Williams-Sonoma on Wednesday reported that fourth quarter net revenue grew 9.3% to $1.8 billion from $1.7 billion in the year-ago period, while comparable sales in the quarter grew 2.4%. E-commerce net revenue in the period grew 14.3% to $1 billion, accounting for 54.6% of total company net revenues.
By brand, comps in the quarter rose 0.1% at Williams Sonoma, 1.6% at Pottery Barn Kids and Teen, and soared 11.1% at West Elm. However, comps fell 0.4% at Pottery Barn. Inventories grew 6% to $1.12 billion from $1.06 billion a year ago, below net revenue growth, according to a company press release.
For the full year, the company reported that net revenue grew 7.2% to $5.7 billion from $5.3 billion a year ago, and comp brand sales grew 50 basis points to 3.7%. E-commerce revenue for fiscal year 2018 jumped 10.9% to $3.1 billion, a "record" 54.3% of total company net revenue. In its fiscal 2019 guidance, the company expects net revenue to reach between $5.67 billion and $5.84 billion and comp sales to grow 2% to 5%, and plans to close 30 stores, bringing the total to 595 by fiscal year's end.
While Williams-Sonoma beat analyst estimates, according to MarketWatch, the company's comp sales numbers reflect a less than stellar quarter, especially with its Pottery Barn brand, which the company attributes to a "softer gift business in December."
However, its West Elm brand performed particularly well, notching double-digit same-store growth, and CEO Laura Alber said on an earnings call with analysts that the company believes the brand offers its "biggest growth opportunity."
"We believe we can grow this brand to almost 3 billion in global revenues within this next five years," she said.
West Elm earlier this year launched a new bath and beauty category, and most recently, formed a partnership with Rent the Runway to allow customers to rent soft goods through the rental website. This could indicate Williams-Sonoma is placing a greater emphasis on its e-commerce business, which already accounts for over half of the company's net revenue. Alber noted that the company launched a buy online, pickup in-store option and is in the process of enhancing its omnichannel operations.
Alber also announced on the call that Williams-Sonoma aims for more online-exclusive offerings through subscription-based services. "In the next year, we will be operating curated bundles of recipes including those exclusively developed by our test kitchen as a paid service on our website as well as on our soon to be relaunched Williams-Sonoma recipe app," she said.
She also said Williams-Sonoma is working to optimize its supply chain operations by reducing its order-to-ship lead time in the company's domestic manufacturing facilities by 30%. The company also said in addition to investing in a separate West Elm West Coast DC to improve delivery times, it is also leveraging technology such as self-service and POS delivery scheduling, real-time order tracking and conscious program automation to increase on-time delivery.
"We believe this is our oxygen for growth. We have built over time a vertically-integrated supply chain and a highly unique platform to launch and scale new brands and businesses," she said. "These are unparalleled advantages, which will enable us to deliver mid-to-high single digit revenue and margin stability for the long-term."