WSM - Earnings call transcript Q4 2021

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Operator

Welcome to the Williams-Sonoma, Inc. Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks. to Officer call Relations. and like Brooks, to now Accounting Chief Head would turn over the Jeremy I of Investor go ahead. Please

Jeremy Brooks

and to during fiscal long-term this Good our we guidance will I'd you for thank statements call, and to fiscal with outlook. financial forward-looking quarter including respect like that afternoon, our call. events 'XX 'XX you for remind and make earnings future and fourth joining performance,

information, best Although actual make these we publicly that we of from statements any available arise these company and believe to today's statements results and no or The undertakes circumstances significantly cannot may after our assurances materialize estimates to these reflect differ that our reflect any expectations. revise or call. update obligation all statements will may events

an to most comparable refer be and for non-GAAP these A annual reconciliation measures X certain measures considered These of our This our in results. and why financial with should along should we be not measures the release with also appears we earlier GAAP directly call issued will non-GAAP we conjunction use explanation the press GAAP Exhibit the Additionally, measure, should be to periodic with in considered replacements and filings SEC. read with of how today. together measures. to

Relations Finally, the call on is being recorded, and website. available our a replay will Investor be

the turn over Laura President to to like call Officer. I'd Chief Now, Executive Alber, our and

Laura Alber

annual These the of and thank afternoon, a model within of expansion EPS XXX This successfully margin coupled an per our driving you labor with deliver XX% us. as and the chain, growth navigated of demand. record in for points XXX share. margin continued XXXX, from limitations XX.X% basis and shortages reflect and XX%, Good strong operating comp growth our thrilled Jeremy. basis unprecedented fiscal resilience a everyone, of QX you, $XX.XX business initiatives expansion to with execution Thank fueled resilience, of incredible comp our operating to all results consumer we and in capacity We're material finish points. to challenges supply joining results

key both in and Our cross-brands business, channel continue execution, all to our core digital-first gained are well positioned strategy business in for faster that to industry. have in-house and growth values are demonstrate our the provide global predicted our traction areas to marketplace, and take excitingly like which framework and X our our this BXB, differentiators share we continue to design, in than us

sustainable performance line the cost know fiscal content, our First, differentiated in decision shifted quarter, the of conscious incremental of function pursue integrity a that love. top not let's maintain and highly this This delivering promotional in margins. further, spend despite the line in brands. our a our and top aspirational and our fourth power to and merchandise our pricing we responded. Throughout on a XXXX, and customers at entirely is focus And fourth we all quarter. deliberate some offering product reduction our promotional pricing cadence we the continued time environment Instead, clearly our made on site-wide in of customers inspirational our

flexibility In efforts. points Further, marketing has fund gross supply basis quarter. this we aggressively XXX to margin and pricing us the of costs fact, in allowed delivered power chain the expansion absorb

our itself. both core growth of EPS, We which a our XX% performance drove XX% execution earnings and in power initiatives, line in of operating durability fourth now. and increase margin excited quarter to in of you which I'm through the demonstrate update bottom Our on the for speaks

an in underserved of industry. BXB to is business outperform, XXXX. million Our continues to BXB book business fractured building and its $XXX

capabilities us good price operations supply industry-leading take offering this global need the allows our high-quality, in-house As breadth design and aesthetics our next sustainable wide in businesses servicing Furthermore, space, chain share continue at white sourcing to of with we to service furnishings brands, this that our across take level. the coupled points. to

business results. our contribute Our BXB tremendous to to has potential

continue to growth new a opportunities. our even BXB targets unlock op only to margin accretive margin, as not climb gross business model costs. our And fixed its is to more we Our of result but as accretive operating

And for continue We own believe expectations opportunities. our exceed this is we our to biggest business. this longer of one term,

retail our been success our has first and contributor strategy. strong to execution. franchise global We're Another with digital

results total. markets Middle the in and investment single customer. efforts. 'XX, record growth record the delivery, transportation earnings approximately counts grew year diverse reductions XX% to those sets record And who than our Core and of a brands critical customer. apart XX% 'XX. In fiscal up results another and drove over seen revenue of and achieved component of continues results a with customers, platform systems brand incredible UK be year marketing our to base. single-brand the our expect company-owned revenue growth. With in growth for is of record us in Customers high last from terms than global providing India cross-brand XXXX, we've Mexico our quarter. strong year due Xx FY our Franchise across During more to the Marketing East, continued that warehousing, of and to faster our cost the XXXX. with Xx a And results digital shop cross-brand and generate we percent sales in achieved past large our came the exceed to markets in new this customer Canada large vehicle

exceeded second, X marketing. to priority has a our more of in wallet that anniversary, with always and third, card by Core of levels we even expectations; share credit are is producing our our grow, launched and first, base. our engagement our program, and Key, cross-brand its we are existing to this things: recently customer acquisition loyalty personalization digital to see reached strategy customer and all-time on we increasing upside believe have an this membership; customer continue continues cross-brand cross-brand spend new While efforts card, we record high our activity X-month cardholder focused The

positions data of future that first-party our our clear managed us approaching. in-house brands, our is cookie-less which our leverage our Remember, multifaceted competitive portfolio across across a advantage benefits peers offer. the to few and continue generates is rapidly a for program loyalty We

As applications a process. shopping of improved our digital-first native company, from finding we are our friction online. on several improved customers' pursuit journey in the product experiences in constant the incremental styling, website, removal to room registry and improvement We've checkout and purchasing of

Additionally, DCs time. networks our service to we continued logistics improve our and in automation relentlessly and focus on optimization

Gender in making the are our and Notable initiatives On ESG our this Index, on recognized with inclusion the included in we XXX #XX quarter sustainability across the front, leadership we take impact annual as tackling supplier Barron's furnishings being we pride industry. home progress Most in Equality leadership work the offer Bloomberg's company second great on Sustainable our Companies and and with distinguish to CDP from and an and suppliers in engagement continue change. commitments brands. receiving our products in are for A our reflected These customers our climate rating that sustainable high-quality accomplishments

and to values provide standards. always And our actions day, embedded commit transparency. integrity maintaining in ourselves highest customers the both to of our and Our central ethical each level our with want products. we We are in

war all XX.X% Customers of delivered of strong which as an all escalated, no to Russia, and the brands. and growth. new operations to handful and we in are between to no product on Ukrainians performance we Russia. dining, now well selling. our business West And responded deeply the occasional atrocities And origin, its have fourth oppose the Russia the team of products, identified Related people who longer in comp family driving are and bestsellers a with our products Elm bedroom, quarter We situation and home. including with let's turn and Ukraine Russian in storage categories. categories

also categories bath, new and kitchen kids incremental as to Additionally, contributed such growth.

XX.X% West Pottery year, XX.X% a to brand. to Elm decorating driven inspiring were and billion delivered basis business high-performance key Barn a build become a On to core building by bedding on another the and a results by a franchises seasonal comp, comp a strong quarter $X continuing delivered XX.X%, enhanced of seasonal categories. in and X-year QX velocity with entertaining. full strong

comp record to Pottery plant a Barn we're its XX.X% a years commitment forests. has Barn a on trees that report mark a vulnerable the restore surpassed to full to X XX.X%, X On Also, delighted with in celebrated year, building the Pottery basis. on X-year year million of halfway to

robust even Our We partner, follows promote sustainability commitments have to other Arbor the planting X responsibly joined million couple Foundation, tremendous on trees a to commitment our latest to XXXX. program, with effort, practices and based ensure the better, impact harvest our and science success by story. doubling this maximum And wood of biodiversity. brands the this the and best

Now Pottery and I'd teen. kids about to like talk Barn

our a least Barn and baby registry. Kids trim furniture, on of our at ran Vietnam Despite volume quarter comp the offering this seasonal through enjoy business larger had from supply a children's and were growth along our in around third indicated entirely customers feel pressure, negative of basis. delivered year related supply quarter. the business, effect the a not immune business second additional through delays strength particular, our home expect we is Unfortunately, with Pottery in we to which comp As results resulting In chain in-store X-year includes record Teen ripple we which our for backlogs Gold of chain a delivered the building holidays. a the in as world. furnishings impact the XX.X%, shutdown X.X the baby the this GREENGUARD impact during business, to from delivering disruption call, our the Also we XX.X% quarter from from online year. on to full

X.X% a on home growth year, entertaining comp of Our fourth for driven XX.X% quarter Williams-Sonoma last and by business with demand gift comp giving. of at a drove top

and expanding We growth. product continue our drive product strategy on our exclusive focus branded to to Williams-Sonoma

the on our that digital are website with the are and pleased store conversion improvements strategy experience We optimization working. is driving in

operating are store high-impact remodels margins. and improved consolidation Our market efforts our driving

comp a On basis. Williams-Sonoma XX.X%, of delivered on the building to year, XX.X% X-year a full a

business. our of Home One of growth our Williams-Sonoma key components is

of raise the proud expertise summary, Given confident results immensely home accomplishments the brand will name, our category and the bar is high-end Williams-Sonoma growth fiscal this fiscal and market, one the and continue momentum we this believe In in to furniture we're opportunity biggest I our our XXXX. strength year. extend clear in am opportunities. the Williams-Sonoma that in that the Home we record of of

strong the quarter, far, see to and first we So margins. in continue sales

of high XXXX relatively mid- $XX to growth We single-digit in driving by a comps we least operational at outlook, margins line operating our billion planned further, XXXX. line-up we long-term robust have growth as And for line to look top improvements with this year. and are with initiatives confident fiscal in and

go to to more their Julie. relentless detail, team call outstanding focus. our the Julie for to call am I their for entire privileged the people. creative grateful and I'm And work energy to through financials slowing pass I'd to I work, turn thank Before this never to group their talented of alongside like that, I down. want the in with endlessly

Julie Whalen

good Thank you, Laura, and afternoon, everyone.

and for our strong. proprietary results We to report outstanding levels are the revenues at profits seen. pleased highest quarter products fiscal remains with financial year demand we have and of another The

Our growth strategies to continue thrive.

model, is competition. we this complex ability us well these, difficult long environment, in are proven demonstrate to the operate of to And positioned in apart to replicate, to operating term Our a set to industry. succeed that plus which dynamically continues from macro our continues all

of results in fourth top XX.X% of quarter a X.X%. a at e-commerce comps to Williams-Sonoma top last growth In accelerated to XX% from third billion quarter most quarter during comp. the year's the businesses, And accelerated negative a Elm Net top brand, comparable another brands XX.X% approximately Vietnam. strong home to By and surpassed of the an channels, a of with below comp brand Kids including these XX.X% on XX.X% Moving emerging year. chain is X.X% revenue West line X-year retail a for their XX.X%. quarter from on Pottery the year-to-date children's a were as double-digit detail. were Pottery both These XX% across and issues comp Barn a the last on delivered supply trend last at $X.X more of revenues fourth drove quarter our top our This brands third results comp. X.X% at closure XX.X% stack. Teen, Barn were of furnishings XX.X% COVID-related XX.X%. comp by the year's impacted comp

or our a XXX strength Moving basis almost of margin in expansion the statement. merchandise down XXX income The year. basis this a Gross came over expansion. last record drove at points margins all point XX.X%, of

Leverage resulting and This our to points, again X.X% strong, a while eliminating success. basis from absorb Our sales promotions XX retail another pricing increased leveraged approximately expenses, a due enabled preserve and higher year-over-year at which and profitable XX demand, strategic once lower compensation advertising and revenues Occupancy costs, offset by our basis recovery, by net quarter East to $XXX lower XX% spend store by to year-over-year dollars customer the In retail fiscal and of the a XX% was increased quarter closures clear decision last XX of freight and from to sales. reduced additional discipline financial full incremental from occupancy center partially merchandise to incentive to X.X% SG&A, million, pricing power general our further ongoing our integrity total our year. closed to quarter absorbing dollar costs of fleet. costs from delivering during growth. strong us which the additional of timing distribution site-wide our on year still ongoing various despite benefit Occupancy rent. approximately Coast employment and from was product we throughout. costs our retail support efforts includes optimization of new an holiday historical overall stores low points, season approximately reduced close operational higher leveraged 'XX, are also includes efficiencies during track driven

year's operating of last margin another As XXX million, throughout to this expanding from XX% a substantial have XXX income us in last share year quarter of points earnings delivered earnings growth ever basis points year our fourth basis we last $X.XX. deliver XX% allowed fourth outperformance. record and over our XX%, quarters These resulted operating combined we highest diluted of result, outperformance profitability at seen higher and approximately This $XXX than to quarter results, per of growth our per with up share $X.XX, quarter with and XXXX, year. record another X of

On levels Elm to XXXX; significant stack; and growth XXX% highlights a our double-digit to XX.X% XX.X% a revenues, global year's growth; of XX% acceleration $XXX $XXX growing brands net double-digit Barn a across e-commerce over and our our X to revenue million; year points and of in business-to-business mix largest division negative at an accelerating of at year's initiatives our year XX.X% growing the despite basis business XX% billion second outperforming brand with with cross-brand XX% brands, or Rejuvenation approximately to of XXX XX% include: on comp a consecutive over company and with top top at XX% top Williams-Sonoma comparable a a at Graham our XX% over in year growing comp. our line, including brands, full these XX.X% comp X-year demand X-year million total delivering our $X.X additional emerging a Mark XX.X% on growing revenues; $X.X billion, and West comp, last growth combined, last growing another total to e-commerce XX.X%; retail comp; at with a XX.X% at comp all comp Pottery of traffic of across to contributing

last on bottom strength record year. in at the and throughout at the XXXX XX.X% supply income associated XXXX us This operating which by strong our to $X.X XX%, discipline XX% driven return more last throughout prior disruptions margin was chain XXX line, Operating this top last margins Xx high to over above higher strength levels. expanded year XX% $X.X of to year, or and capital On last the or line with was drove above points $X.XX year. levels resulted higher gross basis operating points billion, and EPS $XX.XX, increased invested despite an to than billion and to margin than grow basis over financial enabled This operating XX.X%. XXX than year was income costs year on expanding our all-time and

growth over confidence The we us billion sheet, our sustainability ended million our in our and in chain of to fund levels and our debt business, year a of $XXX primarily invest business liquidity balance $X.X cash repurchases. strength expenditures, and in returns cash return reflect and maximizing to to and fiscal the shareholders during capital with in XXXX, $XXX the supply our dividends to of or nearly has form balance million which of with our of commitment decisions on of technology in to year amounts flow credit. shareholders. almost generated $XXX million the in strong $X.X These the On for million operations share billion the of allowed line $XXX outstanding the operating no

the XX% down XX% Merchandise Inventory billion, includes over last negative transit. were XX.X%, was hand inventories X-year but sheet. inventory still balance basis. $X.XXX a increased which on in increasing Moving on year,

year Given demand, customer below we chain the macro levels. supply significant the strong and are disruptions optimal throughout still the ongoing

a to we As back XXXX. half see result, elevated back the levels of until continue order expect

expectations for let the Now to turn our future. me

As in long-term outlook Laura of business. remain we said, very the optimistic the

business enter core our and our growth in Our continuing. we strong initiatives QX as momentum with remains businesses

reach annually by a to higher. fueled growth confident XXXX reduced million. in over growth both is such and billion P&L to revenues Barn provided continuing business revenues, our leverage And and are from long-term we business with the expanding the reach growth and growth reaching leverage $XXX As We expected doubling our growth, occupancy accretion with have our $X.X year result, levels will to billion operating operating BXB with this year a closures single-digit revenues, operating margin from previously for expanding online strong $X.X marketplace operations top combined fiscal outlook we expand our revenue fiscal initiatives, a merchandise beyond, will margins billion $XX as our vertically million supply $XXX by or power estimate our Kids our Elm, we keeping grow our sales fiscal such reiterating top discipline including nearly across targets store financial profile, across to and XXXX, to of growth comp various below billion in to additional faster, that businesses growth. shift to will can accelerating in-stock are West rents, growing to our be billion. prior higher line line further accelerating provide, in relatively $X.X an financial from strategic inventory $X.X mid- brands integrated also This XX% will million, over line and are high of from automation XXXX. emerging and chain to our $X ongoing committed global to billion and drive $XXX profitably, adding margin continued brands expense in higher and due accelerating initiatives in overall $X.X Teen Barn revenues year in Pottery revenues; billion; almost products sales Williams-Sonoma margins efficiencies, as the where Strong proprietary leverage better throughout, from growth pricing Pottery size

Our shareholders. into cash capital to excess business will to allocation our investments and prioritize then for the plans continue XXXX first return

the business Arizona. expect and spend in approximately chain We of distribution primarily $XXX in a new invest XX% including automated to on addition with prioritized the the initiatives, e-commerce, supply center technology support million to of over

and repurchases. shareholders to our excess elevated to quarterly dividend share expect return also We increased form the payouts in cash of

announced we up today increase earlier another double-digit or to dividends, dividend, $X.XX in share. our For per quarterly $X.XX XX%

billion, under which amount a Board new authorization. to authorization outstanding We $X.X prior will our repurchase has also remaining our announced the replace share approved

profitability. in remains long-term flexibility We the for given drive projections will price new allow own continue returns. growth to undervalued stock and to authorization invest This financial our and our opportunistically believe stock us that our

and for line call outperformance enabled of the against to reiterate favor and and and our Long-term proven including discipline, business, and to for shift to they consumer would financial we this, executing combined and importance liquidity partners shareholders. As operating for housing believe drive accelerating the a take our next we to a our ongoing year financial and to business fiscal values-driven to profitability the strong also long-term now share strong do focus our that I initiatives, increasing our strong bottom And begin positioned to of accelerating are profitably. give strong investment outlook another being our you. like in e-commerce long-term for continue year, to deliver to our accelerated market driving should I company. growth ongoing of a our opportunities It our drive would remains like uniquely of their top We financial our associates all with and an record on cash and market growth reward our continue macro sustainability trends the track elevated growth. us and of Thank flow open us all to to is to has returns confidence company. questions. commitment that all the stakeholders. now home, thank

Operator

Rakhlenko of first Instructions]. [Operator And from comes Max & question Co. Cowen our

Max Rakhlenko

we'll Just offset the how they term you think margins normalization much can see and business businesses, businesses then over the how continue grow time, to And any as that contribute longer those curious, otherwise? share to that are? you new what on they'll do much higher about

Julie Whalen

op incredibly to Yes, margin. accretive are these businesses

our can for it that as is same haven't to And example, our has with that, at it's comp, time operating disclosed super driving. BXB benefit excited volume we're We a that the into is about that you becoming the amount, something margin bigger of but earnings. significant because and piece see, the the the

trajectory. And so that growth about we're very excited

Laura Alber

so larger still sourcing we the big the get profit our thought, enough in their runway were that that that case still leverage you in our asking for the those Max, in And improvement brands, profiles because about of question actually some there's we do small smaller great I to of brands. they're brands. aren't

strong but further be today, these So a they grow. as they're very opportunity really they can margins imagine, we profitable as they see improve are would to -- you

Operator

from comes Capital Chukumba question Anthony Loop of Markets. next Our

Anthony Chukumba

you loyalty that about about The number question, the an brand time got, talked you I -- Can number XX recall the know cross-brand in correctly, cross If of and first update members. program. have? I last Key, last just give you it million you've us terms it's that My of members

Felix Carbullido

to numbers, I Yes. see and our dividends could of Anthony, introduction believe you, pay a significantly this loyalty believe off perspective opportunities that's can both in of an a date big that program as one the I tell life the it's shopping. increasing I year, our drivers Key, are our the And biggest Laura up. cross Felix. of credit way tell high. a you is we're at don't for sharing card the past to we're initiative. The And August, credit is of all-time were wallet in this card as We company from date, terms said, multi-tender share to with key this starting and

Anthony Chukumba

global dimensionalize Got guess, the, I issues? you in chain it. sales follow-up. kind I given stark And it's such lost out. then quick can there just just kids of way slowdown a you as I can pointed and the any if Is supply one get teen, mean,

Julie Whalen

I reason that the these I of rate issues, supply XX%. had had my script strong. And did but if for their as what believe -- you to Yes. on run remain said think was business no I about will year-to-date in their that mean math, we chain sort

they would implied come the in immense can at we certainly, fourth And you delivered how the the do guidance. have been where they in, end with had and higher math come quarter. of So had that our much on up

it quarter, to fourth decent a So was the unfortunately. impact

Operator

Telsey Our next Cristina question comes Fernandez Advisory Group. of from

Cristina Fernandez

how the versus about market growth, I to industry single-digit wanted high when you growth any? think XXXX, thinking Demand furnishings if for gains? share you mid- ask, industry in about are home to

Laura Alber

the Sure. But in gives home. provides going huge No, work from retailers. them we this us: an us industry and that they're to talking global smaller uncertainty we live to people are of great reprioritized love to of really the from believe lot generated and confidence doubt rates And is brick-and-mortar important fragmented deal endemic, a to in things of their are we homes. rising that X what's I And half say. me there's hybrid here what as interest to we operate people in really all opportunity. a and a conflicts. than still CEOs, no large their And there's today, have in enter and in more more clear acknowledge sales is the is work And world

whether to total home the industry have the And is to we're or growth to going changes way the stronger So no grows combined that macro us a share one shifts long-term differentiators industry live, the we prospects key believe to market our not, our leads in with and continue ability position grow. than to I take and honestly, believe the in there us. disrupt furnishings and

Cristina Fernandez

margin expenses, about both this in margin versus your to ability operating think we year-over-year one the maintain year, and And in improvement line with then XXXX? for being XXXX? should -- as a better follow-up, be will the Julie, the perhaps but Or gross

Julie Whalen

the on incredibly we line mean maintaining are not items. these obviously at I Yes, levels. allocated guidance on our margin operating We're providing focused

more than in Xx are there XXXX. were said, I think we I where As

commitment maintain able to our so levels. to these And is be

And so have through we to all that opportunity I items went the different that do line it.

have sales, on our elevated go strong. margin maintain and up, these We've like just at we're we leverage on about forward may margins. the got and as maintain answered levels. opportunity prices ability those same and to Some are we've BXB, some down. that may higher things, got to to many go day, growth drive the with accelerating to to the move the maintain supply operating product with those have despite vertical the continue the higher I There's that proprietary And question integration, at efficiencies initiatives P&L end the our and that incredibly on. we many freight the levers a because But that we of continue given and merchandise that margins chain using can product op to

hold would I depend flat lands point. it will on. them for line say it which But so I purposes, would And at this modeling

Operator

Grom next our question Haskett. of Chuck And Gordon from comes

Unidentified Analyst

if those quick us This of Summer] quarter? first have Chuck Grom. And then fatigue if And the give or a is My maybe I lines, indicators you've question throughout is by the follow-up. on the demand trade along you down just for on cadence customer? could color [Craig seen any of some

Julie Whalen

a as And Yes. have really made that start in strong entered of did that's quarter. holiday and any common the the saw of and mean a amongst we fourth most chase do to a more decision then been much promo. dip during January we selling to I quarter, weekend first bit reality retailers. the strategic I we where site-wide and into we pretty see not promotional the think sales, we've was didn't out could that stronger a We even came little the we

delivered, XX.X earnings. And margins and operating the still so the end day, at incredible of comps we whatever, double-digit with

just And is to we what continue strength excited committed so remain do. see that we're to And to continuing. that that, is

Unidentified Analyst

follow-up. guys XQ? Okay. a And then demand a Did you provide comp for just quick

Julie Whalen

but in We relatively line. it's didn't,

to challenges reality haven't still we to, doesn't again, back been and on we orders. backwards like. that -- that to elevated as down have that, the back orders. still incurring We bring but supply the level that encouraged those is alluded chain that able have mean So Laura We're don't we'd elevated

most We fashion. a they for financial important net, we're get those thing products product in therefore, our perspective, hold we're But the so attention is sure as and obviously, and making which always in timely customer in line those continue paying opportunity come hold a to certainly, it's demand the want And continuing to from with delivery. to.

Operator

comes Gutman from question next Simeon of Morgan Stanley. Our

Michael Kessler

Kessler Michael Simeon. is for This on

for the transactions units driver. a but anywhere year-over-year price not an the growing, offset many price We're XX%, XX% question, you for have expectation as was are XX%, retailers probably X%, and First XXXX hearing because growth. or

your if within guiding the So quite that pricing for feel could normalizes. growth should units that? guess mean be the to And price potential And is in there's how slow sales guy a to growth real upside risk is, some that's we're that, I more true that it means guide? it more if down. right 'XX there's maybe mean could which is good about doesn't or assuming inflation we framework? if Does

-- tell that does does what frame you how guess you? that? How do I So that

Laura Alber

Very question. good

product know, we've us value provide that to the and important our best you as market, customers in is well designed, where that's and a So we it's that the won. really sustainable

costs up. course, have Of gone

humble versus This we and come so to increases down, not prices strategically have promotions, key competition only site-wide to ensure where our value. why products we offer the our of will I give we strategy. really want now, stop competitors. a customers you some innovating our prices than on did we higher it's carefully and and us we've it Right the industry checking but peers. and we our them and our that, check that And that is at are going we sales growth something we could. tell the taken products But break customers We're to constantly very to if about products that a our because And believe doing that's can't our is price would that stay we our best buy we're I our part always versus time. all

be As to flat it units expect, growth, it versus saw year to though relates AUR last this more see year. we even units to in I increase

in. the implied the should that it's the already, to thinking for initiatives out that unit we needs all to state and that come a move guidance. back going to gone half the everyone sorts expectation. my constantly, can in differentiator the But this are continue sometimes. this there's because confident that have to is year news both through we've in that back but big in growth, very that's hasn't come chain and issues many, factors growth think our same all be I That's this of hate continue log in it the we we And On varied the reality our supply reading go know, and unfortunately, of but to be and It guidance come order now I you yet, what's we're -- things on.

really that less service. floor, and to point, make the a give great seeing from comment be And I'll be our I our calls continues reduced customer And we our to have just to escalations our are so focus customers. to that customers also the

good occurring say, a are customers know are about are with the competitively our communicating a should I job with we I So faster doing we disruptions all times, that and these offering think better despite or customers our still we job, lead communicating push out.

Michael Kessler

Great. Okay. follow-up. technicality helpful. really more I was If This is question. That all could a ask of just type quick one of maybe

being prior operating long-term talking been at XXXX. levels margin language guidance the your about least of had think I

was just quarter XXXX. basic base now in than least to Or I for at think we're saying the now that? there language? you Is guided quarter anything of is kind higher it where read a or ago. we're ago line, relatively a on into Obviously,

Laura Alber

No.

got it. You

Felix Carbullido

it. got you Yes,

Operator

Haas of of we go America. Bank Jason Now to can

Jason Haas

The that BXB And trends is just in on the curious one XXXX? business. seeing how thinking what just about I'm first there? you're you're

Julie Whalen

Awesome.

we go. just continues BXB over So XXX%, it said, as grew to and

not think undershooting because earlier, call, And is time every this BXB revised I doing give gotten I The That's good for my really well. to I decided as anymore enormous. a is said one no I embarrassing estimates I've I've job. keep it. as market very on estimates

give so on our pipeline chain, And products, clients specific which couple product and experience. design because together allow supply different projects, it do can in-house for our we of a to just deliver also have we and book them development great a And us business. fund

a think York a excited of our we're the we're We and don't a projects big had and San strong name we large stadium seeing big I can the the Mets. with relationship Marriott In return about momentum. hospitality, build standard brand say to Diego arena yet, and care, that. promising In Padres but continues account. health we're So New building business. work our encouraging for

large relevant we're glamping doing and on is think are luxury is we're is the last, residential that and company, which and a premier great large the Downs, developers to leading residential that. is working adjacent with with really the companies. really fun park. national Woodford Churchill under country, working one awesome Canvas, is -- a Reserve We then And which also like furnishing related I their across camps And

what sense So that gives doing. of we're you just a

go and continue have of new a more to there's replacement. there's because So also we then units and just book that businesses there's business

Jason Haas

And I wanted on to remarks, sheet I color. And great balance it know about being I but the the That's the of you how if think you have prepared sort you about in how give out on just being inventory up. inventory versus just feel overall position? then ask what in as just a curious as just follow-up, any could terms much stuck the color Julie touched is that in on inventory of ports hand? your of

Julie Whalen

of prepared remarks said XX.X% increase my about in the on-hand is that Yes. I inventory. XX%

of So the transit XX%. in is that delta what's

is myriad So And sophistication, that the on it. moving in that been some at in of it but we're and others, effectively a sizable water. to and it better certainly lot bringing there's delays not quicker, much inventory for of our portion still that scale reasons we're getting than with obviously, through in more a a immune

basis. negative on X-year basis, not at where go. certainly, we on-hand working sales at factors. with definitely X-year you we have look to be. near want When optimal But we're of room through those a lot at we're a XX of XX our a on levels inventory growth comp a nowhere to so We're And a

the And a in position. year, much better be by opportunity company. so it's a huge hopefully, the back And we'll the for half of

Operator

Adrian And Yih the next of from question comes Barclays.

Adrienne Yih

the Congratulations quarter was fantastic, was fantastic. to year the the team, entire

like pricing they some I I'd competitive RH small Laura, thoughts pre-pandemic, then and white other hear higher to not And the name your And just landscape. much have want industry of on competitors, was the space. independents, chains, to where how create in moved gone? So sort go has to back like of maybe

curious, competitors, of for X chain that is who down you like it for would the about understand Because us go, and those West others. help really not think say I'm Pottery of people to really, lot kind when national Barn? against I you can names Elm, comes I when compete you So where a

So that's my one. first

standpoint. And like an you Julie, op margin help so you seasonality, there's out at It look it's long Sorry, QX if from us opportunity with can seems winded. shaping? more QX then, in normal

Laura Alber

Adrienne. Thanks,

years be part like brick-and-mortar data, But an ago and we the retailers, I was X there done brick-and-mortar. going be market mean So a, going Investor of being -- street was said It's that on frankly. the wish saw XX% try Day to before online. we to not think, I moving better it it's amount higher with we piece even it I pandemic, done together. the to

be pandemic clear even happened, the so to online. of the the move as opportunity were talking before And people about online we winners one

much data a where have. towns in your you as lot about I it's I is that local mean it so the And changed on see street. as can

put same retailers, brands. the the products, call big don't products necessarily then thinking multiple first they that can't who do But whole are not name, nor products tend of specialty elsewhere, they it's people in may have They have a well. if multiple are. do, the have hard have you also, they our who we them the I great. lot that digital own they specialty find there's Now really which appear truly, somebody the they to like all, other They of do. do to but by But don't the about And that about talk hard value-priced house is you things, lot head-to-head but enough. what try And we part. They people, they don't design terms specialty to ones know of a you their does of retailers of then competition, don't And temptation the in find aesthetics. I'm a which we're selling who don't anything capabilities. products really resisting pieces think -- the ones that have people lot big together.

of -- all the improving Day, to nobody to customers everybody we're important them care up and who impact that Barron's it certainly little differentiators. the furnishings a to and and And we companies. that. saw we who sustainable our most saw top their not about that announce of also And on it's and because continue bit from how things. more bigger know up pieces hope are else then even add list made you frankly, products not know someone list footprint, the spend so we chemicals home those they'd sustainable are competitive that it who's we is rather all but buy to what and those to they're Earth step Baron's one. out about retailer goals and goals. get going and I us, our when happy really we're report We're a of home And used parts makes only important one the there's the furnishing, and to that's put And And that to excited in I'm new done,

lot intend leadership So but to position done We're a there's stay there, and we're of ahead. to in durable be high-quality products. on already a there work and we sustainability

Julie Whalen

normal that's basis, obviously, question. guidance that's than sure QX standpoint. the we rate. quarter different really asking a a out I sort noteworthy think on mean, anything of directional you provide to from call the I I'm on Adrienne, you're there's know don't don't run

are think committed to year operating on fact the here that the to the point. the margins don't So that gave and incredible on excited, at highlight holding anything I there's super about obviously, year. we guidance We're we

So our focus. that's think I

Adrienne Yih

very, then, up. Because retailer, very to which driving rate a just profitability, and the the for is profits you that's follow-up. is you criteria decision Julie, profitable one having short clearly, stores? hurdle What for a are keep a closing closing X-wall how And stores, difficult for

square when each you your looking XX% at year? are of making you're decision So that footage stores, how that

Julie Whalen

I one business. choice. at of of When obviously, retailers, that that things you makes different, is look don't mean I size Yes. have first the think the other our they us e-commerce

decisions. making we're so And

e-commerce of One to stores. that on the retail business is looking profitability and the we're our the at comparing decisions

on want Is reasons the certainly, enhancing? to aspect factor. X it our to the customers. in is us We're that e-commerce it want also the that's brand have store, there important But do other service are store? we Do a sale And we incredibly at looking stores side? so for retailer? Because and from

but given -- the think would out about to one but haven't I we way that's it. so exact metric, And say

sale sort think I think margins operating e-commerce, definitely our We and want is spot that what know profitable. historically have in to You make about. of that's sure to been the an interesting

Laura Alber

that I stores, to stores, board, And really is really remodeled transfer and strategy estate better the see working. has, as the the for We're to from optimization across but of the real new beat mean, came expectations, happy retail leases we're our up seeing stores. said, And last then we're team renewal. really seeing that, fantastic our year, we I our closed our Williams-Sonoma, specific XX% renegotiated

services, about design stuff mean, design face good really to brands. do them going on paid us strong space they and though So retail have chat, to lot continue and of us be kept pandemic and back creativity employed, at our even closed, our were we loyalty retail there's of we've a passion and the I stores they how innovate. teams they in helping talked And with with the were and continue profitability. our the during

And with our mean, doing virtually now ever just of -- by big piece so these not of something business it's done we're that and it much And dabbling, a I business, is too. appointments, design supported that's we're our in will and things eliminate we us whole a tech how mistakes or that people decision really home room when look so the and making improving their so whole a they're imagine do house. capabilities that of when purchasing can it's make many

Operator

from question next of our Oppenheimer. comes And Brian Nagel

Brian Nagel

more. talk just to want I but already, question, my So about it

the talk of same? about you chain about Or think situation the pulled again, we as pretty the at have is or 'XX, look to out issues some standpoint you And the persisting could are staying and think you that fluid do dynamic is there, could far dynamics mitigate yet pressures? are from there pull into then As how that's are help Williams-Sonoma not now duration you recognizing the they -- this, it to impacting of internal -- supply an getting that levers these Williams-Sonoma, worse?

Laura Alber

dynamic's So funny, worse. I our it's mean so

going is be be last We could other the year, year. to are and our and as is year we thought this about last talking perspective nothing the same about day this that than worse

horrible we're a it We're see We be labor this. starts. see say bad and of stop about realist mean last it's as it's to expecting and Is comment. COVID all -- would I material sorts that I shortages. year. things, we So as But stops surge,

war impact. Now some will the have terrible

to incredible are have XXth businesses. in importer. that we these so And so industry largest everyone is are scale, in things are the reason team we're the we container happening all and the confident But consumer all that an

allows shippers happen -- and very our us be contingency as vendors inventory we to with to can. could about and production relationships plans we're to these things great tend going much for our worried as what that flow. create have expedite And We we and

to we i.e., also, to we're why at and at same control can is time network. do so And looking our it control customer. continuing we regionalize that what order our an to better, And the to get we're time, how process distribution

closer customers, and to a There's we're we even our damages. fewer give incredible So them lot. service with

And gave way there's lot that things them well. Julie, think think, we a many of we there's believe as likely come room also in a the operating some year. supply -- that happen haven't have that -- well I have levers can we done, expect that But our still predicted company. know this to are do to yet to I of our we that we to great I that we've as summary improve, the don't as of chain. all margin And particularly there's we in

Brian Nagel

and say, would And here margins discussed the in we've is this the benefiting I to of about related driver product as of channel? the you I about say, promotions, constraints the in widespread upside function guess, such think supply way, from the promotions before, Or to quarter. Is now somewhat better, helpful. you follow-up, I of full the sell-through, this within drive price how initiatives really sustainability? think the, merchandising? a That's quick guess chain the then you a I of lack being lack do that, And lack but as still Williams-Sonoma are of more a of internal talked a to ability

Laura Alber

you're that one idea wasn't it down to a have I'd a shift go was things, it -- regular those basis. product price really good than on a it's that a mindset either up say and a No, even selling more on of

You will markdowns. see us take

We will miss on fashion.

will you promotions see markdowns. are not running saw I you've site-wide things not us where been about, people that We that seen run during about have that what talking season. holiday know take Those you are I'm talking overstocked. others many run we've the

look still a and And them can them it's at You pull up measure. now. really,

power pricing of the and brands. merchandise our measure a Our is strength product our of initiatives internally and

Operator

we can Wedbush to And go Seth Securities. Basham of

Matthew McCartney

This is Matthew McCartney on for Seth.

that kind this to quick, Just fair up being half, real for down just back of supply think and equation given want picking half maybe the price volumes the the balance in first growing issues? then of coming chain sort of to sort And full it out flattish year? then revisit the year. kind to volume of Is in about for the even

Laura Alber

what Sorry, understand your units? trying talking talking talking about question. are you you to Are you -- just about are

Matthew McCartney

half, first units versus half second yes, I'm taking understanding just just just chain supply -- about the pricing given issues. aside

Laura Alber

I No, at all. wouldn't assume that

it's been think of a a of have just on strong time. inventory chasing I for sales that we've incredibly function period long we

relative be we're units move with And tie inventory, still is think receipts going unit chain but first maintaining there's chase anything inventory I forward. which sales in don't back still so the as to we're supply There'll order that continuing half. to strong having sales that to we levels, the elevated the throughout occur of number to year.

Matthew McCartney

here. one question Okay. Thank And you. then That's last helpful. just

brand your power Is on your on a to you're of maybe where of pricing pass more or pricing about mentioning level Just and there seeing sort ability any power. less power? wondering you're price, sort pricing even a perhaps differentiation

Laura Alber

been We customers our sure, value. as there's said, fine giving wouldn't I no, that careful. we're want And -- we've I to very make a great line.

product category. continue seeing of increases pricing time, brand. because the to gone as So amount increase it's same we've have had the to much because keeping in take testing doing we point by about of are we products. the price also, a every that cost opening we're single And so And range our customers, in increases But care judgment well. a up we lot we of remember, success at

expensive keep go point So price, we we and sustainability products a price become so same might really have don't our with set bunch to And that also products, our just of a are brands. customer so worked engineer though we in something in vendors and pushing really to value up even these have can of quality our into profiles still build very we bringing acquisition. opening

Operator

I'd the remarks. gentlemen, that's management had back the time for for the additional call closing to today. and we team to like questions Ladies hand or any all

Laura Alber

thank appreciate and to engagement your your Well, person. and you enthusiasm and all. can't your all you see Really questions wait in

Operator

Ladies thank We and that you concludes conference for your gentlemen, call. today's participation.

You may disconnect. now

Williams-Sonoma (WSM) 17 Mar 222021 Q4 Earnings call transcript