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What Drove Williams-Sonoma’s Revenue in Q1?

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May. 31 2019, Published 11:59 a.m. ET

First-quarter performance

In the first quarter, Williams-Sonoma (WSM) posted revenue of $1.24 billion, slightly higher than analysts’ expectations. Year-over-year, the company’s revenue rose 3.2%. Overall comparable-brand revenue growth of 3.5% drove the company’s revenue.

However, the fall in its store count offset some of the increase in WSM’s revenue during the quarter. By the end of the first quarter, the company operated 625 stores overall compared to 627 stores at the end of the first quarter of 2018.

Let’s look at the performances of the company’s brands.

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Pottery Barn

The Pottery Barn brand posted revenue of $492 million in the first quarter, representing a rise of 0.4% from $490 million in the first quarter of 2018. The net addition of two new stores and comparable-brand revenue growth of 1.5% drove the segment’s revenue. The strong performance in the furniture and outdoor business drove the brand’s comparable-brand revenue growth.

West Elm

During the quarter, revenue from West Elm rose 13.2% to $309 million driven by strong comparable-brand revenue growth of 11.8% and the net addition of five new stores. The brand’s comparable-brand revenue was driven by growth in e-commerce and increased sales in made-to-order upholstery, textiles, and decorative accessories.

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Williams-Sonoma

Revenue from the Williams-Sonoma brand fell 3.0% to $195 million during the quarter due to a decline in comparable-brand revenue and a lower net store count. The brand’s comparable-brand revenue growth fell 1.6% during the quarter, while its net store count fell by five units. Management blamed the late arrival of Easter and lower promotional programs for the weak comparable-brand revenue.

Pottery Barn Kids and Teen

The brand has posted revenue of $177 million, a fall of 1.7% from $180 million in the first quarter of 2018. The net decline of six units in the brand’s store count lowered its revenue. However, some of its revenue decreases were offset by comparable-brand revenue growth of 1.2%.

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Others

WSM’s revenue from emerging brands, such as Rejuvenation, Mark and Graham, and its international franchise operations, is classified under the Others segment. Revenue from the Others segment rose 15.3% to $68 million in the quarter.

Peer comparison and outlook

For the comparable quarter, analysts expect RH (RH) to post revenue growth of 4.8%, while the revenue of Bed Bath & Beyond (BBBY) is expected to fall 6.1%.

For 2019, WSM’s management expects its revenue to be in the range of $5.67 billion–$5.84 billion, with its overall comparable brand revenue expected to rise in the range of 2%–5%. Management also plans to close net 30 stores this year, lowering its total store count to 595 units.

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