WSM - Earnings call transcript Q2 2021

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Operator

Welcome to the Williams-Sonoma, Inc.

Second Quarter 2021 Earnings Conference Call [Operator Instructions]. This call is being recorded. I would now like to turn the call over to Mr. Brian Yee, Senior Vice President of Corporate Finance and Treasury to discuss non-GAAP financial measures and forward-looking statements. sir. ahead, go Please

Brian Yee

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

Laura Alber

Brian. Good joining you you, for afternoon, Thank us. all Thank everyone.

quarter the of second channels margin strategies another results our with points and demonstrate the growth all strong across XXX of to XX% outperformance success our and quarter operating expansion. brands are proud These and earnings a power comp, report basis of We of growth company.

due industry digital our is capability, and digital channel We all our have but equity not our strategy, values, in-house and design to we do. exclusive only that our advantage an which with sustainability underlying in first

our intersection people and move execute and complexities have a in for the of to in expected proven homes environment momentum of the to are against XXXX. will our future favorability our prioritize business decor. from winning recorded to a gaining ability our workers sales metrics. five most to years communities and associates. and macro and teams number hybrid traction double set the we industry are that fractured the within We in while and seeing remote transformative in we their in the The nearly a to with industry. see agility us our pre-COVID for not are any since building customers, that We share growth do our of our fact, Our as macro to in is expected Home we take sales grow the environment their remote at And up of waning. growth The with are XX%, work positioning believe more home continue evidence more see share accelerate than acceptance the XXXX change market. market trends improving

the expected and XX% further be operating year margins to full again our with low in raising range to expected now than targets. addition, to predicted revenue beating And from revenue we clear are high differentiators revenue teens are our to us see outlook a our growth our profitability competition. be strategies to the In faster now our distancing and of Therefore, are we and growth key in path previous we XX%. gaining traction XXs

achieve to higher long be expect in Given our which or previously profitability, our and in than at goal will one we of our margins. term expected faster revenues above with year billion $XX FY operating optimism, 'XX now XXXX, now increased increased

detail the why model in competition. about stands our Now out from I'd like talk to more

First, our positioning.

design with shop for are quality and customers engineered us high Our because sustainable that we products value.

Our platform brands and of furnishings are loved a who us and to quality serve market of customers The a across wide fragmented. sustainable great home extremely range looking products at is allows aesthetics for value scale.

$XXX addressable own we and X%. billion is market only Our approximately currently

strong advantage competition online distinguish from supply further to from technology, And of first dominant. retail service decades are is us model the into with and high will line other a one continues, model. and our As only in chain that digital disruption the relative the our only investments product built players brick-and-mortar infrastructure an from to digital marketing competitors online and the market, our exclusive

drive substantial from nearly billion new by our In are scale. goal high-end customers. we they e-commerce the and our XXXX further drive will Second, Home. through runway having XX% gains growing Pottery and underserved opportunity Barn business with model aggressive and expect have mode. both incremental brand model we and e-commerce this as and our presence are new in Graham, customers of and space a reach take demographic new and transforming in From growth stores XX%. and by revenues $X Mark products, updated driving dorm. higher existing of These with household are both awareness Williams-Sonoma growth our and today. to in resonating in bath, aesthetic our reach these to exclusive our expanding more fuel $X brands, white profitable strategies opportunities to to we generated by in store growth product from we a incremental online West expand share with supported And a the initiatives is with a brands, brand with into In the winning new working categories Rejuvenation younger and accelerating growth initiatives to our XXXX. of have reach such to share new new market customers market a that is with to long as upholstery, existing penetration will baby are both product existing their Elm, billion customers to and formation our growth categories Williams-Sonoma the

we is BXB, is an track business on billion. Additionally, year's which million positioned to such grow accelerators least as further to business now BXB to growth to is which goals reach at industry disrupt $XXX our almost have of end, profile. this well our $X and our underserved by this core diversify customer ahead to

us franchise and global XXXX. million Our business, is to at allows model, to into markets faster least $XXX by targeted which our capital become more light profitably business move by is led and

future, allow design model built design tools, and Our initiatives, model rates into brand which the cross by staff as our technology to The and first future. already of we within returns advantage service to and as a spaces health. down. like our this macro, amplified tools are growing return in will growth our grow are continue competitive or ecosystem creating both stores, in i.e., teams renderings ticket have brands. driving incremental outsized cross positioning brand in an furnish continue finally, which we online to the In investments are key loyalty case and provides led programs online see cross of all for technology programs brand growth continue drivers, supported and paying and factors, with our orders customer And and services, effectiveness and our best-in-class virtual self-serve grow the digital these we have into to new talent XD We mindset. by our the our summary, us our with credit with winning overwhelming our come help orders power our an off talented made large design card service marketing created and with the

above. give foretell few relates I it would the I to a which like QX, as outlined opportunity Now you to highlights,

Our driven profitably another channels. XX% all XX%. comp over these channels year with outperforming at comp across two at more above initiatives, in including Pottery drove And in outdoor and E-commerce retail casual categories we building basis renovation, growth XXX year strength an almost sales our XX.X% this momentum quarter. growing of new and notable drove we second are indoor Barn, of in business with point to comp marketplace, was and last also operating modern expanding We're XX view bath grew our margins both in at brands points In rustic delivered business. XX% All XX.X%. versus growing quarter our and the all our with apartment are XX%. partnerships and brand which

and results in our our results our XX% We Greenguard Pottery food categories. backpacks, customer across collections as drove and with of water XXX% double strong Kids our Our an fall to across quarter of early record new expansion storage Teen, with Barn business well eco-friendly furniture, saw bottles business. Gold setting exceptional inspiring reusable growth app. XX% proprietary back-to-school recycled we as in digit new over comps at are personalized another strength registry and our response In baby fabrications and baby

In and to assortment Halloween We've and line launch, to which We are digit seasonal saw year build round furniture West categories also for expanded and our back We indicate continues and strong a celebrations very the XX% come. a businesses. to our triple the our half in comp seeing strong gifting all with the extensions. all new response with year upholstery growth should product Elm, across our with quarter. momentum outdoor collections second strength outdoor our of

Kids growth brand. kitchen New as categories and bath, such incremental also for fueling West the are Elm

all share the an line exceptional XX.X% new top model key to brighter drive results. We off comp, with while to and forecast percentage introductions. lighter clear new a is more stores strong shopping designed profitable across branded our and strength and last by working. on inspiring for are comp Our are In brand, activity. with drove Williams-Sonoma promotional a to substantially season newly of excited across new we that Williams-Sonoma content-led we price of is brand X.X% start. reducing strong and fall store follows retail categories at exclusive and opening us improving very also start design. with strong continued exceeding In higher our response three represent and our our categories the These stores marketing same year's destinations, the time, products, another strengthen extensions to our We're opened These store quarter the experience. with QX, they strength and material to a off see a points, powered opportunity new stores and

As for this we nearly year, the to stores renewal which of close. XX or materially improve our have provides opportunity reminder, profitability us up Williams-Sonoma a

of to online premium a with business as brand destination. continues Our Williams-Sonoma Home furniture scale the strategic our reposition

comp be record-breaking in aesthetic Home our in accelerate casual furniture, an that presentation sustainable over continues growth high-end WS and market. Our assortment brands further saw our $XXX demand validating outdoor BXB right nearly XXX% with with customers opportunity. the digital high-end is will quarter, in up triple-digit our with biggest underserved another We belief revenue. million to to Cross-brand, one division, our resonating of

portfolio Fortune from businesses. which customers, sales We portfolio. have range our from shopped of continue of XX% our brand BXB of expand customers from one our XX% to Year-to-date, and companies have small more repeat than in to XXX the customers come

their are We furniture across a of our to resource purchasing corporate go-to gifting. clients needs a from for range

the on of this notable further to the business. make progress strategic growth, growth continuing initiatives we accelerate In sales to are to addition our

allow our believe industry gain share. that will disrupt continue our customers' ability We tailor to and unique to this needs and to our to market us differentiators further

BXB, making are our progress our across customers brands. we migrating addition In to

cross-brand quality. a from that and of loyalty our customers in-house, key sustainable core reminder, fulfills believe is our program with incents cross-brands a highest and portfolio. the rooms And brands is customers materials offering one of shop our brand. only that XX% of free the for As more designed home X today. the who assortment cross-brand offer those rewards an product the times than the program that made only spend of We loyalty over across our customers shop all At shopping

with One behavior. cross-shopping which new and We incentivize also this cross-brand just credit Capital card, should further a announced our recently partnership with launched

like E-commerce power to continues drive the I'd Now first to of our our discuss growth digital and advantage. profitability.

program continue improving Our customer in-house personalization selling experience capabilities. shopping site visibility and orders, to by and rapid experimentation our tech differentiate to speed, platform

maintaining of as on some we more as of quarter, brings design X complement cohesiveness in year saw we design quarter, where we we our to e-commerce us our two a customers websites, retail great we delivering The and growth customers stores omni while have in their seen using sales over usage. more to see digital-first our operating our ability as presentation average created our XD engagement basis. behaviors, platform. XX% the strong tool, which and the of nature growth, more even revenue home. allowed This the last services, generate mentioned felt XX% evolving model with And and from times For mix, Plans our our digital planner, year relevant. the stores with visualize never typically In have customer. grew with extends and year. room model of our our improving customers' to one service our life, highest and with This both many our second storytelling are products products synergy imagine the example, do shopping omni last

values, our which We are proud key to progress also to quantifiable our commitment differentiator. third is see in

impact XXXX on report, progress released our goals. quarter, This ESG detailing our we

to significantly labels environmental and We the workers. selling to health sourcing long-term suppliers XXXX, shared exceeded and long-term to for to and our By our This carbon reducing our purchases have programs. pay XX% with our our fair empowerment many have new includes sustainability of education our keep social year, invest to in well-being footprint will of initiatives, including in set XX% with XX% aligning responsibly or We which centers drive with of commitments, to waste values well products goal workers of wood, and foster people worker believe being product are with of a the trade our our premiums from of resonate purpose goals, of already from prioritizing of sourced industry. of customers distribution and use planet, commitment out we proud sense our change positive our stores, end offices our our the landfill. we and intend our also our of our of

forward continue taking market second half to look we in confident of year, the we As share. remain the ability to our

is momentum Quarter into pipeline to seasons. strong move related upcoming we entertaining Our to strong our anticipate gifting and product strong and see top growth across holiday margins. we line continued and categories as date, we the continue

bottom look and beyond a drive top year, path line we line have to clear this As growth. we

long-term to resulting competition Our from from digital-first our drive will operating and allow power, models and our differentiators, our our in-house values, set key our have and is channel our increase pricing growth our increased design, apart us and dividend raised long a announced And another why and have profitability. term this new and us quarterly we share full and program. year outlook buyback

Before in Julie incredible to the I call are pillars pass to integrity would our And to I to want outstanding for performance creativity energy, the to like call I hard thank we the the that, detail. our continue and over financial team commitment Their achieve. and with to pass Julie, discuss their results now for work. more

Julie Whalen

another The everyone. good again elevated top levels with top growth you, of last profitability quarter continuation strong record and validated of at was Laura, on growth of year. line afternoon, Thank our outperformance

results our power model operating key of Our three differentiators. and reflect the our second quarter

companies in-house but where design We are that of exclusive is and across not with communities that the business leads only with with digital in capability and only a combined channel one sustainability digital an values work. we first our and the strategy

important by this evidenced to results. All strong quarter our is second increasingly of the consumer more as becoming

highest two million brand of year digit was XX% an the over largest comp comp year an and prior a XX.X% a comp a of broad more with year delivered XX% comp. double almost and comps XX% quarter Kids based grew year with in first two $XXX almost XX.X% an of year of two comparable the XX% detail. compare results Pottery XX.X%, Growth revenue resulting with another quarter over Teen comp drove West from second on the and two comp. on of Barn, on two In were basis. XX% XX% starting in year our comps an approximately growth of an almost brand, on to acceleration was and comp, top XX.X% our Williams-Sonoma $X.XX to Barn Pottery a billion Turning Net stack. at revenue basis. record quarter XX.X% which revenues Elm with brand and almost X.X%

emerging an year XX% and Our to And combined, and our global a comp a comp Rejuvenation brands, Mark basis. XX% million. XX.X% accelerated and Graham on grew almost $XXX two almost approximately business to

to Moving down another XXX basis gross the points income margin XX%. statement. quarter We saw of of expansion substantial

with XXX closure plan an we occupancy was of benefits we enabled fact expect to our product first of from expansion, provide in back And points, approximately Occupancy Our and on quarter. This abatements and that our strategic acceleration XX selling at first deleveraging quarter occupancy approximately The several the we’ve Occupancy million over SG&A the enables points margins our fleet X.X%, leveraged to year, which second based from this to first our on across of were quarter. our five occupancy of high-quality of in us pricing basis rent end site-wide quarter line to are over or business be Year-over-year to points outside deliver had to is sustainable costs great reflects benefit resulting continue renegotiations lieu to year. to XXXX approximately the was COVID value growth. flat the this products this last revenues promotions. quarter we were in we sell and are second decision and held next reduced value the recorded relatively initial pull even year in and low the rate drove SG&A response viable years. higher growth are due compared quarter. The where net occupancy the us $XXX grew from last costs XXX stores also the during lowest is the proving for in rent have second seeing substantially advertising. costs rate tougher dollar to the power basis the spend XX.X% XXX materially and year dollar particularly XX.X% minimize with net last XX% sales promotions primarily It and basis engineered has the proprietary, an of close year of that at leverage. to evident compares.

a As primarily gains. line profitable have market advertising investments where made our result, to top incremental year-over-year and we the drive deleverage is growth in share

$X.XX. operating share seen. XX% our record deliver second costs, $XXX at of record pre-COVID despite earnings Given the per strength counts, that strategic basis a our last quarter investments are a decision we in overall historically advertising share [cost] we XX.X%, as a resulting half helping record make at not profitability new profitability. competitive see quarter in of business, with to made this of points our able level off to from and high another these and ROI a in drive over a new customer grew incrementally $X.XX, last acquisition growth up year. incremental almost have may in e-commerce earnings highest of these others. back time hold margin SG&A in paying growth be diluted two the we We basis, to year XXX per and to levels to year's us resulted customers to record record to to rates This when for it see invest this beyond. were pleased including income have We customer the advantage discipline possible million, expanding still as Operating allowed our is on XX% growing And low an a drive throughout drive

$XXX levels the million million $XXX we and paying cash year or of sheet, off in balance liquidity than year, this after operating double quarter operations last strong. the maximizing On With funding million the ended earlier year-to-date returns. shareholder flow term our more cash $XXX remain loan with in of the business,

share million $XX million repurchased growth shareholders. another in the $XXX $XXX we over level, the returned profitability our year of or of our Year-to-date, form over the and During we and to $XX strong share in in million repurchases. second expenditures maximizing our which X times shares dividends confidence buyback million invested in sustainability and have approximately $XXX shareholders returns capital for of quarter, in million to full reflects our our commitment typical our and

inventories, down transits, increase in an Merchandise including billion were balance the sheet. inventory last of year. $X.XXX for XX% Moving over

to down our on for still However, for with last with decline. a hand available inventory sale and sale last down still year is to is X.X% year

levels inventory improved. sequentially have Our

However, levels expected this not the at at had time. are we they

delays challenges and it's be continue disruptions, to when as demand stronger-than-expected impacted Vietnam a We shortages of Asia, predict including COVID various surges these to our closure container in across in chain all as will out with coming China. be port supply by and supply brands fully And hard industry-wide to recent certainty chain well Indonesia due resolved.

As elevated we a with point, order to expect the the in result, improvements moderate levels year. levels balance remain this at our back of through inventory

to our longer term. turn for the and let rest the of year me Now expectations

As XXXX range to outlook in with operating XX%. XXs are raising to we digit revenue now Laura double our XX% teens to growth of mid-teens be margins growth, projected low to the revenue to high from low said,

ability deliver the momentum years of initiatives come. that our our strength in given to to We the macro and in accelerating trends for our business fuel this our higher outlook year-to-date, confident are will growth the business

the path earlier or target As longer a to $XX billion accelerated revenues and now our raw one growth we of will result of like believe tell see hit operating why are by our best year in now increased continue our despite holding operating XXXX operating beyond, margin and higher level I to and our for accretion following accelerated reasons: the ongoing continued higher; sales an growth higher that have operating center including from for margin; labor our renegotiation the leverage, is initiatives shift freight from where the of and an margin We record additional a strong levels. so leverage operating online we materials, costs we profile distribution believe various profitability term at positioned in-stock lease overall XXXX design-led, occupancy with inventory with deliver term. expectations from store and to are supply maintaining a emphasis efficiencies, closures; continued these pricing you margins We including differentiated merchandise discipline. confident in profitability due agreements least chain year power value-engineered the sustainable levels we and fiscal on our overall at our to product to and margin. strong positioning further 'XX margins would and raised and automation financial further products; long

our we excess as to in of capital our far the in balanced then As allocation and investing XXXX, first are shareholders. approach maintaining business cash returning

prioritized We are technology growth. at business million on track higher supply of support range to $XXX in year spend the e-commerce invest primarily chain that end initiatives and the our towards this with our approximately on

and pursue our this incremental we investments of business strength liquidity, elevated to taking business to aggressively the support in are Given the long-term opportunity our growth.

remaining in XX% and increase today, and a dividend is on what liquidity, share $X.XX our we have And million repurchases $XX quarterly existing We quarterly plan authorization. and increase further of increased of the in dividend over Year-to-date, XX% excess and million in paid level increased to share to to increase year. billion, share share cash payouts $XXX in an return business repurchase a last no an repurchase repurchases the million compared given strength to authorization to we additional announced form shareholders new a our our also of $XXX repurchases. our dividends,

that long-term stock believe profitability committed and to is maximizing our continue and given growth outlook, we shareholder are to We undervalued. returns our

and are in the favorable As profitability. deliver with with a driving long-term increasing investing will ability our the accelerating record in combined market the growth including result, and to housing term stock of to brick-and-mortar our strong liquidity a initiatives, track strong trends, and financial a we ongoing strong home, accelerating returns second of more further summary, We we importance our the proven our financial key believe validate own results long and flow In investment shift being even for operating sustainable growth e-commerce, our values-driven positioned strong cash the sustainability shareholders. macro of differentiators, our an and our in discipline. a drive believe disruption uniquely quarter company,

strong enable this us returns long-term questions. of come. and for years to for will now open profitability call like would for All and financial the to our Thank I growth shareholders to drive you.

Operator

Instructions] first from Yih question [Operator We'll Adrienne from Barclays. our take

Adrienne Yih

Well, another stunning quarter.

team. So congratulations entire to the

I of XX% second externally guess, start with about quarter reported you gross last gross XX% quarter margin this Julie, So margin, I'll this quarter.

Any help there -- can, does up margins? on can room margins how of you you the pure us is that If relative and merch the AUC, as then third quarter so the the what heard people? average to And in maybe get on was up secondarily cost. from that how history more and quarters many unit color into worse upside did that's we've kind roll this and fourth to back merchandise much

Julie Whalen

we even first saw think, As want to back in expansion merch of that everybody margin merchandise I remind I margin, far as all, XXXX.

of proprietary working we promotions. that it's this something Obviously, back because for it's wide engineered we on. is in-house that what site sell because had the of reason in our a can do And we've for and it's design, degree. company is this to on So pricing to substantially We've power shift value, pull not value. fundamental been designed the

So we price can to then relevant initial do allow and as value, that come promotions. the us out with a wide good site many is to not and customer

fundamental pretty a that now while for now. that's aggressively a so have we And shift been pursuing

to and we're because team that freight pressure an vertically have And some raw to going same We're model And from, million same quarter are $XXX would that do the better to continuing increases, I positioned so integrated, through pleased line. incredible that so I the those of this the mitigating see strong we I on was job to costs. Probably But selling last it also Will managing that. has margin quarter. to than million degree. expansion material at and this degree? think to we put price we're $XXX done very to able not. continue. going think Obviously, continue cost that's most it increases can be think,

think So the not we but same this do level. maybe to is sustainable

Operator

take We're question the from our Fernández going Group. Advisory from Cristina to Telsey next

Cristina Fernández

any demand us you you can far? Can through so and about the how give progressed quarter talk the that third about quarter additional color

Laura Alber

incredibly phenomenal we pretty just wane. much results have we've we strong all but that remarks, I that with not demand was seen The kinds And these said in our top performance. prepared it's as of mean, quarter had long. -- line obviously,

strong So and we strong clearly elevated growth it's compares, optimistic and quarter. top -- [potential] business. our growth and the net these seeing XX on are future about confident third of and we're and even QX both QX holding just the demand as very of comps, in And with

Cristina Fernández

thinking could question, I for term, a the to of and retail? does XX% business mix it XX% level? if margin longer that to what imply stay current And Does about between operating need the the at ask e-commerce second the

Laura Alber

grow. margin we're expansion we But where so we opportunities plan before said despite XX% Well, have at assumed so to e-commerce we it holding so that will and this the volatile, recovery year have still hold fact little XXXX. to able that least we're that bit the we our continue operating to least come retail at in that's within speak. Obviously, pleased we're makes assumed able to to XX%. at to and have to and many grow to we it We've out plan XX% to be numbers. drive But a hold

margin. our pressure the in BXB, but First, some we'll the they is for with which they franchise, accretion gross leverage the understand to company I to really that way example, important marketplace on have total additional may initiatives, in in accretive line the are incredibly think and growth sales by from operating margin ongoing have

expansion potential, more So profitable. orders. margin seen, been as has as the accelerating growth going have online, outsized themselves forward help to by then with which those you always And shift we've operating an will have they an

for As used you may recall back report even flow margin, above was to that and the years we top it operating it's obviously, today, sales with higher line XX% through.

expect more to operating more shifts that that as margin So expansion. drive online, and we

fact retail given will we're the Continued drive closing and profitable and occupancy our stores. we're we're that leases leverage fleet that less renegotiating optimizing still

it's a then top the else while our it able supply driving we've that demonstrated we've product to efficiencies lot to power. line, And and hold kinds costs for everything that back think The plus things. all of of down us own chain leverage that our I and and our value margin we engineer that design been operating operating fact on gives from we're pricing do line.

of the that us we this least all to on for XX% as top believe the the at accelerated XX% pace can confidence that going hold So gives year forward line. and then to

Operator

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

Curtis Nagle

cadence or I of of I quick XQ. two could you'd of questions out And been we or asking that curiosity about want -- on So guess, guess, terms you But year-over-year is guys investments I'm advertising that I think get baby made for are up. are some more think kind or XQ of, we help to in people quarter marketing and celebrate? given the both relative any Julie, have registry opening How of dollars. of those much and give I finally you should year. shape weddings, mentioned on rates, then guess, the growth in How not second, about has, Thinking or just to see -- in started of kind helping businesses working particular first thinking ones. just any I were to QX? investments just it, or sort things were starting That's great about wedding probably last one. in kind -- again being in clarity actually it married

Laura Alber

It's start. me Laura. Let

have probably registry. I so question, in wedding With it my the it I'm phenomenal. is up remarks, brought said glad prepared you should

there can baby's Julie, -- in mean wedding XX% I that's register. if now a we've up I big sales, you you, just As that's I number. the are whole wedding, in tell asked could weddings. And I And the been any there weren't imagine, we're mean, time. up

have it learning and our across all We baby mobile, which time the for we brands, better conversion because new spend we're choice is customers. it's a very of our the on the successful. more app, And drives really

support businesses cooking, or of big we part back for stage and love trends, more strong be work even and reality do and they selling are learn two So had so going the we're how mentioned And growth whether with then then school, though and hybrid at see important we're and Likewise, home, technology. that us it’d tradition. mobile it support to to really cooking in coffee cook it still continuing But you're backpacks those big see seeing food those with and a as even we're are tremendous they're continuing those, that very in said, the these those Williams-Sonoma proposition. year. to make of buying businesses quite I last today the help things to people us life to back-to-school, surge opportunities, the going I those

as a year at business of you seen see time And not tough And and anything, where now which Halloween anybody fast If one more. so everybody I be, curve. least that's is hopefully, call it really we Christmas, have strong of we're buy in. seeing the tremendous. to the that and because on that And small growth should strong imagine you into we'll with the craft needs Thanksgiving can should very we've buy if season for course, last a same was holidays, gatherings,

those. there's think natural our the that we lot I right most there to life-stage of them upside in on going help make customers with So of trends to be a appropriately are

question. So thanks the for it advertising over Julie pass answer marketing to to that going to question. I'm

Julie Whalen

okay a for big in that forward. piece advertising, some as certainly, QX we So it make was of lever investing of were spend advertising big we're the lowest year, on a to year-over-year. back until going as pull have which said could sure the that be far and SG&A we advertising certainly, was business that period, to incrementally before the we read was in going Last us

that advertising key whether we guys expansion companies margin where they're it. or trying have to that to may now. be, increases gross or margin others not operating now. whatever because a I on to competitive do see that have mean I have going merch because right trying raw for pay most you're can margin to we is right into the we it's year-over-year so or pressure you same And the takeaway think margin, SG&A it's on realize don't expansion, of kind But line of to advantage take right when it that for pay to don't may they're be have so They and freight for and to reinvest pull material able may do that now. back that back

to competitive so investing customer we're And big fuel future real and opportunity to and that drive a And we taking growth. advantage. think that's new acquisition

Operator

from Seth next with Wedbush Securities. hear Basham We'll

Seth Basham

that Bigger environment, and very you're going in bigger primary by bigger or and work in the furniture, home about behind investment picture, think am question one the specific When this think have there I are cetera, thoughts your on you're considering home you one that. picture question. the intrigued you the et things the home that then I trend transformational hybrid about investment thinking is thing higher levels furnishing, that about? if forward towards drivers

Julie Whalen

it's think time realize more all us made primary been people's I importance has spent Yes, at the of investment. has It we've home always the home.

space and happiness time for productivity. that is to not that, ability and you that's the so so improve of a gives the And you new but the real the amount that piece,

to second a or is how if pulling of when houses themselves, It's out away And And what they're important too And together looking At about all about buying it's and complete the families cook, time, people now get just that same the what those hear. them to with them, not having this who and it's to are see fantasy thinking afford and and they live for of moves. home. live bringing talk friends to still can't things come even you their with learning resources hybrid you people lot so homes the is what's those it are in you them back kids their low. everything. trends to with work, parents of of there's supply

You hear about their kitchen remodel.

about it home going could and trend And I think really to you're hearing they a really, the I transient. I'm mean they second family. hear friends this wish your be don't buy. that important sure You is with is

share continue in but very one also because gain it's I in for think not only time position puts good we're last share just doing. nobody a that and has one much a trend I advantage doing earlier, and this to said really us long world that nobody take there's what as is the will of to

Seth Basham

from is of else due is first start see strong material two the the be the should thinking in the to very something fact guidance a And outlook secondly, half on that year, or you outlook. comparable guys year thinking but Is expect about does that rate deceleration then just and you a balance impressive, that holiday you of it the obviously, conservatism basis store the strong we despite that your for there about? imply sales mentioned a year

Julie Whalen

I wouldn't read anything more into that.

success and going As and we've quite now the had -- into it year-to-date, seen we've strong for few said, we've very a we've strong quarters quarter. third

challenges end, incredible we're our with outlook for fundamental a like have. no the positioned we that absolutely and taking chain the the But basis. thoughtful anybody, high that's supply the in guiding with to think Certainly, which everybody range very we're better low high into two that from On on chain are I still maneuver year difference why our than said, consideration impacts we're But is to but best that supply XXs, that are else, being out through we there's have we business. team, of our that there.

Operator

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

Chuck Grom

you curious any in And Laura, so, Williams-Sonoma banner? be a sized but BXB think, slowdown, what as, back-to-school long-term talked time, actually with you seeing I acceleration Home seeing I opportunity. us could if guess summer million about Can long you're of $XXX you ending you've not here, your what term? up an And at think a same then business remind et just the signs I'm if cetera?

Laura Alber

this. I'm need going to help Julie's on

businesses that really bang gets because back-to-school is that. First most is kids address the business from we the obvious that teen of all, and our

you If right you'll go see to that. pages now home

most course, that the to would of have so that those And upside back-to-school. imply relative

when make sure million $XXX terms In wrote $XXX say she for didn't all, said, that me meant BXB, of quarter. I let I the earlier first note a of said as million Julie and I to me misspeak thought

misspoke, if opportunity with question this to take your correct to going I'm apologize. I So myself I

it's is But be. track faster much keep certainly expected. to it this certainly in And really BXB, can we're a than when $X question we could Julie? how on billion what, how ever we jokes on and about it said So be bigger -- making we good big

Julie Whalen

year, $XXX years five now this million which is… Originally

Laura Alber

Yes, $XXX million this year.

because a I is that reason out what is. our it. small-minded the can is So It's be to even not monster and put then close I say I number there about number too opportunity. a didn't opportunity don't a want to

Chuck Grom

what And about Williamson Home?

Laura Alber

in we Williams-Sonoma there. our from advantage huge We've stores online changed the the which think home, in brought just it's too a good. is driver a early and number market. being I doing big out really focused, a in we put I we've parts see so as strategy to And a leader do And far, it, market. underserved new around think for a it don't of growth that number so put us large but

Chuck Grom

'XX help incremental the some to puts EBIT you the just think But and variability takes the of fourth sounds a, XX% just about order the a in get XX% between can revenue spend. third less and want to quarter half any in flow us to you Julie, think let's ad like And there's in It that year. then and going here to about? be us implies second say, for to the one through that growth on margin XX%

Julie Whalen

if were certainly, from it's still have on in SG&A to that. expansion I reality we also line, focus much look play to XX% believe we're leverage. and where ad but you in XX%, will spend the from mean, wouldn't merch Xx we I into gross occupancy going the is I both almost mean, XXXX. too come the at margin margin

But material year. given think this it just is we'll raw we keeping of mind you back that. through as So is costs half And we in we're maneuvering Sure. target that right the also everyone big But increase and move in freight thoughtful certainly, being go, and through. now, costs got right be the the a update higher? we've we're could to

Operator

next Gutman Morgan Stanley. question our with take We'll Simeon from

Simeon Gutman

return freight, then and Two second didn't questions. prepared talked I inventory how looks I how position into did of immediate terms the on you're is frame medium missed return? regarding is you you Are because about the I catch part the spend, next your then the even you this know Can of And remarks, navigating or year? about quick talk in what seeing advertising longer-term time that. the you're environment, some branding? spending

Julie Whalen

see From sequential is we improvement. an you'll perspective, what said inventory

that's think we it if X.X% I you like quarter, something or decline was of still XX% look sale, last on that But a increase. inventory and at our it's X.X%. available to moved hand for a

And we quite demand where that's not just, be. to expected just frankly, hasn't stopped. one, we're So because, where our

really high So demand. it's constantly

think back I in combine who our and get that to we anybody challenges this, And and really credible our way scale that always is relationships ahead of most. did. than the facing, positioned are and that to ahead guarantee given supply chain tariffs So with else stock of that challenging. the supply team you are and jumps all about chain we everything better long-term

that impacting We're so to immune is not it. certainly And us.

as the move levels back to do but the And moderately so higher that will of we cause we expect us improve order to inventory year. year, have the throughout throughout balance

Laura Alber

things there's make very I'm to want that mentioned competitive. of. we proud And are I really sure that

challenge producing so thrilled and and all opportunity most take an from than you're dropping about good is XXX in -- we And kind at more most you about of people's upholster but going thing, further I upholstery, vis-a-vis else. still for our incredible anyone were anyone furniture So us into we that quoting now really think and it's make a us And where a that. a when at about see we right own percent our down example, days. challenge. for lot better the custom large to as else it And that's looking upholstery now, than our of which to are are business sites you to our outperform going times, XX look own previously we're we're gave of teams because that days, make

it, we you too but without about? think being telling would everybody about we answer do Felix, So like how question about to advertising competitive that how answer the

Felix Carbullido

I or term long focus are is and what on mostly we guess, market. investment return focus who we short customers on in So term, really on

So or very in market on looking for moving. to people either -- furniture, we're focused

high mentioned, baby, As a Laura value those customers. wedding, are having

in acquisition throughout lifetime good strong around our us see furniture, signal And banners. uptick there a so always are when our we very and in of are all perspective, it for value. from that's means long-term again, terms prevalent of what strategies a From this

we're and in say end in focused would term. value the high I then market So the it on out term long presenting short customers without

Operator

Zach take Wells our Fargo. with We'll from question next Fadem

David Lantz

mix margins, unpack inflation? Lantz a This what and within how terms on Zach. we the if promotions that traffic be, base David quarter absence start in follow-up was increases, you the did And wondering a of were in and bit of impact could is for then price ticket and clearance. To merchant and little would trend the of

Laura Alber

I outperform to getting broader reflects on top running were And able a that's is Impact quarter a customer competitive line more we offer strategy. of promos, terms think in to set to promotional hard and the yet, in to inflation, our our I strategy great of based actually without bottom promotional And the It's this out. our But business. not one run value research. line products, interesting, promotions. tease mean, is but that

some not, And our our down those Traffic really slow us another slow selling and when could interesting in doing facts of imagine how which such in to down about inventory interesting continue so really our appealing aggressive because do these They're to retail is movers, story, are in with product our and good large it's aggressiveness our believe XXXX has is as better even claims as is about is improved, and movers. XX% cube customers. We traffic or it comps. stores our much turns to important a is for that comps, But really, be. the traffic inventory year-over-year our still our job stores, we're running because furniture. crazy good of it to much clearing

that. back They're our not decorating from in is that furniture also, buying with at customers traffic we stores, XXXX sales. more homes said I of pushing luck. new their And shopping we across online look We're pieces this not And just cross-brand to launched are card. they're seeing us. we're we whole yes, as just they It's an but opportunity. buying and us. It's week the level it earlier, buying credit are pushing they're And more So more brand. as

from before our it I PLCC think card to might be before, the Williams-Sonoma opportunity to this and we run it Felix? out card time, of to what makes Felix talk over about credit hand different

Felix Carbullido

I our credit in loyalty new partnership of launched as card part Monday, we mean Capital this One ever-expanding in fact, cross-brand with program. our week,

And you brands online you our so in rewards. shop X% or store, when back with any in get of

you shop when up to shop brand shipping XX will as Sonoma anywhere grocery restaurants, Williams cardholders, your and receive in back you XX% you All first incremental programs well. When you get else, X% at sign past what's back when X% free back. And our for they You days. is stores at in which get you regardless shop at of get rewards.

incent brands. brand increased So drive and retention the but to reward to an across is also customers in card it's each designed our individual shopping

that So share our we to customer. to as sister Laura of of key increase said, by brands sale one our portfolios and that is our weapons believe wallet in our can our introducing we terms of growth continue average across customer per

Operator

over that the any session. And question-and-answer today's does management turn you. like Thank remarks. for to I'd to closing back conclude conference additional or

Laura Alber

your Happy to I if shopping. say at and to all you for forward want to you in and you quarter. person you seeing us and next just the support, for I not, thank again to hopefully talking look joining

Operator

That all does We disconnect. you you conference. you conclude now Thank you. may do today's for thank participation and

Williams-Sonoma (WSM) 26 Aug 212021 Q2 Earnings call transcript