WSM - Earnings call transcript Q2 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Williams-Sonoma, Inc. Q2 2022 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks. Today's call is being recorded. 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

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

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

measures. non-GAAP refer should measure, comparable the be we read GAAP Additionally, to measures how and considered for results. financial use GAAP measures an along of our why with non-GAAP certain A and Those replacements will reconciliation to together should explanation be of not directly we most with is with a issued Relations SEC. an on website. our those we press periodic release conjunction should today. annual Investor considered This to replay call and will filings the be appears Exhibit also call with and X The be measures, being our earlier recorded, in the available

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

Laura Alber

our our the today. $X.XX execution growth impressive afternoon, our second initiatives earnings portfolio, the Thanks, marked share. earnings XX% line the team. on excited an quarter share strength reflect over and the to quarter performance, of top Jeremy. Good of delivering of comp ongoing of of results These XX.X% multi-brand everyone. to I'm success growth another the QX per strong and

by perform and continue and products love. customers high-quality, to differentiated demonstrate ability our sustainable that We our offering know to

all very proud by macroeconomic the continued two-year impressive while the was given against, especially and that of of it order we our a I'm the three gives delivering are is comp compares on fulfillment, reiterate successful this today. our backdrop XX.X% outlook to factors: And elimination demand site-wide guidance comps performance an XXXX and promotions. confidence up performance, longer-term this strong driven and Our continued positive us strong outperformance basis.

Our in competitive is the industry positioning a strength.

with rest edge ongoing retailers to Our compared the business digital-only have brick-and-mortar to share provides scaling the that for our both marketplace us, strategy industry creation and a sophisticated a players. the half digital-first generation is household and the retail up. try and capabilities. is the of catch players with small only millennial large At market into And than the the sales fragmented do not of stage, not while from gains of this opportunity for e-commerce the for huge arrival same competitive time, channel but future more

this take that environment of us is disruption ripe an for for creates market All share. and to

inspirational, differentiators, high-quality continue win compelling our price products We because key points. which at sustainable in-house our to and with design capabilities include exclusive, of

rooted values in us to diversity, of a business leader as fundamental And want now which decisions apart becoming more business. industry. customers. but one digital-first are highlight sustainability, I many even channel opportunities, set our purchasing our in differentiators and not and for digital-only These equity Our the strategy inclusion, to to

it business a had billion $X on increase XX% to QX becoming Our demand well BXB year. business driving is and in track another in terrific quarter this a

our continue share commercial leveraging our brands. a To source builds, of momentum the to and team office product We are the facility to companies In see diverse reimagined. of industry on Snapdragon and workspaces pipeline are this New business In of through BXB to continue our grow development on else suite sports no at service focusing renovations we San our to entertainment, range across expansion in growth, diversifying optimistic hospitality, about we collegiate our fleet to return assortment. the the We we one and our State in remain new by and this drive the excited sales continued encouraged services Stadium. the continue product and we excited contract-grade we of of of and is as And as verticals. market are space are gain office focused pipeline, do. potential offerings Diego there that providing first full

Moving sustainability. to

our committed progress we announce thrilled long-standing worker the our ESG differentiators publication prioritizing diversion trade to are as In sourced remain fulfillment well-being goals. detailed progress waste premium. increased diversity, responsibly fair impact of industry-leading We business. commitment, report, including highlighting and key sustainability, cotton report for and to in We the the on and recent XXXX our of wood, our philanthropy

company, the home furnishing science-based emissions carbon one decreasing our made our set also first of target and are intensity. have we our We across brands for reducing progress to a

Now global I'd our business. talk to like about

in We opportunity, believe partnerships. continue a In franchise that focused expansion continued represents multichannel to on with markets. QX, sizable we our key strategy are we a global and building momentum

Kids in in presence Barn growth, and further all of in drive XXXX. response. brands in continue QX into Barn of of family with And company-owned business with with launch websites and the to Barn the customer our India Elm Kids Pottery and West market, stores Mexico continues we Our expansion this relaunches Barn our our launched Pottery Pottery in Potter our the Canada, the and website beginning websites Williams-Sonoma in expand great and to we of year

area results strong continue the Unfortunately, to chain. disruption, on I Before an pressures. supply we get significant where you brand, inefficiencies and see is cost this the we want update of the to to

out to we customers. ship of well to improved, still to ocean support continue our have our center are shipments growth distribution has costs multiple improve and to And Also, position market we higher higher shipments added as in-stock our on-time incur to Although our room incurring as we freight. customers. still costs to service

half pressure will second in reflected and and the this of next. first is We the this our year in continue of guidance half This outlook. our expect

strong our comp two-year Pottery or driving contributed All delivered Barn divisions quarter to of turn incremental basis. a extremely XX.X% product another brands. let's to demand. channels on XX.X% and a the Now with performance

Our high-quality to growth. Pottery with Barn product continues the initiatives. lead business to and continues furniture proprietary growth innovate incremental

the and For an exciting quality with example, and the Barn in with at community home aging in-place July, Pottery new accessible launched designed living home, enhance disabilities injury. people to of concept life

our have this market, Our enthusiastically our portfolio customers responded this significant across we opportunity brands. believe to underserved efforts a and could of be address about

drive in assortment Elm. top or kids on excited Elm on West to new growth we the the X.X% which of continue in expanded And experience our businesses last a year quarter XX.X% West Moving there. delivered bath, second launched brand. basis. for XX.X% We're two-year comp dedicated and our outsized to BXB and a about e-commerce

Elm categories; areas a our expanding of hosting drive QX, the we on three key our with Elm. ability growth brand. and seasonal collaborations improving reductions; become billion across innovative in success launching three, depth West are we brand. in and forward West to Looking and focused And entertainment our One, decorating, to in-stocks confident initiatives, the of to furniture remain $X time strategic ongoing at two, lead

a update Barn our to a X.X% home delivered in you business, QX. like furnishing quarter Pottery comp children's sequentially which on I'd with Now stronger

in the throughout further comps space in on operations to clear his in all can closures weeks kitchen. channels; positive occurred Felix across Also, leaning to the Williams-Sonoma receipts a our a inventory the to of breadth that further including: those there half in-stock successfully came In strategy for the collection, in initiatives that assortment essentials the but Officer, new also our our we improved to from will brand, as of quarter, marketing out that ongoing has love results across indicate improved be improving the expertise. and Williams-Sonoma the in brand's of to products ensuring path. and the brings two, filed have we Carbullido, heritage in site our only business was storytelling talent great the opportunities brand sees e-commerce areas, also previously the see adjacencies to rely benefited a not home inspiring stock biggest by want comp country. imagery Vietnam, of who recently opportunities the reaction improve, announced the in experience the in holiday the position which launched at And through newness conversion Felix customers best back stock accelerating half. ship any useful Early of Williams-Sonoma to position, one, the to the a ever In addition our of assumed in Marketing we offering the back leadership. in we dorm President key incredible In quarter. higher an driven as continues e-commerce we and enabled early in fleet core in at only recovery During brand, brand. X.X% believe and into cook but will three our and Felix on relevant Halloween. merchandising, kitchen. to functionality Williams-Sonoma importance of change white key offering, back-to-school the I role, positive factory in be well driven and with This any highlight given and are is QX, particularly role with categories by clear XXXX. store the seasonal home Chief into across success the shop product finally, of in

double-digit part opportunity. had quarter to and As Williams-Sonoma we business, a comp Williams-Sonoma high be our of the again brand, an Home continues this

long-term the believe and name, Home our improvements our in drive executing Given the a Williams-Sonoma to brand opportunity proud design-led, to performance the home our the growth share gains we and Williams-Sonoma high-end be of destined financial summary, our market market, committed product the category leader remain we initiatives furniture shareholders. our of customers, strong distinctive of we operational want I clear high-quality furnishings. on in and thank In and and home to is expertise employees that strength are our returns. to

detail. committed of the to all through to are in call delivering go more you. for We with the that, Julie all turn like And to financials I'd to

Julie Whalen

had Thank and operating you, and We revenues, outstanding quarter another everyone. earnings exceeding all expectations. hello, margin Laura, with

and performance strong. remains Our execution

demand accelerating comps and due to and Our healthy order outperformed fulfillment. positive comps

employment to and grow comps Our margin quarter growth enabled momentum due operating of top of continued our and another another bottom business on to expansion. operating the more advertising double-digit with both us and above line quarter regular and factors build priced outperform to running expectations a continued and These has to leverage. margin strategy

of and profitable succeed in with further to that quarter positioned best growth. short this results strong Our the validate term the are we one long

In to grew of revenues Moving second to Net quarter XX.X% at XX.X% in XX.X%. comp channels. to in double-digit growth delivered XX.X%. XX% e-commerce of billion brand an on retail, basis our traffic year with an year-over-year XX.X% retail grew top our both stack results for almost comparable to comp despite down $X.X e-commerce, last This in delivered points XX XX.X% XXXX. detail. growth more revenue we penetration we And two-year and a includes

down Moving income the statement.

basis margin historic hold year's near XX.X%, continued highs last points below QX. gross record to Our XX at which was

to chain merchandise longer remained higher remaining was as disruptions, promotions. rates to integrity margin back quarter no costs freight of strong site-wide year-over-year with margin Our to higher The offer furniture another by margins preserve order supply demand, decline our from higher continue our all. our and committed we strong fulfillment driving for consecutive freight driven pricing expansion global merchandise by gross decision

given our increasing for also approximately that been distribution our growth, which flat. times ongoing cases, centers; flat revenues some pleased orders, at in Coast. typically multiple we from occupancy incremental to our in we efforts, efficiencies distribution East shipment. both were and times retail shipping X% from allow multiunit time. centers costs costs net have of Occupancy order distribution over to optimization done were occupancy includes real best rate optimize service year, with $XXX costs new which able dollars West out-of-market shipping these estate our and customers cost incurred freight to the in new us These ongoing on million, incremental incremental support And help single and a hold and drive We mitigate last and to would to were for costs centers will X.X% the

basis all points with expenditures basis we spend. results continues driven SG&A to operate historical operational and challenging be record to million, up the approach, rate profitable our Our over and XX from from of income at record employment a company, a and of at to diluted our second earnings of top of per margin earnings over return a XX.X% disciplined low once to XX% strong year's leverage leveraging line by XX from an our to at quarter year, most last quarter last performance maximize growth continue ever, QX operating with in efficiency. operating XX.X%, resulted advertising This These $X.XX. share XX.X%, Across ongoing points led the including earnings again $XXX expanding share per year. $X.XX, last

investments the balance the On balance allowed quarter fund of year-to-date the capital and cash to support no to flow This our million debt of to we us sheet, almost and million. business operations flow growth. year-to-date a with cash ended with outstanding $XXX cash our of $XXX operating double the

increase $XXX million this elevated share our share our the significant through confidence shareholder demonstrate and million to have business. reflect in we repurchase addition, last strength cash of levels year These million In dividends returned we in $XXX of almost commitment a returns. in shareholders, long-term over repurchases, at maximizing the and to time. $XXX excess year-to-date

Merchandise quarter, last XXXX year, time over over reduced our down levels back in-transit the same last was increased the up only to levels inventory, balance over inventories, Moving include decreased. on In were order XX% Inventory but increasing which hand up billion, XX% the $X.XXX frame. XX% year. X% versus sales sheet.

However, total. continue too they be high in to

order be get return working next our back year. in We to are fulfill we that believe customer to We orders. to levels normalized hard goods these to will able

of the beyond. for year expectations and remainder the our to Turning

are reiterating XXXX. financial to year single-digit billion fiscal to revenue fiscal We growth, outlook mid- high growing margins relatively with XXXX $XX 'XX year long-term line and of with revenues our by operating in

outlook The by remains pressures Our the business the unrest. reiteration uncertain chain supply our seeing strong, interest outcomes fundamentals first acknowledges global evidenced that we trends, comps remains inflation, accelerating the surrounding simply enter unknown economic we as half demand with our spending of backdrop rates, quarter. and and are our of outperformance third currently

three the in year-to-date our our of enable levels; Our outpace to our strong very given line our the build and confident possible. in centers receipts back beginning half operating tangible lower financial proud our pressures year best cost in drivers: 'XX in with which start our related strength validate our our the profitability trends, our to momentum. initiatives, achieve of rate customers, resulting the to to XXXX, XX.X%, customers a freight-related remain and confidence growth them and from across costs revenue in we shareholders. share at we elevated back of market we the efforts expected continue the plus our ability product industry for reflect in further was our delivering culture perspective, These rooted will our chain, by summary, year relatively serve global profitability. back orders fiscal the other to higher half, to chain ocean deliver and In to gains; ability and results the timely us discipline. are our to and and continued supply to particularly as as and strong year and which growth our disruption freight margins our through inventory From deliver is all-time achieve strong these to our expect support to associates pressures, we Despite sustainable outlook results an which improvement fiscal continue fill continue and ongoing prior Our order to from growth into continue supply distribution incremental costs which high,

that to us our an as with are and uniquely purchases our as market shifting differentiators we leave initiatives of prioritizing the ahead to continue competition. navigate ever, take value keep positioned and the to us and to continue continue increasingly our in model online consumers And profitably. of in we operating changes momentum confident and combined dynamic are now the well where than are of this, the strong more foundation share macro sustainability environment their As environment, will growth

our Thank for call hard you. and like thank to Finally, all associates now their I driving open I to work great relentlessness in would the would results. questions. these like for

Operator

take our Company. Rakhlenko [Operator Cowen first from We'll & Instructions] question Max with

Max Rakhlenko

here line, that just play share from in the you then offense does color more provide you just bigger picture, any early first, tougher? top as get and just demand the on the trends? So XQ was and you ways environment to can what do what quarter on And outperformance can attribute then

Julie Whalen

Max, it's Julie.

alluded we lower positive as third net that So comps. indicate moderate. our demand the last are remarks, quarter. they said demand into healthy accelerated heard we had what had like to report. in call fact, our and our to as comps others or that in We nothing we entered comps we've double-digit start in the our are and, seen remained But prepared than They

And so bill, our were third by see seeing we're quarter we able demand we're to to accelerate healthy deliver accelerated net those this driven into and both of both accelerating pleased quarter. and the comps that

Laura Alber

And and we're why about how come we're question your winning, Max, to outperforming.

of great you reasons. First couple all, of thank for think We a it's question. the

and setting First, differentiators over we've what they're truly us key apart. said and our are over

truly, brands. us the I sustainable. white Let see that This these high of that quality points. We have these culture business. we But I innovation don't for great to bring have Barn a a And accessible also bunch be lot example that believe that Barn no to Barn, in-house Hailey proprietary a Pottery one in more business one each relevancy opportunity. you collaborations always continue allows in from we to happens detail they've that innovate deliver wonderful, Disney in and the collections past. me licenses A that not launching, results with to is home, had is first also and have Emily and of driving Bieber, different Harry check delight also us grows important have is the in is than continued kids seed love And it that those if talk and Kids, collaborations value. It one the really just products have in have Pottery Potter, the Beatrix Meritt, out. to and into design, very to about We is one and first great has in fun large brand child. drive we one got exciting best Pottery some really sizable space. which just On my really and else of about They which Potter, talk want our started. But obvious & the for wins been at allows favorite the of to has

Kids that innovation, a in kids really our low about that know more don't it's in I Elm, this gotten of But in awareness growth we've West a us For Elm attention really Barn on working also And collaborations had the some too. really, bath. Elm like we've BXB, you've Kids us we Samuel. we Pottery business. and if -- set we're chance that's terms that, Sherman are apart see business. have Sarah kids to And in really has West about even and talked also talked there our still West had

innovation say I our design we think, products. this some that a innovation, is culture making really, when that the are examples outperform. differentiator it's those what's we us that own So say we of of just It's

Max Rakhlenko

the and it. debt speak And to on then site-wide That's ahead? you We've promos. the obviously increase, can haven't maybe picture, just Got to suppressed, but helpful. you not promotions, bigger seen returned strategies very

leave the if And So some I be top even just you should willing of quarters to get ahead? industry ultimately, guess, we line to some does expect on table promotional the margins what the very would you? maintain ahead, in from

Laura Alber

Yes.

year. they're the promotional, of couple of first big So I lot and been faltering. going industry MMU you through, been watching Julie, than this difference and believe, our our... of particularly already this that's on There's happen box all, the a flushing that you've the just very most is weeks for between more detail retailers a here, did with

Julie Whalen

the expanded. Not expansion has but It's gross quarter our still shipping delta yes, that remains of the financially, MMU just strong. is we're cost. the And is on MMU seeing. margin But simply another

environment, promotional able the with drive that. we're even so And still to

Laura Alber

key come that the one read that the no that's confuses it just think you from didn't to gross from. that do when sure I point margin of want where they and the I came quick understand make where it

We function product great to I healthiest posture equipped our the . we continue are and doesn't market. equation same innovation, no of elimination the And a And to going to great the are else is sustainable. believe maintain sell long inventory. out success. quality the said, mean as we're long-term I value this to not this for that we has run in promos. one we're site-wide that committed it's the business really That products use because We way the product as commitment absolutely and maintain our and in to of the that that markdowns have this as design, to manage there said, believe

expanded very and seasonal We that we managing markdowns but our of not we in aggressive inventories we're and running. and business, the promotions markdowns are part particularly take amount any SKUs, are slow-moving of have will products retail about

Operator

We'll Telsey Group. Fernández with take Advisory Cristina question our next from

Cristina Fernández

ask improving. I been has Congratulations receipts another good inventory like to inventory it wanted for half, tight, mean back quarter. but I it's the about seems

the So expect seen of half second what in the as half? better you far in first flow year the you've inventory do so

Julie Whalen

say throughout Yes. expect improve we back I the would move half. We do. it we certainly mean as to I

to more both dealing furniture of fill we we're to demand. inventory items, it's but still and date, And our basis and -- cube of sales. current far lot think important we're our XX% three-year growth versus to XX%, in it's is coming I up on on a are bigger dealing as with shifting I but fill X% mean, that, what's remember as first orders also all, with to to a back

we be stock. inventory creates time. time, need be able the same inventory we the it out. And so aging that's to in Laura to get to about lot in coming pushed at get be at And yet to same of a to the as need more And mentioned, in inventory thoughtful still that still,

in we So have the room distribution more center.

expect we get but inventory still the as do levels the to to levels we better our elevated we'll first So move XXXX. have back of half, backorder into half

Laura Alber

Yes.

that, we just to decreased to good important they back too which is we've have is customers, in backorder high. levels though to crate think order I still as news are seen our have add the really gotten stock, rates come Back down. even

believe Our upholstery thing next are environment. just the the in-house back lead upholstery. through cancel And stock rates is not do can is in every where we we we day also our next, much on much on-time And our than as be in Nobody covers and have extremely custom focused I balance are shipments have domestic and getting And go want in better a year moderated. be, another as position. are. this -- else of under we serve in we the working we as that, best should early faster to times shipping our to this industry-leading customers we

Cristina Fernández

a follow-up. just And quick then

merchandise flattish margin, are like promotions year-over-year. seems the On it say,

operator merchandise are what the expand are to the margin? the So that other you drivers allowing

Laura Alber

very been also this come can see to on we We offer too to customers. giving And and without question fuel you of value still has where that selective. those taken look in on that and to We sort this certain interesting an price. We're plateauing underpriced We we we're are unilaterally materials point, competitive starting information don't raw away. prices. our where pass some know raises. down -- costs raising much We've our think at we to customer. I see That's price have

honestly, our should that that partners some our of lower potentially help over So our they vendor customers. reductions allow to time, that we allow price margins, also get to us prices -- us would to and the could from

Operator

We'll Adrian with question take Barclays. our from Yih next

Adrienne Yih

Congratulations again.

keep going. You the time just

that brackets second kind household in of kind income lower lot and feeling quarter. a the of the median income and of been there's Laura, obviously, of into the discussion the householding having much about pain end, more So creeped

saw high pretty strength Williams-Sonoma guys what median-ish You they're West how you and regard really hire income. different Can it. target you're Home stayed seem seeing with to of these that maybe to household would more up, you income curious, at be the to seek talk in brackets behaving? Elm I'm to me but terms about

Laura Alber

Sure.

all, for us still coming First off small is very of Williams-Sonoma Home a small, base.

wouldn't for much total I industry. So read the high-end that into

anything which see inconsistency across In I'm who customers, than would furniture and of slightly $XXX they're our segment, of and people on versus spend than I buying us much else. terms vehicle can spend. seeing accelerate fastest people growth millennials we spend a income this better, less slightly at always do business you furniture don't isn't is more see to But mean that see also for that's they data differentiation ton not how location, looking income, our to Z material. Southeast, see. decelerate. that we better, from $X,XXX We're not what based given it's growing it's awesome. Gen even more except is continue strong Southwest, There not be a but about much levels, with surprising who that the

So that our factors, customer could from and X I all don't conclude -- insulated because income is perspective. I'm share this with at a although looking situation we sharing it, better are we're that not seeing an to in we're more you these

I result, home -- improving it's some them, asset. course. our there's this homes furnishing the and we journey. home always with slowing about And of of the Therefore, rates And current lag continue significant engaged necessarily thing sales on significant the all the working, also more runway believe we're market, to that in interest time know, home sale housing metrics there's don't And in and period improvement love that a And and assets. largest home most the been they of our rely home customers as investing the have although just and one smart that seeing as macro sales. I ahead are bigger well entertaining we're predicting is the with know recession, we might consumer improve think think their I'm seen for customers their house of as although lot of our pursing we all home I homes, cools. a spending sentiment while appreciation, And okay? there remodel. there's too much, talking add, out a inflation And people also

different there's I in clear lot we're So think gaining the share business. gaining lot we're that very data significant at looked in sources of is of is share. couple of a really and data a right a We've reasons, we're believe it sources, share, that and

Adrienne Yih

for orders follow my in-stocks, know custom versus then And I hard up keep have stock. been to in is, in-stocks Julie,

if the the movement wondering obviously tend orders, are stickier if I'm any cancellations have -- you’ve difference noticeable to not So and to those deposit. custom of people because have seen in

So any trends in that would be helpful? super

Laura Alber

that, take Adrienne. I'll

own most orders, all. People business We stock of to and their custom, okay? at upholstery our is upholstery custom do their always fabric much choose frame. So want own don't

furniture, dynamic What our of business bedroom all dining our upholstery those wood is there stopped there's So pieces. furniture, that's most no changing. But custom. really is

Operator

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

Seth Basham

in chain the If the are get additional work about is implies XXXX, margins first that for in the after else of there decline My the decline? slight in some performance operating XXXX Is might first a that it some outlook driving here? just margins supply Or that line thinking anything What's of pressure? strong half year. the half. with the is half modest back question second operating

Julie Whalen

Yes.

things So there. there's two

reiterating obviously of a I all, that nod First we is fact strong the uncertain. mean, environment the guidance our are giving

definitely to with on op on costs. particularly associated some these that cautious the that, going line, being we're So pressure we're chain margin ongoing supply is there feel but

We've to are that costs demurrage So to distribution costs. ocean along going incremental dray costs. freight we're continue and center got have higher with

So customer there's costs are get the that all doing the goods the to them. to us. then getting by are thing incrementally, right to to we the goods accelerate And increased our

from shipments we QX, for rate if that cost And and some that have out-of-market incremental so modeling spot will shipment. charges, in a in so QX, one year. we would make last be incremental help that of thing aware, for year single that and didn't in to you but QX, higher there'll sure typically had you're us remember cost The last partially done a we perspective have to shipments offset multiple

is bigger do And so a do. than thankfully, end the to the is And at of of we've strength always operating a QX. the first with in But to to with we you'll and ability the in confident day, XX.X% course, our year, as we can will that line the you hit the are we've be as in had. going very margin we which, it that QX the mitigate 'XX, see had ever know, half we of impact everything highest the our

Seth Basham

year normalize, clearance start That's your then that has slow-moving you'll more years? you of see mark inventory last to two? we have much next How reversion SKUs. or need down been really kind benefiting relatedly, margins an And the over helpful. do two impact the as and to And for on what

Julie Whalen

I se. that per ages, up now. go we've inventories would that and for while We've warehouse always always that, sales clear assume had wouldn't to mean we've I had it. a had mean I

shift sell anything what or perspective. that core. significant is there's a there a most concerning be margin think don't promotional is should Remember, it stance of we from I So a

we're so companies and than apparel And so forth. the different

stock, late, for push you of there's back pressure them and it and And lot more the more it to get a so you get inventory out out comes as come in it distribution if center. in

a just space it's us, For play.

to have we'll things rid get should and substantial need continue of inventory, like so we but shift And to no aged that markdowns occur. where that there's

Operator

Chukumba next our question from Markets. Anthony take Loop with Capital We'll

Anthony Chukumba

great tough sort on well environment. as macro particularly quarter, the of given Congrats a

clarifying updates a the So was given quarter? of real more gave us you and that fact thoughts to prior the and But second performance terms question, calls, particularly color if about brands In don't and -- I a any question. mean nitpick prior emerging there. of had really And in talked the a just wondering your calls, quick just on you would there's provide emerging comps the if you in just quarter. great I brand there you in

Laura Alber

Yes.

Q&A. I growth. our are being both we time really additive because for profitable absolutely more prepared So do just that have didn't sorry, driving But we remarks, they're more in

Rejuvenation And performing comp with other consumer across retail I DTC performance give specific in trends and starting because we're in pickleball, comp? home Mark won't fun love really It's really and good each business, me travel, seeing brand and business. to brand to of fueling okay? drivers to and entertaining consistent Julie Rejuvenation. a come business sports, driving as growth and gift we're people strong BXB really post-pandemic are golf, awareness of can resurgence for So we're would let's and us both brands. stores their more are and I for see, Graham, both We're and specific company. stuff. really primary Mark seeing and growth. trends excited and We both the for And Rejuvenation still vehicles as the you Rejuvenation. a have us on give see double-digit Mark our stores social can that few them Rejuvenation, it’s incremental Same in about are noticed to want to -- this these and particularly Graham, tell Graham double tennis like And digit, pushing we're

Anthony Chukumba

near buying like sell-side allocation, it. think half, about capital Obviously, about would about expect question. you just first very hear just yes, how comments have comments, I second in brief year. but particularly just back stock. Anyway, And No, likes of this year? appreciate can I mean, in strong the the in flow obviously, this continuous free the half your term cash do flow been questions helpful. edit your very see of that's free you've dividend. half like adding second from the to aggressive so the back really more you you of strong analysts don't me. real Got But you cash I

Julie Whalen

our Yes. I buy nicely. undervalued. we for not we'll same the dividends, but able that stock $XXX, mean course, undervalued. to We're higher maybe Certainly, It buybacks and we're much continue as average pleased is to it's we and were obviously, the still going still recovered stock has with of degree believe about now, see. to our on stock back

free it And generating thing cash and strong are to we that we continue as cash think kind flow going we so do are, this really and long to some our to earnings the have we're right is return of to shareholders. as

doing still that. committed we're to So

Laura Alber

And we think signals in also have I also the the confidence our buyback guidance.

Operator

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

Chuck Grom

release versus possible like backlog on are you size there where year? gain are where up the our On it levels obviously more a is looks banner severe math, a is today which it were others? And last continues But thing you for where your good maybe backlog backlog to your customer. to steam, is than the

Julie Whalen

the guys total we you disclosed it but know, as Yes. still has haven't it's incredibly come down, amount, I but mean sizable.

of have orders may think with we that before I furniture. most associated said back the

back have for has Pottery but down, into every half certainly, good West Barn and we that's as is So certainly, starting balance XXXX. and that brand Elm a the sizable are bring to orders, a we them. news And move amount of the and back tailwind

Chuck Grom

maybe PB you is Okay. than higher? is And a banner Would Sonoma West say Elm? that higher is there or

Laura Alber

lower, mentioned. obviously Well, Sonoma less is

Julie Whalen

Pottery brand. Barn is our largest

Chuck Grom

spend distribution line over like about next an I the X% dollars sounds openings those the are think on there Okay. given occupancy in way increase quarters to occupancy or so of year-over-year, guess that incremental is And line openings? the a then center item. on couple the it

Julie Whalen

At been to same that coming higher, off. should those Yes, we've kind time, will it be got where it of now incremental some a has some We've incremental similar be of little had because the distribution strategy, time the close of of bit offsite off. know, But year. end the most stores over that the is our think as our and optimization estate we retail on will plan that come bigger I hubs play, you real at closing centers.

benefit you you'll with into year, as the so to the reduced lap associated new occupancy again from stores. that get costs start those And

-- the shorter will pressure in So there that on be but line. yes, term,

Operator

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

Jonathan Matuszewski

quarter. Great

chain. you still challenges was one mentioned First just Laura, on persist supply there.

you Just while exposure I by a curious are think half. mentioned from you China diversification a ago, standpoint? guys reducing where

to initiative? much just So my that on is question. curious That's first how go there

Laura Alber

Yes.

I think journey. ongoing that's an

high-risk What the just exposure. can reduced is also kids some for. make high-quality that been the We do has furniture having hit on of multiple have our working to we're for find mark yes, significantly sustainability China harder we're who that vendors who -- the vendors looking multiple this can and do to now

you're these any the the There's other moving including the high-quality lot is around So would of suppliers what looking be continuation And for China happened, it a it that mean issues. a to all that. market. we're to has out different I always place of but really additional in globe, issues of would places free say domestic doesn't

just to we have are. we So terms of have options in more where

fears they is skittish this issue continued a going because think accelerate are these are there. given everyone for to a out and to open further I the while to too be factories has recessionary much that than

think highest vendors. pressure I to So some of on we're going the quality see flow to continue from

Jonathan Matuszewski

my follow-up the and Gen you fastest-growing Laura, cohort seeing. question, That's you're And Z, millennials mentioned helpful. then

you what like on on into strategy we a influencer media. ambassadors, marketing It question leaning social bit you. guys for So from feels deeper see brand marketing are a in

West demo that never your group not as it some is about Z really a thought the those of channels. Gen I long for core collective really You launched business, Elm but ago. a leverages

So just more channel, marketing. a more your leaning been it's a that to with what good it see. at digital seems least impactful been? a thoughts guys you've on in But you bit how guys like making job You have pivot are how from we done of always

So impact. any in there terms thoughts of the

Laura Alber

few too. But It's me a to with still make I'm two has to going interesting very sales doing jobs. comments, on since be video is he's happened engaging. and

think, a product And showing just multi-layered Pinterest The doing I doing we're all, much for to more I and still pushing our on and or Google. is try has than much add TikTok, is get there's to Gen on TikTok, Insta, appealing always on go ad the video expected, I on to think than Snapchat, Felix, video. liking we're And whether sites, been it's these credit is as new millennials engagement video. don't room as TikTok, for their it's like channels, Snapchat. YouTube do to whether Group of we're generation, you want all a and stuff lot And So that? we Pinterest that different anything also that Z a certainly video, better there. lot of frankly.

Felix Carbullido

the aesthetics. about. things. customers, think they has but on couple they introduce They to talked what it's But brand, also I new brand a also all our particularly undeniable, that they you of of bring ages, collaborations reach to impact our new the bring some design TikTok of those No, demographics -- customers the extend of

offering customers diverse looks to and so to and of expression about point our or some So it's of these a new of these some influencers. new acquire customers brands we can more of introduce view our

correct, want has. leaned make always you're And into it's -- more been. we So have that, society to because we're relevant we've -- we're as sure we as

Operator

next We'll Thomas question Markets. take from our Capital Brad KeyBanc with

Bradley Thomas

most well. Great half important the Let the here. It's season, me of that's first your as obviously little quarter congratulations holiday year a to my early add of talk the about probably year. but

show a holidays? about a here any in the how of how bit And differences up comment from the the standpoint, is just and during that could quarter? you how you merchandising if a maybe consumer Julie, it how Laura, mix for different little for bit nuances any about wondering, So year, you're thinking this plan little may

Laura Alber

see to, in to We a to good always But start love a sold off business, a Williams-Sonoma, as year's very built I of holiday that. great And I off the it's the alluded to holidays. start, the good last in out kids frankly, have have we products. PB and also Halloween our lineup, should key fast of great We said last good really we on year lot sellers. and

The a it And year we're about holiday to last before last was going by Williams-Sonoma chance ideas leverage disrupted get so Williams-Sonoma. year. COVID. we're barely excited made those to season And that fully

COVID. easy. not of had able Let's many my not exactly remember, because family I Thanksgiving to Christmas be was make --

a being products people to for and Felix, looking celebration our experience and part and I easier much on So and great it preparedness right managers. think today his celebrate in be should fact, you forward meeting team the working and customers to with on come Felix holiday great district And this together, that the we're really with now our are giving holidays really a to year, website. had a of

Felix Carbullido

such before the is for our spent mean but at of to important managers meeting, I our retail. I business, four country because Yes. part holiday in come important an district it look across it's with hours critically this and

walked through we assortment. so And the

celebrate. I'm I month, because And with but is single of there's super mentioned about think about, a Zen better everyone every there's excited holidays a seasonal to -- excited celebrate are to I reason it. always things number no Laura Williams-Sonoma. another can't one there's brand --

this holiday going about optimistic for and super I'm So holidays forward this brand.

So stay tuned.

Operator

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

Simeon Gutman

to right ask wanted demand and mentioning picked of, things better to some I Laura. some quarter. want quarter, you the that, and sounds I the and about of better. has the gotten the I were the that's Last comps gotten Julie consumer. like and up early coming part at that of this quarter? there it tone you're have the And make tentativeness maybe the was sure not have think, read choppiness seeing into sentiment

Julie Whalen

third we that right. comps accelerating pleased coming moderate. to No, quarter, our or I strong, we that's in as said and demand as call, really started call being saw that And quarter. and exactly last heading we're them mean and we back excited see

seen, there. And out so we haven't again, are what mentioning others

that are real we're thankfully, one really different in business. strength seeing retailers. So And it's for certain of our those

Laura Alber

into said. I is overread the this what but meant this don't to signal remember, -- Julie is we is three exactly weeks you just this, what to only we're quarter,

Simeon Gutman

the BXB, at And any is widening? Is Can Is house in average spread outpacing the of I'm comp. BXB of concentrated brands? assuming, terms the growth, least share that is spread? among you it your narrowing? And

Laura Alber

the last of lot brands Yes. we're also BXB. It's a year consistent in a beat seeing And from growth. to feed innovation to

project. even big they for mentioned, of do more So more strategy contract the as in more and BXB because products that the in part bring a sales means can we can is we offer

has are the has lighting. and us Lots talk as there's very and large But we in part of Pottery Home. Trade We the across right so Rejuvenation particularly large-scale always of furnish a heard because that business with of has that business, the Barn their of to terms you've by Williams-Sonoma it's hard room in we BXB nature projects the strong expand lot small now and penetration, wins holidays, a of in Elm but as been. In people is opportunity. started, more opportunity assortment about Home the custom-configured gifts really lot percent board. hotels a Williams-Sonoma small, been a the big Williams-Sonoma West with do do start BXB a

Operator

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

Oliver Wintermantel

your bit for the question question business? Can for the BXB you follow-up a us a BXB of rest have is what maybe the details versus little on I Simeon. margin business the more give

Julie Whalen

-- We it's to in accretive mentioned you time. the this Yes. our to past, at total margin company I said this operating but

as line. that continues the on So the business benefit incremental grow, to we bottom get

Oliver Wintermantel

And different Is just before? you at with have the then success look disclosed now that stores, that the it I on the a think also having -- your something the success was over the with last now you're base. store your in also quarters? e-commerce few not reconsidered what and you XX% new -- but closing of

Laura Alber

Great question.

in And moved very in new as too, improved stores our storage our example small repositioning repositioned, market. I and their incredible look outperforming space we backyard, provides at real as had review off to design shopping they their and start store. estate forecast, reassess experience. closing customers that we Williams-Sonoma we we've continue an our in a that then Williams-Sonoma current stores have strategy. Madera perfect embrace Corte while to are success and strong other And in we've We are stores, the a the in A that been also relocating inspirational

location not areas to as that look an P&L. just fleet, are we on stores for at some in this as improve not a we in there the going that of the and are to our are underperform vibrant it look think course, to are town. always of But opportunity item as So best retail line or

Operator

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

Marni Shapiro

touch it a coming BXB, talk just from actually are brand. bit team. expense have asking just the on you like positive. about how the But it works the not up, you Can the on want I a again products to Congratulations. structure assuming sales I'm to there? sounds I'm little the beat

R&D design the then as Because already And I could that and So feels little about everything from because a is well. bit thought timing on really part like just touch the that like way the leverage the reliant brands? a curious brand? was And that you So I what's I'm holds coming done. of it relaunch . always to of interesting.

Laura Alber

Okay. Great.

So is then our And dedicated for presidents a working Josie who's right, we team. to you're we that brand The appeal have and opportunities the powerhouse, runs with looking Marni. sales categories absolutely who structure have to it, clients. identify

then as some which, are, we is had list most approved, then develop we says, then of products have white we get to a consumers space, So to if them durable, look and But think work he And work let's pretty which sees them of to were this brands area.” already this and actually to products way, contract grade make the for the she make "Hey, some together more at or test new by and more they they durable. incredible change you had we any something exciting. good I us headquarters to whether just Beach, that are furniture. got Hyatt client Marriott Indigo, new Hotel and for it's I projects be could that Boston, Regency, so New and just go Vacations, read Huntington Oak Scottsdale], just it Antonio, hotel, mean, in, Astoria, Waldorf furnish ones not the Marriott examples, on on these all Orleans, and to Charlotte, Kimpton, we And Hilton that [Cherry want San But are I InterContinental I space it's is doing she's mentioned. to space IHG on

brand just the And And between this on and question Hold team. wonderful BXB has then Everything. the the been so a partnership team

just that visible the we want well. for makes versions really a And who it my close, more we have, more we expandable house the Everything relevant on you'll back wasn't why they kitchen I organizer XX break we check the So like designed But saw bring so just of now if distort and a beautiful, had this think, And always Williams-Sonoma to favorite we've back look you your drawer, And out, storage we which day banner. really it it's to your made the it then of an it great Hold there's opportunity doing under products. site. probably up but high-quality be see doesn't products being to and online, to organized. custom kitchen because and and

and initiative volume it's successful and very it's a been it's real for gaining us. steam, So

Operator

our take final Kate We'll with Sachs. question Goldman from McShane

Kate McShane

and I'm just going between back you was been the how to you're some compare for dealing freight change that And and what to change going multiple with a to if that time? regards you have expect I deliveries any QX? was was I was just curious quarters asked the backlogs you just in what versus because with forward? cost. the could wondered question there just experiencing between way cost previous QX

Julie Whalen

Yes.

the need inventory these are ocean that think need been and as of And to accordingly. bigger change volumes everybody, containers is getting case freight gone the be the things ocean be moved the has big in, rates I have demurrage coming to up. of there side dray around in the freight for we're stored and

know, on and you I June, that of those of you don't capitalized sales. you sort sort until charges get those balance or think May of as And recognize as so make and so it the inventory, sheet then happened was part

So is But of the that's it's to half. reason. a of the turn, starting more feel towards some why which back those function we're

Operator

participation. appreciate call. And today's ladies conference your and gentlemen, We this will conclude

now may You disconnect.

Laura Alber

you. Thank your Happy support. Appreciate shopping.

Williams-Sonoma (WSM) 25 Aug 222022 Q2 Earnings call transcript