home to a something franchise lot e-commerce be markets just in is is together just that is great continues global that been and these as the is and percent India. that year building flagship a West in you we seen together into store we're days there world. Dubai before. stores we're a we're established that to and of with going that brand Elm

still are We on delayed, track but that. to It's little a do big it's a market.

and that are China we're so really have We the excited London don't very partnership. Elm. West for this plans Our China we put with and sizeable to that want off in of we it do to at we us forecast well point. one and it's Similarly, about enter is most

We stores the some have of department some things in there.

easy other We business kids’ in to than It’s the don't just expand there right than have a we but more there. e-commerce. doing is with a also leases now places of long and plans difficulty Europe also go to have lot website, further just

right push doing Europe. So we're now not a big in

Laura Alber

look all holding regarding occupancy expect you'll so there and back if I questions and a dollar now we for So have think down your do we continue. to growth of you that been occupancy that while first see

to thing is distribution into occupancy is important investments, also that many things rent. depreciation center our The there go from capital remember like

be my So will if prepared I at then volume, lower but I line. higher and the e-commerce said that higher that that things XX% dollars with downs remarks but leverages potentially just our and there about least sales fleet combine our then will upset closing ups that as is apparently of reality occupancy be we're the mentioned these all by and volume of in that you other

but going have will muted more that foreseeable expect I leverage drive the sales do the growth forward also dollar So higher to future. for both

some do of promos the made of that had that but decision fact of far marketing. company also As time this that have we've merchandise and at the in really go the clearance point content-led margins, continue a pull lowest to in as after and relevant inventory site-wide off levels we to we've yes, we expect it's

you It blanket and from price to engineering get it that that. right where at where more you to it fact and a us we'll the to right fine-tuned could the and situation we what to product value just people price the it. you got are email never puts buy with buying right but get So great want if compromise quality XX% what and a give you are the on we in about combined and you it you sustainability give levels and it's want serve it we a you doing if instead it that of off want the only up you we're getting more

So so after that we're merchandise are that in going we forward. and is expand aggressively going margins that's why confident to continuing

Adrian Yih

Best Very Great. of helpful. luck.

Laura Alber

Thank you.

Operator

line Again Guggenheim And Forbes our Forbes next Go Steven question comes your head is please. Securities. from open. Steven with

Steven Forbes

Sorry selling about to marketing follow the just provided Good want merchandise or you call. evening. the during that. I margin on commentary up

during you margins think I selling said, XXX fourth quarter. the expanded basis points

just relates you you transitory it cadence you the mentioned us a the clearance think and see whether the activity. commentary be can margin? you to that XX% or any in as as these about in as margin remind headwinds number path business to the it potentially something, selling some So the for promotional Do of anything year selling about margin, cycling the profile what as we cadence then think EBIT was on of

Laura Alber

an from all I from year accelerating standpoint been on expansion mean, improvement selling margins standpoint. have an

expect to quarter right So can was the to but back by you that I amount the largest if going on you forward. expand expansion. that look have this and continue in don't handy we continued year, quarter now they've exact again, particular the see

specifically our out obviously we're merch-margin our As it's and more margins shifts the this are we've recently furniture why more as puts confident minimize that and our shippers. this more of selling what's third-party margins and expansion able the mean with which it addition mixed shipping our have as on items hubs of on to that'll shipping is we differentiator with this the these give that possible fulfillment going focused e-commerce, our so that to fact and that come with layer to to obviously cost entire through what the we've takes us and and and at and rates costs it for selling the take continue. stores to time drive far We to forward costs and could bring in year there's trying margins have so omni has whether help that's the something obviously merch-margin occupancy the I is some ways the into network margin and become lowering can incredible fact we been always with I it expansion also going are as combination trying have selling top these gross obviously think forward increases higher throughout the drive of figure said much But as for part those as stores of working larger delivery a we of win has during you our that been been third-party that a especially to as the to the country that huge shippers. around been us a then on own using

relationships also lowering offsetting on so we only great but they same these with solution costs to we're working come our shipping driving are but to sense focused have to them with we Now where the selling third-party and great are. absolute not an time in at keep margins shippers them a to

Steven Forbes

safe. Thank you. Stay of Best luck.

Laura Alber

Thank you.

Operator

Thank you.

Our next from Wintermantel comes Evercore. Oliver question with

Oliver Wintermantel

a costs. Yes. Thanks had labor guys. I regarding question

bonuses but COVID mentioned then You in that. XXXX, all of pay also and

I to plan So for and for how wanted XXXX you see costs? on beyond labor

Julie Whalen

our year to the up. we costs So as labor obviously during gone spoke have

especially rate. per rates board we across that $XX from many hourly and so other hour You've retailers the to have moved the heard a

in per $XX or certain areas. we're distribution at our So particular at in least in centers even higher hour

basis wages at to hourly And competitive. so that of we've want lot always we we market market look and always on in our base. got a and the there's by pressure be Obviously a

others. rate and might Our that people headwind certain care will from this but of be it's especially past have of are moves made in not since we've been it as for so for a us you the these year we're an as the much making perspective if secret them taking hourly we sauce

will year the with that pressure moving and you've the you or think obviously more little are eliminated I on next wages help side utilization got going line. these flip We those Labor parts. got COVID mentioned because substantial costs. the fairly reduced be which On labor hourly so potential some is to expect cost COVID there you've and us a

got we on that that COVID more coming but spend you've the side have advertising out. are some You've costs got the fact may flip

the with So P&L our that merchandise margin it expansion next and our sales year. entire leveraging lot operating higher gives expansion drive us leverage margin combined with confidence of and a occupancy can we

Oliver Wintermantel

Thanks Julie. luck. Good very much

Julie Whalen

Thank you.

Operator

you. Thank

Securities. question with next Wedbush Seth Basham Our comes from

Seth Basham

quarter Congrats outlook is Thanks a great evening. the of on margin in terms for good a impressive particularly around My very the outlook; year. and lot question and XXXX.

operating bit expecting provide Just to a margins? will XXXX, How perhaps provide little margin you're those it in margin? be of of gross you expansion in SG&A, in of much you color on your more the how it expansion much to expect of the both complexion

Julie Whalen

Julie. is This I that Yes. will answer question.

and confident depend very expansion. on we're yes, occupancy on both. cost as and of we that than last giving to our have, out increased we it. flipping able of expansion day confident I mentioned We're some our very a COVID that the as expect line result by and at but we of will merchandise of costs be in COVID to margin are quarter but going the just guess, to question So the coming I benefit not going be cover leverage higher will cover that these end we're we be in obviously that It's some the costs have more to item will guidance out quarterly

a have the and the companies e-commerce us profitable we're most sales an through completely P&L. expectation one operating e-commerce leverages been now driving And to of expansion higher so or e-commerce historically line. we going we of those to there allow higher sales bottom as coming of and costs more that of XX% more lot out are are that on shift the drive combined and any e-commerce remember that And margin will with and the leverage so that with to be

that's expectation. So our

Seth Basham

Understood.

much materially margins operating XX% up follow it you're be XXXX your more seems point at goal have in XXXX Just this expansion through to expanding Is if for is to in you XXXX. in conservatism seemingly don't time? just that like going plan that XXXX your

Laura Alber

top. proposition that so value industry have that business stays back our sure it's there's say the service to the a conservatism money some also we're, and sure want conservatism, and also compelling really to on but the best bit we making invest stay our I'd the into is make it's aside in we of set to

Seth Basham

best and Congrats of Understood. luck.

Laura Alber

Thank you.

Operator

And our Advisory next Fernández question comes Group. from Telsey Cristina with

Cristina Fernández

store Hi you second you see from talk So one two couple lower you your you good your and and ship prior had any to have that fulfill look are evolving if or congratulations at more the differences how question restrictions can where that's some have fulfillment. could seeing my been questions. when roll that quarter. they help don't? cost to of in do how orders years? over you and the and the further about and I perhaps wanted also next a lifted those is that then versus that on see rates I demand markets One based notable on trends, higher or are vaccination

Laura Alber

Yes.

So is this Laura. thank you

with Let ship what going me Felix the from then the correlations. and store just or to seeing first take answer not to I'm it we're to seeing pass

sites grown year, an and up can particular pick more in store. do us that lot more it's to a but that area they this more things still a is there with our sort filters has bylines that trapped on better stores and inventory would demand it we're terms So is it fulfill in better correctly store leverages helps and in customers at and ship it because great getting putting of driving from ship better be and for up with in room ton us and and marketing for from store, it to otherwise

way and So we've because it's who wants service well COVID get been it's quickly. out pushing great but not because customer to in another just the that to as

and them opening vaccination see we're power what better, to more all to face continue pass market behind put infrastructure. it to to going experiences and going that site Felix you're better and stuff. good So I'm have us seeing with

Felix Carbullido

question. the our where furniture is for strong we've in data in is rates still are for What Sure. that high. very demand states vaccination Thanks seen

no So that correlation between business. vaccination and in changes rates and level in state furniture there's data our our growth our

here. it's seeing what is we're a So not zero-sum really game

travel people up a get we more. vaccination to expect their open vaccinated, increase up, open schools up, to substantial luggage as business to we as more As start have people homes business, starts a and as open gear rates

are businesses entertaining and for that. dining primed our So

what vaccination So negative rates We're strong correlation no across correlation of fact rates. regardless we're seeing the is in early board seeing. indications it's a are

Operator

question our with from And Matuszewski comes Jefferies. next Jonathan

Jonathan Matuszewski

first as Curious cook first and just Williams-Sonoma these great taking seeing my spending that as on guys repeat you're one there. for home year. remarkable the Thanks quarter. was far My concept Hi what questions. we're another repeat as there now trends quarter Any would far and from kind of eat customers beginning my to anniversary question. of at as some new last color was be helpful? trends That

Laura Alber

Sure.

an that we've that continue was yes paying Williams-Sonoma what changes business shifting really which content made of strategy First exclusive I'll we're the to to online do. and from predominantly to lot driving store again business say to thrilled to from and it's off a a

strength In the terms that where across are the great areas particularly board seeing cookware, Williams-Sonoma working are dominant of we electrics. most the categories cutlery,

those and it's Do per someone earlier. categories to online very we when a you higher mentioned productive customers we Julie strictly you year favorable per add high profitability very extremely metrics metrics that did have we versus you customer I and customer dollars see of have dollars interesting to repeat online it order terms have wayfarer miss have that? Felix advertising anything want last like and we as customer anything In all and higher in orders compare there? to

Felix Carbullido

be No, returning haven't, are record those and portfolios Laura reiterate all actually repeat shopping very we shelter our I we've at customers we seen rates mentioned rates. strong to and place as just record during and new at our mean rates acquired across

brands of new program leveraging we best offer our shop have other portfolio. loyalty Williams-Sonoma, them in to So continue across these we but to think introduce encourage grow what to our the them within that of to to wallet will our our share not as just customers

Jonathan Matuszewski

two revenues as super I of That's a Design in-store and half you I'd I one mentioned quick Great. those helpful then around squeeze customers around spending mentioned think much. just times in. crew you and are think

a of helpful. for So lot would potentially How success just curious you your options M&A thoughts outward going with be Thanks. forward? had tech all Any related planner about that. thinking of room integrating you've capital other maybe with and kind there color are

Laura Alber

the I most other tell amazing the couldn't phenomenal for one thought you virtual during for worked have were who that question, I wanted work going done things to us such that who chat design ask a new that store a now. happened you different which a it's was the ready one is that the to is I whole and in shutdown job they did people channel of

but So services don't tools. we the where use do our design you have online to need anything

allow people and before. to you send XD In Other designers the fact yourself pay has nobody their that models. tour XD tool, power you can have you which done back

actually can or on call a do virtually. store, it You and go a you customer it store go or a can do can yourself as into you

brick supply we for services, e-commerce want remarkable. And few and shift so, and yes, to mortar that it all continuing from dramatically shift and Julie to you online a numbers? infrastructure give online are capital that supports is chain to

Julie Whalen

XX% we're basically to hold we spending say e-commerce related and year about spend on higher. expect are spend, spend to that'll I Yes. to expected this should less than e-commerce used and be We now XX%

we'll is and going that's our on examples spending that So be now e-commerce as capital to complete shift the in one of well.

Laura Alber

at good And in-house of landscape to stuff anything always have to course anyway. do innovation how a building we're we a had we're can it is lot the anything we relates we as of I've on seen as planned and that see that great that get as already looking jump to

Jonathan Matuszewski

for helpful. the Very Thanks color.

Operator

you. Thank

next come Shapiro Marni from Tracker. will Our with Retail The question

Marni Shapiro

right Congratulations look and the quarter, year guys. I love way stores Amazing now. amazing the

has spring been transition beautiful. Your

the Julie a home to crowded of more bigger bit become I guess online. popular a little getting kind very start space picture has Laura here and question So

that outlined separates are on of key that the into as your differentiators it also Would fit some pack you have your more your differentiators. you and from you that gets What differentiates you advantages online? like e-commerce crowded? what are So

Laura Alber

Thank question Great you. Marni.

sometimes on to Product and and a the you higher. so if that be on think help went you and equation we decision something lifestyle show we then conversion and lot is So about a a that to a were to our for time and long one really many sustainability trust that and help an lifestyle. able your amped the needs the us a or selling really just Page your to things with looking order things buy online, single really we not you is is versus you and bring to you the add people whether helping product UGC, else And if page seeing customer look PIP, spent really add value Information decision everything have life you shopping you but interested which in it's There if have thing up online paths on and XD you and inspire they make different of the to something for your you're have to it's but competition. guided quality didn't that make we're is

of to used just we've other the very we that's we So and the separate then the one all not trying make big in is make the the ideas now have our a decision in something with investments customers partners. innovative lot immersive can team by and we success cases modeling build online looking different wealth and so it innovation a say simply continue and we multiple our to key the color through really brands these I'd that Elisa’s at how farm to for other and with is our always work that that through things once swatches, bet of try push accuracy, it across brands done new coming that's works, people fruition a rooms, brand run it make difference. makes XD thing tech such testing photography whether people real-life to experiences and a stores a easier really in actually in the customer catalogs us and brand in our something and something know that's different know is been about that of part and AB and showing

Marni Shapiro

also? sense. also two to it's follow-up guess that seeing trends stickiest actually Could I and turn the the a Is I in it you growth quick that do are post-pandemic a like part how are which ask a story. spite lot even. it sounds The you just will it COVID, of thinking online, that are That emerged in follow-up sounds be one makes of during enormous talking and every work your online you the sounds stores still all going like of important you and still about part that's forward? like it think

Laura Alber

Yes.

their They And the you Americans. year we never the your for underway team to back. better of it's has this overtime trends we once know They And a more, we that about lot cook. learned and values are The back too home. are all, get Once first economy invest of gone talk to that you investment. reached you usually piece. it people historically have is you things. hopeful Everything always know excited reopening learn Let's learned were you that the back still they cook on we for the hope about, Home and in you lot so see. there When been new biggest much. think up the go immunity.

the future entertainment. is for always And to the to interested going trend. out in dinner, key you And that go are Williams-Sonoma. but secondly, cook are may better. would going to be say I you of cooking You

able to been entertain. have We

actually like and Easter, get X imagine people holidays. be for together the Some July able to

dreaming and air. or busy outdoor. Christmas are inspiring parties make like Year's fresh how better that customers even host the our of We homes this. got we serve flu. most to the we in We Nobody Also the customers. Nobody we wait New our and cannot got parties, that can our cold for

outdoors you stay going are more than you a before. lot to did think I

Williams-Sonoma The a outdoor strength way as home Williams-Sonoma it's catalog, in to the home dominant haven't will by equally, work extremely We and mentioned I hybrid luxury know take perfect to the last way you think this it's are about that really just you, obviously West buy. from pick inspired I desk still be and Elm if it’s seen well I seeing work station. you picture outdoor, still have want don't new [Indiscernible] the by. I I because and going talk about homes a at have I that from accomplished of to home. but

get don't spaces just have more from and You is home around. lot room still There so are to those to builds busy include a home going been better new work you it. make

in willing and business we have So work Elm home. it we play lot that have on are innovation and in business work that's and and we to West phase the grow from we continue to guidance a of

going it opportunities Marni you business the business for a channel key growth here great together you of three I strategy have to ride. gross strategy, whether with us lot a it's ride macro strategy take to it's and or and our it's we and just a is product or telling multi-year put there are and the am differentiators So

Operator

question-and-answer or back now conclude And remarks. over session. to any additional Alber Thank does closing Laura I will that for you. turn the conference the

Laura Alber

your wish and for best appreciate talking family really look to the and Well to forward and joining thank you you your and interest you all us soon person. we I in hopefully

Operator

today's conference. excellent Well thank an you. participation. does Have We do you That for day. your conclude thank

Williams-Sonoma (WSM) 18 Mar 212020 Q4 Earnings call transcript