Williams-Sonoma Inc. (NYSE:WSM) Q4 2014 Earnings Conference Call - Final Transcript

Mar 18, 2015 • 05:00 pm ET

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Williams-Sonoma Inc. (NYSE:WSM) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Executive
Laura Alber

completed the insourcing of our foreign buying offices, which will not only reduce cost but improve quality and strengthen our supplier relationships. And we continue to refine our domestic supply chain by insourcing more of our furniture delivery operations. also made significant progress in automating aspects of our personalization capability.

In the fourth quarter, we exceeded the high end of our expectations, despite challenges relating to the West Coast port disruption. The prolonged slowdown negatively impacted our results and will continue to impact us to an even greater degree in the beginning of this year. Mitigating this situation is a key priority, and we are intently focused on the strategies and tactics to ensure the availability of merchandise in our stores and on our websites. Julie will talk in more detail about the impact of the port disruption on our business later in the call.

Before I go through our holiday performance by brand, I want to tell you what our mindset was going into the holiday season. We knew it was going to be promotional, and it was, even more so than expected. We had strong performance because of our innovative exclusive products and our high service multichannel model.

Serving our customer is the foundation of our operating strategy. In the fourth quarter, this meant expediting product that arrived late to ensure it reached our customers in time for the holidays. We also stepped up our retail execution this holiday season. Our in store experiences further differentiated our brands. I'd like to give you some highlights of our brands' performance during the quarter.

The Williams-Sonoma brand posted its sixth consecutive quarter of comparable brand revenue growth for the 2.8% comp. We are seeing momentum in the brand. The strategies that we have outlined are working and allowing us to gain market share. Our cookware, food, and entertaining categories were strong performers.

Also in the fourth quarter, we opened a new Costa Mesa store that represents a fresh experience at retail for the brand. The results of this store have exceeded our expectations, and we see opportunity to improve productivity at retail based on learnings from this model. Across our Pottery Barn brand, customer demand growth in the quarter was more than twice net revenue growth as delays in receipts created lost demand and increased back orders that were not filled during the quarter.

Pottery Barn comp brand net revenues increased 2.9%. Our nostalgic, decorative accessories, textiles, and tabletop collections were met with a strong customer response. Throughout the quarter, we also saw significant demand for furniture across our upholstery and leather businesses. Pottery Barn Kids Q4 comparable brand net revenues increased 2.7%. Our strategy to own seasonal decorating for children contributed to our performance and brought new customers to the brand.

In PBteen, comparable brand net revenues grew 3%. Highlights from the PBteen business were our seasonal bedding assortments and textile assortments, including our girls and guys sleepover and gear collections. And in West Elm, we once again delivered