wsm-20210801

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 1, 2021.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-14077

_________________________

WILLIAMS-SONOMA, INC.

(Exact name of registrant as specified in its charter)

_________________________

Delaware

(State or other jurisdiction of

incorporation or organization)

3250 Van Ness Avenue, San Francisco, CA

(Address of principal executive offices)

94-2203880

(I.R.S. Employer

Identification No.)

94109

(Zip Code)

Registrant’s telephone number, including area code: (415) 421-7900

(Former name, former address and former fiscal year, if changed since last report)

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading
Symbol(s):

Name of each exchange
on which registered:

Common Stock, par value $.01 per share

WSM

New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 29, 2021, 74,365,546 shares of the registrant’s Common Stock were outstanding.

Table of Contents

WILLIAMS-SONOMA, INC.

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED AUGUST 1, 2021

TABLE OF CONTENTS


	PART I. FINANCIAL INFORMATION
		PAGE
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Thirteen Weeks Ended				Twenty-six Weeks Ended
In thousands, except per share amounts	August 1, 2021		August 2, 2020		August 1, 2021		August 2, 2020
Net revenues	$	1,948,339	$	1,490,777	$	3,697,368	$	2,725,980
Cost of goods sold	1,089,951		939,575		2,086,127		1,760,518
Gross profit	858,388		551,202		1,611,241		965,462
Selling, general and administrative expenses	535,288		365,841		1,012,964		731,456
Operating income	323,100		185,361		598,277		234,006
Interest (income) expense, net	(39)		6,464		1,833		8,623
Earnings before income taxes	323,139		178,897		596,444		225,383
Income taxes	77,069		44,333		122,572		55,396
Net earnings	$	246,070	$	134,564	$	473,872	$	169,987
Basic earnings per share	$	3.29	$	1.73	$	6.29	$	2.19
Diluted earnings per share	$	3.21	$	1.70	$	6.11	$	2.16
Shares used in calculation of earnings per share:
Basic	74,786		77,783		75,293		77,522
Diluted	76,584		79,264		77,516		78,841

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Thirteen Weeks Ended				Twenty-six Weeks Ended
In thousands	August 1, 2021		August 2, 2020		August 1, 2021		August 2, 2020
Net earnings	$	246,070	$	134,564	$	473,872	$	169,987
Other comprehensive income (loss):
Foreign currency translation adjustments	(3,522)		6,737		178		1,461
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $25, $(71), $(216), and $125	65		(200)		(600)		349
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax (tax benefit) of $(126), $38, $(181), and $51	337		(107)		490		(144)
Comprehensive income	$	242,950	$	140,994	$	473,940	$	171,653

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


In thousands, except per share amounts	August 1, 2021		January 31, 2021		August 2, 2020
ASSETS
Current assets
Cash and cash equivalents	$	655,211	$	1,200,337	$	947,760
Accounts receivable, net	141,814		143,728		128,737
Merchandise inventories, net	1,170,561		1,006,299		1,042,340
Prepaid expenses	85,587		93,822		109,495
Other current assets	20,537		22,894		27,098
Total current assets	2,073,710		2,467,080		2,255,430
Property and equipment, net	875,295		873,894		887,401
Operating lease right-of-use assets	1,052,617		1,086,009		1,146,229
Deferred income taxes, net	58,848		61,854		37,789
Goodwill	85,421		85,446		85,419
Other long-term assets, net	99,146		87,141		75,028
Total assets	$	4,245,037	$	4,661,424	$	4,487,296
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	601,879	$	542,992	$	373,086
Accrued expenses	224,089		267,592		158,407
Gift card and other deferred revenue	403,409		373,164		292,684
Income taxes payable	61,335		69,476		28,502
Current debt	—		299,350		—
Borrowings under revolving line of credit	—		—		487,823
Operating lease liabilities	213,784		209,754		221,575
Other current liabilities	74,331		85,672		102,086
Total current liabilities	1,578,827		1,848,000		1,664,163
Deferred lease incentives	18,359		20,612		24,684
Long-term debt	—		—		298,995
Long-term operating lease liabilities	994,165		1,025,057		1,080,622
Other long-term liabilities	126,967		116,570		85,910
Total liabilities	2,718,318		3,010,239		3,154,374
Commitments and contingencies – See Note F
Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued	—		—		—
Common stock: $0.01 par value; 253,125 shares authorized; 74,426, 76,340 and 77,796 shares issued and outstanding at August 1, 2021, January 31, 2021 and August 2, 2020, respectively	745		764		778
Additional paid-in capital	569,734		638,375		608,892
Retained earnings	964,000		1,019,762		736,772
Accumulated other comprehensive loss	(7,049)		(7,117)		(12,921)
Treasury stock, at cost: 4, 8 and 8 shares as of August 1, 2021, January 31, 2021 and August 2, 2020, respectively	(711)		(599)		(599)
Total stockholders’ equity	1,526,719		1,651,185		1,332,922
Total liabilities and stockholders’ equity	$	4,245,037	$	4,661,424	$	4,487,296

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity
In thousands	Shares	Amount
Balance at January 31, 2021	76,340	$	764	$	638,375	$	1,019,762	$	(7,117)	$	(599)	$	1,651,185
Net earnings	—	—		—		227,802		—		—		227,802
Foreign currency translation adjustments	—	—		—		—		3,700		—		3,700
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		(665)		—		(665)
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		153		—		153
Conversion/release of stock-based awards1	686	7		(97,958)		—		—		(500)		(98,451)
Repurchases of common stock	(1,791)	(18)		(9,239)		(306,272)		—		—		(315,529)
Reissuance of treasury stock under stock-based compensation plans 1	—	—		(344)		(44)		—		388		—
Stock-based compensation expense	—	—		25,471		—		—		—		25,471
Dividends declared	—	—		—		(46,370)		—		—		(46,370)
Balance at May 2, 2021	75,235	$	753	$	556,305	$	894,878	$	(3,929)	$	(711)	$	1,447,296
Net earnings	—	—		—		246,070		—		—		246,070
Foreign currency translation adjustments	—	—		—		—		(3,522)		—		(3,522)
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		65		—		65
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		337		—		337
Conversion/release of stock-based awards1	25	—		(1,709)		—		—		—		(1,709)
Repurchases of common stock	(834)	(8)		(4,358)		(131,493)		—		—		(135,859)
Stock-based compensation expense	—	—		19,496		—		—		—		19,496
Dividends declared	—	—		—		(45,455)		—		—		(45,455)
Balance at August 1, 2021	74,426	$	745	$	569,734	$	964,000	$	(7,049)	$	(711)	$	1,526,719