San Francisco — Williams-Sonoma Inc., which owns and manages Pottery Barn and West Elm, reported another three months of earnings in the third quarter of fiscal year 2024, despite sales remaining below last year’s levels.
The San Francisco-based retailer’s net revenues for the three months ended Oct. 27 were $1.8 billion, a 2.86% decrease from $1.854 billion in Q3 2023. By brand, Pottery Barn’s $718 million was 7.71% lower than $778 million the previous year, while West Elm’s $451 million was 3.22% lower than $466 million in 2023.
However, despite lower sales, the corporation reported another quarter of profit. Williams-Sonoma’s net earnings for the quarter were $248.95 million, or $1.96 per diluted share, up 25.11% from the previous quarter’s net earnings of $237.29 million, or $1.83 per diluted share.
“We are happy with the results of our third quarter, which exceeded both top and bottom line forecasts. Laura Alber, president and CEO, stated, “The quarter was driven by continued improvement in our sales trend, market share gains, and strong profit.” “In Q3, our comp was -2.9%, with an operating margin of 17.8%, resulting in a 7.1% increase in profits per share to $1.96. Our operating results reflect the operational improvements we have been working on all year and show the robustness of our margin profile in a challenging environment.”
The year-to-date data showed a similar scenario. Net revenues for the first three quarters were $5.249 billion, down 4.1% from $5.472 billion in the first nine months of 2023. However, net earnings of $740.36 million, or $5.74 per diluted share, were a 24.36% increase above net earnings of $595.32 million, or $4.56 per diluted share.
With one quarter remaining, Williams-Sonoma is upping its fiscal 2024 projection to reflect stronger net revenue trends and greater operating margin expectations. The business now estimates an annual net revenue reduction of -3% to -1.5% in fiscal 2024, with comparables falling between -4.5% and -3%. In the long run, it anticipates mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.
“Our approach of focusing on returning to growth, improving our world-class customer service, and increasing margin is effective. And, as we enter the fourth quarter of the year, we are hopeful and confident in our business,” Alber stated. “Our best performance comes in the fourth quarter. As a result, we are raising our full-year guidance. We now expect full-year revenues to come in. Williams-Sonoma expects revenues to trend lower and margins to track higher at a rate of down 3% to down 1.5%, and we are improving our operating margin outlook by 40 basis points to 17.8% to 18.2%.”
