It shouldn’t have come as a surprise to anyone paying attention, but on Wednesday, when Williams-Sonoma announced a record fourth quarter—and year—it continued one of the hottest streaks in recent home furnishings retail history.

More importantly, it pushed naysayers and skeptics back as the company forecast signaled continued strong performance for the upcoming year. Williams-Sonoma put its money where its mouth was by increasing dividends and announcing an aggressive stock buyback plan. “Given the ongoing strength of our business as we enter fiscal year 2022, we are planning for our performance to be in line with our long-term financial guidance of mid-to-high single digit annual net revenue growth,” said CEO Laura Alber, announcing the results. The company’s plans include increasing revenue to $10 billion by fiscal year 2024 with “operating margins relatively in-line with our fiscal year 2021,” said Alber.

By most every measurement, the numbers exceeded expectations for all Williams-Sonoma brands. For the fiscal year, comp growth rose 22 percent, with double-digit gains across the board: 33.1 percent for West Elm, 23 percent for Pottery Barn, 11.6 percent for Pottery Barn Kids and Teen, and 10.5 percent for the kitchen nameplate Williams-Sonoma. Overall company revenue in 2021 reached $8.25 billion, up from $6.78 billion in 2020. Operating income was up 17.6 percent to $1.45 billion, and earnings per diluted share rose to $14.75 (against $8.61 a year ago). There were also gains in gross margins and operating margins compared to the prior year.

The numbers would be impressive on their own, but in a conference call with analysts following the release of earnings, Williams-Sonoma execs laid out compelling growth stories, including aggressive forecasts for this year and beyond.

The company’s B2B business—which includes sales to hospitality, health care, residential development, sports facilities (like Churchill Downs) and even “glamping” companies—was up more than 100 percent over the past year, accounting for $730 million in revenue. “It’s one of our biggest opportunities,” said Alber. The company sees this business growing to $1.5 billion by 2024.

Meanwhile, Williams-Sonoma’s global business, which includes both franchised and company-owned operations, was up 23 percent to $425 million. The company predicts that number will climb to $700 million in the next few years, driven by growth in markets like the Middle East, Mexico and India. Though it did not offer specifics, the report singled out the Williams-Sonoma Home unit, which currently operates only online, as one with potential. (On previous calls, executives maintained it will continue to model this online rather than with physical stores, something it tried 15 years ago before closing them.)

Even with all of this good news, the company pointed to supply chain issues—especially the impacts on Pottery Barn’s kids and baby business—with executives reporting they do not expect to see any relief until at least the back half of this year. Williams-Sonoma is also staying on course with its previously announced plans for store closings, expecting to shutter 25 percent of its retail fleet. And while the company never had stores in Russia, it traced some of its products’ origins to the country and will no longer offer those in response to the Russian invasion of Ukraine.

Despite those challenges (and the fact that Williams-Sonoma’s top-line numbers just slightly missed expectations), Wall Street loved what it heard, with the stock spiking more than 12 percent in after-hours trading directly after the earnings release.

Alber, whose down-to-earth, low-key style is often a relief from the typical over-the-top CEO exuberance, was nonetheless ecstatic with these results. “We are immensely proud of our accomplishments. ... [And] I am confident that we will continue to raise the bar and extend this momentum in fiscal 2022,” she said.

Homepage photo: ©John Mantell Photo/Adobe Stock

____________

Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.