Williams-Sonoma on Wednesday reported that first quarter net revenues rose 8.2% to $1.2 billion from $1.1 billion in the year-ago quarter, as same-store sales rose 5.5% from 0.1% of a year ago.
E-commerce net revenue in the quarter rose 11.3% to $646 million from $581 million a year ago. The company’s GAAP operating margin was 5.5% and non-GAAP operating margin 6.3%, according to a company press release.
By brand, comparable sales at Pottery Barn rose 2.7% after a 1.4% decline last year; 9% at West Elm after a 6% rise last year; 5.6% at Williams Sonoma after a 3.2% rise last year; and 5.3% at Pottery Barn Kids and Teen after a 8% decline last year.
Williams-Sonoma outdid itself in the first quarter, demonstrating that its stores and longstanding experience in the furniture and home goods market remain a challenge to newer, online-only players like Wayfair.
The company has introduced a series of customer-friendly changes, including delivery scheduling, pickup of online orders and loyalty program changes, and is crossing over some of its branding for the first time. "One of the most creative things that I think we've done this year is the launch of our cross-brand collaboration between West Elm and Pottery Barn Kids," CEO Laura Alber told analysts Wednesday, according to a conference call transcript from Seeking Alpha. "This 50-plus piece collection marks West Elm’s first foray into the baby and kids category, and distinctively combines the brand’s signature modern aesthetic with Pottery Barn Kids industry expertise and craftsmanship."
The company is also growing sales online, 11.3% in the quarter, after they'd languished for a while. "This may not be as exciting as the uplift posted by Wayfair, but Williams-Sonoma's online operation is both more mature [and] actually makes money," GlobalData Retail Managing Director Neil Saunders said in a note emailed to Retail Dive. "This is a clear win for the company and justifies the investments made into redesigning product pages to present items in a more compelling way and with better storytelling."
The company is shuttering underperforming stores, and Alber said Wednesday that will continue. As it should, according to Saunders, considering that "the shifting dynamics of retail mean it is inevitable that some stores will become less relevant."
But it seems clear that executives understand their importance nevertheless, he said. "Shops are not just being closed," he said. "New concepts like Williams-Sonoma Home are being opened. Although there are only a handful of these outlets, which focus more on luxury home furnishings than the traditional Williams-Sonoma brand shops, they are a good example of how the company finds opportunities to serve new niches. Growth from this proposition will be further bolstered by the increasing number of shop-in-shop concepts."
The company is facing pressure in a market driven by new pure-play competitors as well as renewed efforts by Target, Amazon, Walmart and Overstock, which have all introduced new private furniture lines in recent months. But Saunders sees Williams-Sonoma as "an extremely well run and innovative company" that is poised to withstand these competitors. "It understands the market and its customers," he said. "It is also worth mentioning the strong design credential across all Williams-Sonoma brands. Because products are designed in-house, the company is both able to stay on top of trends and offer exclusive items that are not available elsewhere. In an era of heightened competition, this is critical in driving sales to both stores and online."