wsm-20220731

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 July 31, 2022.


☐			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 28, 2022, 66,711,363 shares of the registrant’s Common Stock were outstanding.

Table of Content s

WILLIAMS-SONOMA, INC.

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JULY 31, 2022

TABLE OF CONTENTS


	PART I. FINANCIAL INFORMATION
		PAGE
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22

Table of Content s

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	For the Thirteen Weeks Ended				For the Twenty-six Weeks Ended
(In thousands, except per share amounts)	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Net revenues	$	2,137,537	$	1,948,339	$	4,028,764	$	3,697,368
Cost of goods sold	1,208,728		1,089,951		2,271,407		2,086,127
Gross profit	928,809		858,388		1,757,357		1,611,241
Selling, general and administrative expenses	563,288		535,288		1,068,355		1,012,964
Operating income	365,521		323,100		689,002		598,277
Interest (income) expense, net	(344)		(39)		(507)		1,833
Earnings before income taxes	365,865		323,139		689,509		596,444
Income taxes	98,790		77,069		168,321		122,572
Net earnings	$	267,075	$	246,070	$	521,188	$	473,872
Basic earnings per share	$	3.92	$	3.29	$	7.50	$	6.29
Diluted earnings per share	$	3.87	$	3.21	$	7.36	$	6.11
Shares used in calculation of earnings per share:
Basic	68,180		74,786		69,516		75,293
Diluted	69,081		76,584		70,844		77,516

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	For the Thirteen Weeks Ended				For the Twenty-six Weeks Ended
(In thousands)	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Net earnings	$	267,075	$	246,070	$	521,188	$	473,872
Other comprehensive income (loss):
Foreign currency translation adjustments	(1,385)		(3,522)		(2,899)		178
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $9, $25, $42, and $(216)	26		65		119		(600)
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax (tax benefit) of $2, $(126), $8, and $(181)	(5)		337		(23)		490
Comprehensive income	$	265,711	$	242,950	$	518,385	$	473,940

See Notes to Condensed Consolidated Financial Statements.

Table of Content s

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	As of
(In thousands, except per share amounts)	July 31, 2022		January 30, 2022		August 1, 2021
ASSETS
Current assets
Cash and cash equivalents	$	124,944	$	850,338	$	655,211
Accounts receivable, net	133,500		131,683		141,814
Merchandise inventories, net	1,542,428		1,246,372		1,170,561
Prepaid expenses	102,312		69,252		85,587
Other current assets	25,537		26,249		20,537
Total current assets	1,928,721		2,323,894		2,073,710
Property and equipment, net	973,676		920,773		875,295
Operating lease right-of-use assets	1,174,354		1,132,764		1,052,617
Deferred income taxes, net	52,897		56,585		58,848
Goodwill	85,269		85,354		85,421
Other long-term assets, net	104,257		106,250		99,146
Total assets	$	4,319,174	$	4,625,620	$	4,245,037
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	680,097	$	612,512	$	601,879
Accrued expenses	244,559		319,924		224,089
Gift card and other deferred revenue	498,354		447,770		403,409
Income taxes payable	87,159		79,554		61,335


Operating lease liabilities	206,931		217,409		213,784
Other current liabilities	93,945		94,517		74,331
Total current liabilities	1,811,045		1,771,686		1,578,827
Deferred lease incentives	14,725		16,360		18,359

Long-term operating lease liabilities	1,115,501		1,066,839		994,165
Other long-term liabilities	99,624		106,528		126,967
Total liabilities	3,040,895		2,961,413		2,718,318

Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued	—		—		—
Common stock: $0.01 par value; 253,125 shares authorized; 67,057, 71,982 and 74,426 shares issued and outstanding at July 31, 2022, January 30, 2022 and August 1, 2021, respectively	671		720		745
Additional paid-in capital	541,895		600,942		569,734
Retained earnings	750,083		1,074,084		964,000
Accumulated other comprehensive loss	(13,631)		(10,828)		(7,049)
Treasury stock, at cost: 1, 4 and 4 shares as of July 31, 2022, January 30, 2022 and August 1, 2021, respectively	(739)		(711)		(711)
Total stockholders’ equity	1,278,279		1,664,207		1,526,719
Total liabilities and stockholders’ equity	$	4,319,174	$	4,625,620	$	4,245,037

See Notes to Condensed Consolidated Financial Statements.

Table of Content s

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 30, 2022	71,982	$	720	$	600,942	$	1,074,084	$	(10,828)	$	(711)	$	1,664,207
Net earnings	—	—		—		254,113		—		—		254,113
Foreign currency translation adjustments	—	—		—		—		(1,514)		—		(1,514)
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		93		—		93
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		(18)		—		(18)
Conversion/release of stock-based awards 1	617	6		(78,142)		—		—		(372)		(78,508)
Repurchases of common stock	(3,380)	(33)		(18,590)		(482,452)		—		—		(501,075)
Reissuance of treasury stock under stock-based compensation plans 1	—	—		(344)		—		—		344		—
Stock-based compensation expense	—	—		28,339		—		—		—		28,339
Dividends declared	—	—		—		(55,893)		—		—		(55,893)
Balance at May 1, 2022	69,219	$	693	$	532,205	$	789,852	$	(12,267)	$	(739)	$	1,309,744
Net earnings	—	—		—		267,075		—		—		267,075
Foreign currency translation adjustments	—	—		—		—		(1,385)		—		(1,385)
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		26		—		26
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		(5)		—		(5)
Conversion/release of stock-based awards 1	26	—		(767)		—		—		—		(767)
Repurchases of common stock	(2,188)	(22)		(12,519)		(252,808)		—		—		(265,349)
Stock-based compensation expense	—	—		22,976		—		—		—		22,976
Dividends declared	—	—		—		(54,036)		—		—		(54,036)
Balance at July 31, 2022	67,057	$	671	$	541,895	$	750,083	$	(13,631)	$	(739)	$	1,278,279

1Amounts are shown net of shares withheld for employee taxes.

See Notes to Condensed Consolidated Financial Statements.

Table of Content s

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 awards 1	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

SEC Form 10-Q filed by Williams-Sonoma Inc.