Williams-Sonoma, Inc.

Sector: Home and home improvement Countries of operation: Australia, Canada, the UK and the US (including Puerto Rico) Key product categories: Bathware, kitchenware, entertainment products, furniture, home furnishings and decorative accessories, and outdoor Annual Metrics [caption id="attachment_126737" align="aligncenter" width="720"] Fiscal year ends on January 31 of the following calendar year
*Trailing 12 months ended November 1[/caption]   Summary Williams-Sonoma is a US-based multichannel specialty retailer of home and kitchenware products that operates stores in Australia, Canada, Puerto Rico, the US and the UK. The company was incorporated in 1973 and is headquartered in San Francisco, California. It operates in two segments: e-commerce and retail. The company includes multiple banners including Mark and Graham, Outward, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, Rejuvenation, West Elm and Williams Sonoma. The Williams Sonoma banner offers a range of products for cooking, dining and entertaining, including cookbooks and cookware, cutlery, electronics, furniture, outdoor, tabletop and bar products. Company Analysis Coresight Research insight: Williams-Sonoma’s significant investments in its e-commerce platform over the past few years have given it a major competitive advantage in the current market landscape, comparing favorably with many of its rivals. The company is well equipped to weather the ongoing challenges in the store environment amid the Covid-19 pandemic. Williams-Sonoma’s e-commerce penetration grew from 57% of total sales in its fourth quarter of fiscal 2019 to 70% in its first quarter of fiscal 2020, 76% in its second quarter and 70% in its third quarter. As e-commerce continues to gain traction, the company plans to rationalize its brick-and-mortar presence. Williams-Sonoma has a long-term plan of operating with “fewer, better and more profitable stores.” In its third quarter fiscal 2020 earnings call on November 19, 2020, the company announced its long-term financial targets of revenue growth in the mid-to-high single-digit range. It also targets operating margin expansion and an above-industry average return on invested capital.

Tailwinds

Headwinds

A strong housing market is supporting demand for home goods. Consumer spending is continuing to shift away from travel and experiences, leaving increased disposable income for spending on home goods. The rollout of vaccination programs is set to boost a return to stores in 2021. The company’s strong omnichannel presence holds it in better stead to keep pace with the evolving macro-environment than predominantly single-channel retailers.

The uncertain economic environment, with high unemployment levels and low consumer confidence poses a challenge for the retailer.

  Strategy Williams-Sonoma drives its growth through three areas of strategic investment:

1. Brand experimentation and innovation, for a best-in-class approach to multichannel retail experiences
2. Operational excellence across the enterprise, from quality products and sourcing to efficient manufacturing and supply chain
3. Culture and corporate social responsibility, from commitments to foster women in leadership and embrace diversity, to a healthy impact on the community and environment

The company’s long-term plans include:

• Accelerating digital growth and a fundamental shift in its channel mix
• A marketing strategy focusing on content and building customer relationships
• Increasing profitability and bolstering its longer-term earnings outlook

In its third quarter fiscal 2020 earnings call, the company reconfirmed plans to close a total of 40 stores by the end of fiscal 2020. With half of the company’s leases due for renewal in the next three years, Williams-Sonoma intends to evaluate each lease, considering the economics of the lease deal and the capacity of each store to enhance the brand. Williams-Sonoma also reported on the call that that it is looking to expand its presence in the business-to-business market in the US, which it values at $80 billion. Management believes that over the long term, behavioral changes and industry shifts that have emerged amid the pandemic will persist and continue to favor its business. Williams-Sonoma is already investing in its next growth phase to capitalize on opportunities that position it for an expanded market share. Revenue Breakdown   Company Developments

Date	Development
January 25, 2021	Denim wear label Wrangler launches its first-ever home collection in partnership with Williams-Sonoma subsidiary banner Pottery Barn Teen.
October 8, 2020	Williams-Sonoma announces plans to improve its holiday shopping experience. The retailer is organizing dedicated queues for online order pickups, waitlist apps and private shopping appointments outside normal store operating hours for customers looking to avoid crowds.
September 29, 2020	Williams-Sonoma launches new collaborations with cooking collective Ghetto Gastro and  kitchen design and manufacturing company Crux.
September 24, 2020	Williams-Sonoma unveils a collection with premier textile purveyor The House of Scalamandré.

  Management Team

• Laura J. Alber—CEO, President and Director
• Julie P. Whalen—Executive Vice President and CFO
• Dean A. Miller—Executive Vice President and COO

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Source: Company reports/S&P Capital IQ