retail watch | Mar 16, 2023 |
Williams-Sonoma keeps on winning

The home retail industry is struggling, right? Well, once again, Williams-Sonoma hasn’t gotten the memo.

In reporting record year-end sales and earnings Thursday morning and oozing confidence for its 2023 prospects, the multibrand home furnishings retailer continued to buck the trend of a serious retail-spending slowdown.

That slowdown finally did show up, at least a little, in the fourth quarter, with the retailer’s first negative comps in years, particularly in its West Elm nameplate, which had been leading the way for much of the recent past. And while describing the “demand choppiness” from consumers over the past few months, Williams-Sonoma said the first half of 2023 will be challenging with continued downturns in its year-over-year performance.

But still, leadership used the words “confidence” and “confident” multiple times on the earnings call, saying they expect to continue to grow core brands—Pottery Barn, West Elm, Williams-Sonoma and Pottery Barn’s two children’s lines—along with its two smaller nameplates, Rejuvenation and Mark & Graham.

More importantly, the company pointed to strong dynamic growth in its B2B business, up 27 percent this past year and falling just shy of $1 billion in total annual sales. It also said its startup in India, a joint venture with the giant Reliance Industries Limited conglomerate with three stores and an e-commerce component, showed impressive growth.

Not only that, but Williams-Sonoma believes it will continue to outperform the marketplace, taking market share from the competition going forward. The hard numbers showed a 6.5 percent top-line increase to $8.7 billion for the fiscal year, and record earnings of $16.54 per share to $1.12 billion.

Individual brand results were a mixed bag. Pottery Barn had an increase for the quarter, up 5.8 percent, and the PB children’s units, Teen and Kids, were also up, by 4 percent, while West Elm registered the largest decline, at 10.7 percent. The Williams-Sonoma kitchenware division, which includes Williams-Sonoma Home, dropped 2.5 percent for the quarter. But even those weaker top- and bottom-line results generally beat analyst forecasts, and the stock was up slightly by midday Thursday.

Looking ahead, leadership said that business had slowed at the start of 2023, with the downward trend continuing into the first quarter (only January was part of the just-released quarterly results). Calling it “demand choppiness,” CFO Jeff Howie said the company experienced “a strong holiday bookended by soft November and January results.”

Nevertheless, he and CEO Laura Alber expressed confidence for the coming year. They expected the back half of the year to compensate for the earlier months, and overall were forecasting a revenue range of between minus 3 percent and plus 3 percent. Part of the optimism is based on the easier-to-beat comps for the second half, when 2022 business had already slowed.

Whatever growth Williams-Sonoma achieves, Alber said, will come from taking away business from the competition, even if the overall home furnishings sector continues to be soft: “As we look to the long-term, we are confident in our continued ability to take market share and to do so profitably. We are confident that we will continue to deliver for all our customers, employees and shareholders.”

There’s that word, “confident,” again.

Homepage photo: ©Jetcityimage/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.

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