wsm-20231029

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 29, 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 November 26, 2023, 64,144,519 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 29, 2023

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	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	23
Item 6.	Exhibits	24

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 29, 2023		October 30, 2022		October 29, 2023		October 30, 2022
Net revenues	$	1,853,650	$	2,192,574	$	5,471,715	$	6,221,338
Cost of goods sold	1,031,290		1,282,048		3,216,729		3,553,455
Gross profit	822,360		910,526		2,254,986		2,667,883
Selling, general and administrative expenses	507,283		570,893		1,468,884		1,639,248
Operating income	315,077		339,633		786,102		1,028,635
Interest income, net	7,182		370		16,015		877
Earnings before income taxes	322,259		340,003		802,117		1,029,512
Income taxes	84,974		88,280		206,794		256,601
Net earnings	$	237,285	$	251,723	$	595,323	$	772,911
Basic earnings per share	$	3.70	$	3.77	$	9.20	$	11.27
Diluted earnings per share	$	3.66	$	3.72	$	9.12	$	11.08
Shares used in calculation of earnings per share:
Basic	64,142		66,704		64,718		68,578
Diluted	64,774		67,617		65,298		69,782

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 29, 2023		October 30, 2022		October 29, 2023		October 30, 2022
Net earnings	$	237,285	$	251,723	$	595,323	$	772,911
Other comprehensive income (loss):
Foreign currency translation adjustments	(4,028)		(5,158)		(4,062)		(8,057)
Change in fair value of derivative financial instruments, net of tax of $27, $378, $57, and $420	78		1,069		163		1,188
Reclassification adjustment for realized gains on derivative financial instruments, net of tax of $40, $45, $316, and $53	(114)		(128)		(896)		(151)
Comprehensive income	$	233,221	$	247,506	$	590,528	$	765,891

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 29, 2023		January 29, 2023		October 30, 2022
ASSETS
Current assets
Cash and cash equivalents	$	698,807	$	367,344	$	113,058
Accounts receivable, net	124,238		115,685		125,842
Merchandise inventories, net	1,396,864		1,456,123		1,687,895
Prepaid expenses	100,045		64,961		104,208
Other current assets	27,381		31,967		29,729
Total current assets	2,347,335		2,036,080		2,060,732
Property and equipment, net	1,026,819		1,065,381		1,009,088
Operating lease right-of-use assets	1,235,425		1,286,452		1,277,064
Deferred income taxes, net	76,272		81,389		54,247
Goodwill	77,279		77,307		85,245
Other long-term assets, net	120,639		116,407		107,631
Total assets	$	4,883,769	$	4,663,016	$	4,594,007
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	675,505	$	508,321	$	720,856
Accrued expenses	203,958		247,594		275,381
Gift card and other deferred revenue	528,403		479,229		488,771
Income taxes payable	53,139		61,204		45,879


Operating lease liabilities	231,236		231,965		220,012
Other current liabilities	96,745		108,138		103,821
Total current liabilities	1,788,986		1,636,451		1,854,720


Long-term operating lease liabilities	1,163,631		1,211,693		1,208,074
Other long-term liabilities	117,918		113,821		118,279
Total liabilities	3,070,535		2,961,965		3,181,073
Commitments and contingencies – See Note F
Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued	—		—		—
Common stock: $0.01 par value; 253,125 shares authorized; 64,135, 66,226 and 66,556 shares issued and outstanding at October 29, 2023, January 29, 2023 and October 30, 2022, respectively	642		663		666
Additional paid-in capital	572,406		573,117		553,698
Retained earnings	1,260,216		1,141,819		877,157
Accumulated other comprehensive loss	(18,604)		(13,809)		(17,848)
Treasury stock, at cost: 6, 1 and 1 shares as of October 29, 2023, January 29, 2023 and October 30, 2022, respectively	(1,426)		(739)		(739)
Total stockholders’ equity	1,813,234		1,701,051		1,412,934
Total liabilities and stockholders’ equity	$	4,883,769	$	4,663,016	$	4,594,007

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 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
Net earnings	—	—		—		201,507		—		—		201,507
Foreign currency translation adjustments	—	—		—		—		2,171		—		2,171
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		(157)		—		(157)
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		(296)		—		(296)
Conversion/release of stock-based awards 1	13	—		(432)		—		—		—		(432)
Repurchases of common stock 2	(90)	(1)		(548)		(9,547)		—		—		(10,096)

Stock-based compensation expense	—	—		20,547		—		—		—		20,547
Dividends declared	—	—		—		(59,114)		—		—		(59,114)
Balance at July 30, 2023	64,145	$	642	$	551,507	$	1,084,772	$	(14,540)	$	(1,426)	$	1,620,955
Net earnings	—	—		—		237,285		—		—		237,285
Foreign currency translation adjustments	—	—		—		—		(4,028)		—		(4,028)
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		78		—		78
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		(114)		—		(114)
Conversion/release of stock-based awards1	11	—		(1,159)		—		—		—		(1,159)
Repurchases of common stock 2	(21)	—		(131)		(2,883)		—		—		(3,014)
Stock-based compensation expense	—	—		22,189		—		—		—		22,189
Dividends declared	—	—		—		(58,958)		—		—		(58,958)
Balance at October 29, 2023	64,135	$	642	$	572,406	$	1,260,216	$	(18,604)	$	(1,426)	$	1,813,234

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

2Repurchases of common stock include accrued excise taxes of $2.5 million as of October 29, 2023, which is recorded in retained earnings.

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		—		—		—		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
Net earnings	—	—		—		251,723		—		—		251,723
Foreign currency translation adjustments	—	—		—		—		(5,158)		—		(5,158)
Change in fair value of derivative financial instruments, net of tax	—	—		—		—		1,069		—		1,069
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax	—	—		—		—		(128)		—		(128)
Conversion/release of stock-based awards1	13	—		(1,156)		—		—		—		(1,156)
Repurchases of common stock	(514)	(5)		(3,010)		(71,516)		—		—		(74,531)

Stock-based compensation expense	—	—		15,969		—		—		—		15,969
Dividends declared	—	—		—		(53,133)		—		—		(53,133)
Balance at October 30, 2022	66,556	$	666	$	553,698	$	877,157	$	(17,848)	$	(739)	$	1,412,934

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

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Thirty-nine Weeks Ended
(In thousands)	October 29, 2023		October 30, 2022
Cash flows from operating activities:
Net earnings	$	595,323	$	772,911
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	166,027		157,410
Loss on disposal/impairment of assets	19,143		5,738

Non-cash lease expense	186,764		169,602
Deferred income taxes	(7,993)		(10,494)
Tax benefit related to stock-based awards	12,455		11,172
Stock-based compensation expense	66,435		67,797
Other	(2,411)		(2,170)
Changes in:
Accounts receivable	(8,928)		5,288
Merchandise inventories	56,770		(443,812)
Prepaid expenses and other assets	(35,857)		(39,737)
Accounts payable	164,958		98,103
Accrued expenses and other liabilities	(48,978)		(34,157)
Gift card and other deferred revenue	49,878		42,005
Operating lease liabilities	(200,168)		(177,855)
Income taxes payable	(8,005)		(33,276)
Net cash provided by operating activities	1,005,413		588,525
Cash flows from investing activities:
Purchases of property and equipment	(134,830)		(234,378)
Other	402		100
Net cash used in investing activities	(134,428)		(234,278)
Cash flows from financing activities:
Repurchases of common stock	(313,001)		(840,955)
Payment of dividends	(174,571)		(165,254)
Tax withholdings related to stock-based awards	(51,108)		(80,431)




Net cash used in financing activities	(538,680)		(1,086,640)
Effect of exchange rates on cash and cash equivalents	(842)		(4,887)
Net increase (decrease) in cash and cash equivalents	331,463