wsm-20221030

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 October 30, 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 November 27, 2022, 66,567,436 shares of the registrant’s Common Stock were outstanding.

Table of Contents

WILLIAMS-SONOMA, INC.

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED OCTOBER 30, 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 Contents

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	For the Thirteen Weeks Ended				For the Thirty-nine Weeks Ended
(In thousands, except per share amounts)	October 30, 2022		October 31, 2021		October 30, 2022		October 31, 2021
Net revenues	$	2,192,574	$	2,047,539	$	6,221,338	$	5,744,907
Cost of goods sold	1,282,048		1,152,054		3,553,455		3,238,181
Gross profit	910,526		895,485		2,667,883		2,506,726
Selling, general and administrative expenses	570,893		565,218		1,639,248		1,578,182
Operating income	339,633		330,267		1,028,635		928,544
Interest (income) expense, net	(370)		121		(877)		1,954
Earnings before income taxes	340,003		330,146		1,029,512		926,590
Income taxes	88,280		80,622		256,601		203,194
Net earnings	$	251,723	$	249,524	$	772,911	$	723,396
Basic earnings per share	$	3.77	$	3.37	$	11.27	$	9.66
Diluted earnings per share	$	3.72	$	3.29	$	11.08	$	9.40
Shares used in calculation of earnings per share:
Basic	66,704		74,010		68,578		74,865
Diluted	67,617		75,943		69,782		76,975

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	For the Thirteen Weeks Ended				For the Thirty-nine Weeks Ended
(In thousands)	October 30, 2022		October 31, 2021		October 30, 2022		October 31, 2021
Net earnings	$	251,723	$	249,524	$	772,911	$	723,396
Other comprehensive income (loss):
Foreign currency translation adjustments	(5,158)		792		(8,057)		970
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $378, $(19), $420, and $(235)	1,069		(54)		1,188		(654)
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax (tax benefit) of $45, $(131), $53, and $(312)	(128)		369		(151)		859
Comprehensive income	$	247,506	$	250,631	$	765,891	$	724,571

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	As of
(In thousands, except per share amounts)	October 30, 2022		January 30, 2022		October 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	113,058	$	850,338	$	656,898
Accounts receivable, net	125,842		131,683		139,511
Merchandise inventories, net	1,687,895		1,246,372		1,272,028
Prepaid expenses	104,208		69,252		85,433
Other current assets	29,729		26,249		22,852
Total current assets	2,060,732		2,323,894		2,176,722
Property and equipment, net	1,009,088		920,773		892,226
Operating lease right-of-use assets	1,277,064		1,132,764		1,159,315
Deferred income taxes, net	54,247		56,585		61,768
Goodwill	85,245		85,354		85,392
Other long-term assets, net	107,631		106,250		101,901
Total assets	$	4,594,007	$	4,625,620	$	4,477,324
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	720,856	$	612,512	$	638,371
Accrued expenses	275,381		319,924		273,722
Gift card and other deferred revenue	488,771		447,770		431,446
Income taxes payable	45,879		79,554		38,320


Operating lease liabilities	220,012		217,409		218,348
Other current liabilities	103,821		94,517		91,418
Total current liabilities	1,854,720		1,771,686		1,691,625
Deferred lease incentives	13,918		16,360		17,268

Long-term operating lease liabilities	1,208,074		1,066,839		1,095,290
Other long-term liabilities	104,361		106,528		129,771
Total liabilities	3,181,073		2,961,413		2,933,954

Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued	—		—		—
Common stock: $0.01 par value; 253,125 shares authorized; 66,556, 71,982 and 73,326 shares issued and outstanding at October 30, 2022, January 30, 2022 and October 31, 2021, respectively	666		720		734
Additional paid-in capital	553,698		600,942		585,449
Retained earnings	877,157		1,074,084		963,840
Accumulated other comprehensive loss	(17,848)		(10,828)		(5,942)
Treasury stock, at cost: 1, 4 and 4 shares as of October 30, 2022, January 30, 2022 and October 31, 2021, respectively	(739)		(711)		(711)
Total stockholders’ equity	1,412,934		1,664,207		1,543,370
Total liabilities and stockholders’ equity	$	4,594,007	$	4,625,620	$	4,477,324

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 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

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