wsm-20230430

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 April 30, 2023.


☐			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 May 21, 2023, 64,222,370 shares of the registrant’s Common Stock were outstanding.


	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	19
Item 4.	Controls and Procedures	19
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	21


	For the Thirteen Weeks Ended
(In thousands, except per share amounts)	April 30, 2023		May 1, 2022
Net revenues	$	1,755,451	$	1,891,227
Cost of goods sold	1,080,392		1,062,679
Gross profit	675,059		828,548
Selling, general and administrative expenses	475,582		505,067
Operating income	199,477		323,481
Interest income, net	(5,498)		(163)
Earnings before income taxes	204,975		323,644
Income taxes	48,444		69,531
Net earnings	$	156,531	$	254,113
Basic earnings per share	$	2.38	$	3.59
Diluted earnings per share	$	2.35	$	3.50
Shares used in calculation of earnings per share:
Basic	65,849		70,851
Diluted	66,696		72,652


	For the Thirteen Weeks Ended
(In thousands)	April 30, 2023		May 1, 2022
Net earnings	$	156,531	$	254,113
Other comprehensive income (loss):
Foreign currency translation adjustments	(2,205)		(1,514)
Change in fair value of derivative financial instruments, net of tax of $86 and $33	242		93
Reclassification adjustment for realized gains on derivative financial instruments, net of tax of $172 and $6	(486)		(18)
Comprehensive income	$	154,082	$	252,674


	As of
(In thousands, except per share amounts)	April 30, 2023		January 29, 2023		May 1, 2022
ASSETS
Current assets
Cash and cash equivalents	$	297,291	$	367,344	$	324,835
Accounts receivable, net	109,203		115,685		122,946
Merchandise inventories, net	1,401,616		1,456,123		1,396,135
Prepaid expenses	62,723		64,961		60,997
Other current assets	27,993		31,967		23,939
Total current assets	1,898,826		2,036,080		1,928,852
Property and equipment, net	1,050,026		1,065,381		942,460
Operating lease right-of-use assets	1,258,599		1,286,452		1,102,056
Deferred income taxes, net	70,758		81,389		48,737
Goodwill	77,330		77,307		85,298
Other long-term assets, net	115,498		116,407		103,310
Total assets	$	4,471,037	$	4,663,016	$	4,210,713
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	629,561	$	508,321	$	642,619
Accrued expenses	205,175		247,594		183,729
Gift card and other deferred revenue	452,505		479,229		490,821
Income taxes payable	87,680		61,204		126,270


Operating lease liabilities	229,751		231,965		211,614
Other current liabilities	97,144		108,138		88,587
Total current liabilities	1,701,816		1,636,451		1,743,640


Long-term operating lease liabilities	1,186,231		1,211,693		1,038,249
Other long-term liabilities	116,165		113,821		119,080
Total liabilities	3,004,212		2,961,965		2,900,969

Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued	—		—		—
Common stock: $0.01 par value; 253,125 shares authorized; 64,222, 66,226 and 69,219 shares issued and outstanding at April 30, 2023, January 29, 2023 and May 1, 2022, respectively	643		663		693
Additional paid-in capital	531,940		573,117		532,205
Retained earnings	951,926		1,141,819		789,852
Accumulated other comprehensive loss	(16,258)		(13,809)		(12,267)
Treasury stock, at cost: 6, 1 and 1 shares as of April 30, 2023, January 29, 2023 and May 1, 2022, respectively	(1,426)		(739)		(739)
Total stockholders’ equity	1,466,825		1,701,051		1,309,744
Total liabilities and stockholders’ equity	$	4,471,037	$	4,663,016	$	4,210,713


	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 29, 2023	66,226	$	663	$	573,117	$	1,141,819	$	(13,809)	$	(739)	$	1,701,051
Net earnings	—	—		—		156,531		—		—		156,531
Foreign currency translation adjustments	—	—		—		—		(2,205)		—		(2,205)
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		242		—		242
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		(486)		—		(486)
Conversion/release of stock-based awards 1	498	5		(49,322)		—		—		(201)		(49,518)
Repurchases of common stock 2	(2,502)	(25)		(14,803)		(286,573)		—		(1,000)		(302,401)

Reissuance of treasury stock under stock-based compensation plans 1	—	—		(334)		(180)		—		514		—
Stock-based compensation expense	—	—		23,282		—		—		—		23,282
Dividends declared	—	—		—		(59,671)		—		—		(59,671)
Balance at April 30, 2023	64,222	$	643	$	531,940	$	951,926	$	(16,258)	$	(1,426)	$	1,466,825


(In thousands, except per share amounts)	Net Earnings		Weighted Average Shares	Earnings Per Share
Thirteen weeks ended April 30, 2023
Basic	$	156,531	65,849	$	2.38
Effect of dilutive stock-based awards			847
Diluted	$	156,531	66,696	$	2.35
Thirteen weeks ended May 1, 2022
Basic	$	254,113	70,851	$	3.59
Effect of dilutive stock-based awards			1,801
Diluted	$	254,113	72,652	$	3.50


	For the Thirteen Weeks Ended 1
(In thousands)	April 30, 2023		May 1, 2022
Pottery Barn	$	767,714	$	774,646
West Elm	452,393		536,293
Williams Sonoma	239,421		252,220
Pottery Barn Kids and Teen	216,221		226,969


Other 2	79,702		101,099
Total 3	$	1,755,451	$	1,891,227
1Includes business-to-business net revenues within each brand.
2Primarily consists of net revenues from Rejuvenation, our international franchise operations and Mark and Graham.
3Includes net revenues related to our international operations (including our operations in Canada, our franchise businesses, and operations in Australia and the United Kingdom) of approximately $70.8 million and $95.0 million for the thirteen weeks ended April 30, 2023 and May 1, 2022, respectively.


(In thousands)	Foreign Currency Translation		Cash Flow Hedges		Accumulated Other Comprehensive Income (Loss)
Balance at January 29, 2023	$	(14,458)	$	649	$	(13,809)
Foreign currency translation adjustments	(2,205)		—		(2,205)
Change in fair value of derivative financial instruments	—		242		242
Reclassification adjustment for realized (gain) loss on derivative financial instruments 1	—		(486)		(486)
Other comprehensive income (loss)	(2,205)		(244)		(2,449)
Balance at April 30, 2023	$	(16,663)	$	405	$	(16,258)











Balance at January 30, 2022	$	(10,886)	$	58	$	(10,828)
Foreign currency translation adjustments	(1,514)		—		(1,514)
Change in fair value of derivative financial instruments	—		93		93
Reclassification adjustment for realized (gain) loss on derivative financial instruments 1	—		(18)		(18)
Other comprehensive income (loss)	(1,514)		75		(1,439)
Balance at May 1, 2022	$	(12,400)	$	133	$	(12,267)


	As of
(In thousands)	April 30, 2023		May 1, 2022
U.S.	$	2,326,300	$	2,014,516
International	86,587		123,081
Total	$	2,412,887	$	2,137,597

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