Williams-Sonoma Inc. (NYSE:WSM) Q3 2019 Earnings Conference Call - Final Transcript

Nov 21, 2019 • 05:00 pm ET


Williams-Sonoma Inc. (NYSE:WSM) Q3 2019 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and thank you for standing by. Welcome to today's Williams-Sonoma, Inc. Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after the presentation. I'd like to remind everyone, this call is being recorded.

And I'd now like to turn the floor over to Brian Yee, Senior Vice President of Corporate Finance and Treasurer. Please go ahead, sir.

Brian Yee

Thank you. Good afternoon. This call should be considered in conjunction with the press release that we issued earlier today. Unless indicated otherwise, our discussion today will relate to results and guidance based on certain non-GAAP measures. The reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures, and our explanation of why the non-GAAP financial measures may be useful, are discussed in Exhibit 1 of our press release.

This call also contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which address the financial condition, results of operations, business initiatives, trends, guidance, growth plans, and prospects of the company in 2019 and beyond, and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current press release and SEC filings, including the most recent 10-K for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call.

I will now turn the conference call over to Laura Alber, our President and Chief Executive Officer.

Laura J. Alber

Thank you, Brian, and good afternoon everyone. Also on the call with me today are Julie Whalen, our Chief Financial Officer; Felix Carbullido, our Chief Marketing Officer; and Yasir Anwar, our Chief Technology Officer.

Q3 marks another quarter of strong performance. Comparable revenues accelerated 5.5%, operating margins held flat to last year, despite increased tariff headwinds, and EPS grew 7.4%. Our results and continued success relative to the industry, reflect that our strong value proposition of high quality, design-led sustainable products, is resonating with our customers.

In a fragmented home furnishings industry, it is hard to overstate how important it has been for us to continually evolve to stay ahead of the past, remained at the forefront of driving profitable growth. Importantly, our digital first model is a key component of our success. While we continue to innovate the experience in our stores, our revenue growth was led by e-commerce at 9%, reaching almost 57% of revenues. Highlights in the brands include West Elm, which led our performance with a 14.1% comp, on top of a 8.3% comp last year. We've also had continued resurgence of growth across our Pottery Barn brands. We also had double digit increases in our emerging brands, Rejuvenation and Mark and Graham, and despite a negative comp, we improved profitability in the Williams-Sonoma brand.

Key to driving results across all our businesses,