Williams-Sonoma, Inc. Announces Strong Third Quarter 2012 Results - EPS Grows 20% over 2011
Raises Financial Guidance for Fiscal Year 2012

SAN FRANCISCO--()--Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the third quarter of fiscal 2012 ended October 28, 2012 (“Q3 12”).

Q3 12 RESULTS

  • Net revenues increased 8.9% to $945 million in Q3 12 from $867 million in the third quarter of fiscal 2011 ended October 30, 2011 (“Q3 11”). Comparable brand revenue increased 8.5%.
  • Operating margin increased to 8.4% from 7.9% in Q3 11.
  • Diluted earnings per share (“EPS”) increased 20% to $0.49 versus $0.41 in Q3 11.
  • During the quarter, the company repurchased 748,807 shares of common stock for approximately $31 million, leaving $31 million remaining under the $225 million stock repurchase program authorized by the Board in January 2012.

Laura Alber, President and Chief Executive Officer, said, “On behalf of all of us at Williams-Sonoma, Inc., I would first like to express my concern for the welfare of those individuals and families impacted by Hurricane Sandy. While the recent storms have caused some disruptions to our business, our response has been focused on assisting our associates and customers in need.”

Alber commented, “During the third quarter, we delivered stronger-than-expected revenues, operating margin and diluted earnings per share. EPS grew 20% on revenue growth of 9%, as comparable brand revenue growth accelerated to 8.5%, from 7.4% last quarter. Importantly, we drove these results while simultaneously investing in our strategic growth initiatives.”

Alber continued, “We are proud of our recently announced growth initiatives, including the launch of West Elm Market, a West Elm brand extension, and the launch of Mark and Graham, our new on-line brand, which features personalized gifts and accessories. This week, we announced new Williams-Sonoma branded product lines that represent the next generation in cooking technology. Drawing on over five decades of culinary experience, these introductions in cookware, cooks’ tools, and new tech-driven Williams-Sonoma smart tools represent advancements that will be appreciated by the home cook and professional chef. These Williams-Sonoma branded products are just the beginning of what we will bring to the market over the next several years.”

Alber concluded, “We are raising our fiscal year outlook by $0.01 to a non-GAAP EPS range of $2.45 to $2.52 due to our strong results throughout the year. Our guidance includes the impact of the acceleration of our global expansion into Australia in early fiscal 2013, as well as the unexpected impact from the storms.”

Comparable brand revenue growth in Q3 12 increased 8.5% on top of 7.3% in Q3 11 as shown in the table below:

Third Quarter Comparable Brand Revenue Growth by Concept*

       
  Q3 12   Q3 11
Pottery Barn 11.1 % 7.0 %
Williams-Sonoma** 1.3 % 0.3 %
Pottery Barn Kids 10.1 % 5.2 %
West Elm 13.0 % 27.0 %
PBteen 2.0 % 6.5 %
Total 8.5 % 7.3 %
* See the company’s 10-K and 10-Q filings for the definition of comparable brand revenue growth.
** Williams-Sonoma excludes net revenues from Williams-Sonoma Home (“WSH”) merchandise. Including WSH, comparable brand revenue growth for Williams-Sonoma was 0.8% in Q3 12 and 0.1% in Q3 11. (WSH net revenues are included in the total.)
 

Direct-to-customer (“DTC”) net revenues in Q3 12 increased 14.7% to $447 million from $390 million in Q3 11, with increases across all brands. This growth was led by Pottery Barn, West Elm, Pottery Barn Kids and Williams-Sonoma. E-commerce net revenues increased 16.7% to $396 million in Q3 12 versus $339 million in Q3 11. DTC net revenues generated 47% of total company net revenues in Q3 12 versus 45% in Q3 11.

Retail net revenues in Q3 12 increased 4.2% to $497 million from $478 million in Q3 11, primarily driven by Pottery Barn and West Elm and partially offset by a decrease in Williams-Sonoma. Retail leased square footage was flat to last year. Comparable store sales in Q3 12 increased 2.9% versus 6.3% in Q3 11.

Gross margin expressed as a percentage of net revenues in Q3 12 increased to 39.0% from 38.3% in Q3 11.

Selling, general and administrative (“SG&A”) expenses in Q3 12 were $289 million or 30.6% of net revenues versus $263 million or 30.4% in Q3 11. Included in the 20 basis point increase from Q3 11 to Q3 12 were planned incremental investments to support e-commerce, global expansion and business development growth strategies.

Operating margin expressed as a percentage of net revenues in Q3 12 increased to 8.4% from 7.9% in Q3 11.

Merchandise inventories at the end of Q3 12 increased 9.9% to $688 million from $627 million at the end of Q3 11.

FY 12 FINANCIAL GUIDANCE (for the 53-weeks ending February 3, 2013)

  • Fourth Quarter and Fiscal Year Guidance

Guidance for Fourth Quarter and Fiscal Year 2012

       
Fourth Quarter   Fiscal Year
Q4 12   Q4 11 FY 12   FY 11
  GUID

(14 weeks)

ACT

  (13 weeks)  

GUID

(53 weeks)

ACT

  (52 weeks)  

Total Net Revenues (millions) $1,360 - $1,400 $1,268 $3,995 - $4,035 $3,721

Total % Growth vs. Prior Year
(53-week vs. 52-week)

7 - 10 % 6.1% 7 - 8 % 6.2%

Total Adjusted % Growth vs. Prior Year
(53-week vs. 53-week)

2 - 4 % 6.1% 5 - 6 % 6.2%

Comparable Brand Revenue Growth*
(53-week vs. 53-week)

2 - 4 % 6.6% 5 - 6 % 7.3%
Non-GAAP Operating Margin** 14.5 - 15.1 % 15.6% 10.1 - 10.3 % 10.3%
Non-GAAP Diluted EPS $1.21 - $1.28 $1.17 $2.45 - $2.52 $2.24
GAAP Diluted EPS $1.21 - $1.28 $1.17 $2.41 - $2.48 $2.22
Leased Square Footage % Change <1> - 0 % <1.5%> <1> - 0 % <1.5%>
* See the company’s 10-K and 10-Q filings for the definition of comparable brand revenue growth.
** The non-GAAP operating margin above excludes the impact of unusual business events of approximately 20 basis points in FY 12. We anticipate GAAP operating margin to be in the range of 9.9 - 10.1 % in FY 12.
 

Guidance for Fiscal Year 2012

       
FY 12   FY 11
  GUID

(53 weeks)

ACT

 (52 weeks) 

DTC Net Revenue % Growth vs. Prior Year
(53-week vs. 52-week)

12 - 14 % 12.4%

Adjusted DTC Net Revenue % Growth vs. Prior Year
(53-week vs. 53-week)

9 - 11 % 12.4%

Comparable Store Sales Growth*
(53-week vs. 53-week)

2 - 3 % 3.5%
Income Tax Rate 38.2 - 38.6 % 37.9%
Capital Spending (millions) $200 - $220 $130
Depreciation and Amortization (millions) $133 - $135 $131
Amortization of Deferred Lease Incentives (millions) $26 - $27 $28
Stock-based Compensation Expense (millions) $31 - $32 $24
* See the company’s 10-K and 10-Q filings for the definition of comparable stores.
 
  • Store Openings and Closings

Store Opening and Closing Guidance by Retail Concept

               
Q4 11   Q3 YTD 12

ACT

  Q4 12

GUID

  FY 12

GUID

  ACT
Retail Concept

Total

Open   Close  

 End 

Open   Close  

 End 

Open   Close  

 End 

Williams-Sonoma 259 3  

<3

>

259 2  

<10

>

251 5  

<13

> *

251
Pottery Barn 194 6  

<7

>

193 2  

<3

>

192 8  

<10

> *

192
Pottery Barn Kids 83

1

 

<1

>

83

2

 

<1

>

84

3

 

<2

> *

84
West Elm 37 9  

<1

>

45 4  

<2

>

47 13  

<3

> *

47
Rejuvenation 3 1   -   4 -   -   4 1   -   4
Total** 576 20  

<12

>

584 10  

<16

>

578 30  

<28

>

578
* FY 12 store closing numbers include 20 permanent store closures. FY 12 total store opening and closing numbers for Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm include 1, 5, 1 and 1 stores, respectively, for temporary closure and re-opening due to remodeling. Remodeled stores are defined as those stores temporarily closed and subsequently re-opened due to square footage expansion, store modification, or relocation.
** Temporary “pop-up” stores, where lease terms are typically short-term in nature and are used to test new markets, are not included in the totals above as they are not considered permanent stores. At the close of Q3 12, we operated three pop-up stores -- one in West Elm and two in PBteen.
 

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, November 14, 2012, at 2:00 P.M. (PT). The call, hosted by Laura Alber, President and Chief Executive Officer, will be open to the general public via a live webcast and can be accessed through the Internet at www.williams-sonomainc.com/webcast. A replay of the webcast will be available at www.williams-sonomainc.com/webcast.

SEC REGULATION G -- NON-GAAP INFORMATION

This press release includes non-GAAP operating margin and diluted EPS. These non-GAAP financial measures exclude the impact of employee separation charges and the impact of asset impairment and early lease termination charges for underperforming retail stores. We have reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in the text of this release and in Exhibit 1. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our quarterly diluted EPS actual results and FY 12 guidance on a comparable basis with our quarterly and FY 11 results. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements relating to: our growth initiatives; our global expansion; our holiday strategies; and Q4 12 and fiscal year 2012 guidance.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: accounting adjustments as we close our books for Q3 12; recent changes in general economic conditions, and the impact on consumer confidence and consumer spending; new interpretations of or changes to current accounting rules; our ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of our merchandise; changes in consumer spending based on weather, political, competitive and other conditions beyond our control; delays in store openings; competition from companies with concepts or products similar to ours; timely and effective sourcing of merchandise from our foreign and domestic vendors and delivery of merchandise through our supply chain to our stores and customers; effective inventory management; our ability to manage customer returns; successful catalog management, including timing, sizing and merchandising; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce new brands and brand extensions; dependence on external funding sources for operating capital; disruptions in the financial markets; our ability to control employment, occupancy and other operating costs; our ability to improve our systems and processes; changes to our information technology infrastructure; general political, economic and market conditions and events, including war, conflict or acts of terrorism; and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the SEC, including our Annual Report on Form 10-K for the fiscal year ended January 29, 2012, and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

ABOUT WILLIAMS-SONOMA, INC.

Williams-Sonoma, Inc. is a specialty retailer of high-quality products for the home. These products, representing seven distinct merchandise strategies – Williams-Sonoma (cookware and wedding registry), Pottery Barn (furniture and wedding registry), Pottery Barn Kids (kids’ furniture and baby registry), PBteen (girls’ bedding and boys’ bedding), West Elm (modern furniture and room decor), Williams-Sonoma Home (luxury furniture and decorative accessories) and Rejuvenation (lighting and hardware) – are marketed through 584 stores, seven direct mail catalogs and six e-commerce websites. In addition, on November 8, 2012, the company launched Mark and Graham (personalized gifts and gifts for the home), which will be marketed through a direct mail catalog and an e-commerce website. Williams-Sonoma, Inc. currently operates in the United States and Canada, offers international shipping to customers worldwide, and franchises its brands throughout the Kingdom of Saudi Arabia, Kuwait, and the United Arab Emirates.

 

WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THIRTEEN WEEKS ENDED OCTOBER 28, 2012 AND OCTOBER 30, 2011
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

       
THIRD QUARTER

2012

2011

(13 Weeks) (13 Weeks)
% of % of
$ Revenues $ Revenues
 
Direct-to-customer net revenues $

 447,115

47.3

 %

$

 389,653

44.9

 %

Retail net revenues   497,439   52.7   477,523   55.1
Net revenues 944,554 100.0 867,176 100.0
 
Cost of goods sold   576,556   61.0   535,213   61.7
 
Gross margin 367,998 39.0 331,963 38.3
 
Selling, general and administrative expenses   288,702   30.6   263,219   30.4
 
Operating income 79,296 8.4 68,744 7.9
Interest (income), net   (173 ) -   (7 ) -
 
Earnings before income taxes 79,469 8.4 68,751 7.9
Income taxes   30,569   3.2   25,330   2.9
 
Net earnings $ 48,900   5.2

 %

$ 43,421   5.0

 %

 
Earnings per share:
Basic $ 0.50 $ 0.42
Diluted $ 0.49 $ 0.41
 
Shares used in calculation of earnings per share:
Basic 98,444 103,651
Diluted 100,418 105,721
 

WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THIRTY-NINE WEEKS ENDED OCTOBER 28, 2012 AND OCTOBER 30, 2011
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

       
YEAR-TO-DATE

2012

2011

(39 Weeks) (39 Weeks)
% of % of
$ Revenues

$

Revenues
 
Direct-to-customer net revenues $

 1,235,883

46.9

 %

$

 1,101,815

44.9

 %

Retail net revenues   1,400,568   53.1   1,350,936 55.1
Net revenues 2,636,451 100.0 2,452,751 100.0
 
Cost of goods sold   1,624,707   61.6   1,516,184 61.8
 
Gross margin 1,011,744 38.4 936,567 38.2
 
Selling, general and administrative expenses   813,022   30.8   752,038 30.7
 
Operating income 198,722 7.5 184,529 7.5
Interest (income) expense, net   (532 ) -   63 -
 
Earnings before income taxes 199,254 7.6 184,466 7.5
Income taxes   76,258   2.9   70,121 2.9
 
Net earnings $ 122,996   4.7

 %

$ 114,345 4.7

 %

 
Earnings per share:
Basic $ 1.24 $ 1.09
Diluted $ 1.21 $ 1.07
 
Shares used in calculation of earnings per share:
Basic 99,528 104,592
Diluted 101,285 106,835
 

WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)

                                       

      October 28,

      January 29,

      October 30,

  2012   2012   2011
Assets
Current assets
Cash and cash equivalents $ 262,484 $ 502,757 $ 379,393
Restricted cash 16,049 14,732 14,726
Accounts receivable, net 59,562 45,961 54,140
Merchandise inventories, net 688,437 553,461 626,583
Prepaid catalog expenses 44,452 34,294 46,898
Prepaid expenses 34,370 24,188 41,925
Deferred income taxes, net 91,718 91,744 85,602
Other assets   9,741   9,229   9,632
Total current assets 1,206,813 1,276,366 1,258,899
 
Property and equipment, net 763,576 734,672 740,025
Non-current deferred income taxes, net 13,691 12,382 34,061
Other assets, net   39,342   37,418   18,179
Total assets $ 2,023,422 $ 2,060,838 $ 2,051,164
 
Liabilities and stockholders' equity
Current liabilities
Accounts payable $ 236,562 $ 218,329 $ 220,689
Accrued salaries, benefits and other 96,534 111,774 89,117
Customer deposits 208,239 190,417 207,749
Income taxes payable 1,467 22,435 17,152
Current portion of long-term debt 1,753 1,795 1,815
Other liabilities   28,734   27,049   26,418
Total current liabilities 573,289 571,799 562,940
 
Deferred rent and lease incentives 177,912 181,762 188,989
Long-term debt 3,755 5,478 5,494
Other long-term obligations   50,609   46,537   45,957
Total liabilities 805,565 805,576 803,380
 
Stockholders' equity   1,217,857   1,255,262   1,247,784
Total liabilities and stockholders' equity $ 2,023,422 $ 2,060,838 $ 2,051,164

ADDITIONAL INFORMATION

    Store Count   Average Leased Square
Footage Per Store

Retail Concept

July 29,
2012
  Openings   Closings   October 28,
2012
  October 30,
2011
October 28,
2012
 

October 30,
2011

Williams-Sonoma 259 1

<1

>

259 268 6,600

6,500

Pottery Barn 193 4

<4

>

193 201 13,900

13,700

Pottery Barn Kids 83 - - 83 84 8,100

8,200

West Elm 40 5 - 45 36 15,600

17,200

Rejuvenation 4 - -   4 - 13,200

-

Total 579 10

<5

>

584 589 10,000

9,900

Total Store Square Footage

July 29,
2012
October 28,
2012
October 30,
2011
Total store selling square footage 3,526,000 3,566,000 3,583,000
Total store leased square footage 5,738,000 5,813,000 5,809,000
 

WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THIRTY-NINE WEEKS ENDED OCTOBER 28, 2012 AND OCTOBER 30, 2011
(DOLLARS IN THOUSANDS)

 

   
YEAR-TO-DATE

2012

2011

(39 Weeks) (39 Weeks)
Cash flows from operating activities
Net earnings $ 122,996 $ 114,345
 
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 98,653 98,773
Loss on sale/disposal of assets 1,567 1,290
Impairment of assets - 172
Amortization of deferred lease incentives (19,785 ) (20,828 )
Deferred income taxes (8,767 ) (6,989 )
Tax benefit from exercise of stock-based awards 7,098 6,036
Stock-based compensation expense 22,778 17,834
Changes in:
Accounts receivable (13,045 ) (12,526 )
Merchandise inventories (134,545 ) (113,034 )
Prepaid catalog expenses (10,157 ) (10,073 )
Prepaid expenses and other assets (12,883 ) (19,125 )
Accounts payable 4,832 (17,687 )
Accrued salaries, benefits and other current and long-term liabilities (9,069 ) (38,535 )
Customer deposits 17,773 15,284
Deferred rent and lease incentives 15,866 8,027
Income taxes payable   (20,929 )   (24,847 )
Net cash provided by (used in) operating activities   62,383     (1,883 )
 
Cash flows from investing activities:
Purchases of property and equipment (116,398 ) (102,255 )
Restricted cash deposits (1,317 ) (2,214 )
Proceeds from insurance reimbursement - 707
Other   (231 )   (536 )
Net cash used in investing activities   (117,946 )   (104,298 )
 
Cash flows from financing activities:
Repurchase of common stock (124,293 ) (93,986 )
Payment of dividends (66,185 ) (51,334 )
Tax withholdings related to stock-based awards (12,327 ) (8,376 )
Proceeds from exercise of stock-based awards 12,009 7,651
Excess tax benefit from exercise of stock-based awards 7,399 4,895
Repayments of long-term obligations (1,765 ) (1,515 )
Other   (405 )   (86 )
Net cash used in financing activities   (185,567 )   (142,751 )
 
Effect of exchange rates on cash and cash equivalents 857 (78 )
Net decrease in cash and cash equivalents (240,273 ) (249,010 )
Cash and cash equivalents at beginning of period   502,757     628,403  
Cash and cash equivalents at end of period $ 262,484   $ 379,393  
 

Exhibit 1

 
Reconciliation of Q3 12 and Q3 11 Actual GAAP to Non-GAAP

Operating Margin By Segment*

(Dollars in millions)

               
DTC   RETAIL   UNALLOCATED   TOTAL
  Q3 12   Q3 11 Q3 12   Q3 11 Q3 12   Q3 11 Q3 12   Q3 11
Net Revenues $ 447 $ 390 $ 497 $ 478 $ - $ - $ 945 $ 867

GAAP Operating Income/<Expense>**

  101   84   44   46  

<65>

 

<62>

  79   69
GAAP Operating Margin***   22.5%   21.6%   8.8%   9.7%  

<6.9%>

 

<7.1%>

  8.4%   7.9%

Unusual Business Events (Note 2)

  -   -   -   0   -   -   -   0

Non-GAAP Operating Income/<Expense>
Excluding Unusual Business Events

$ 101 $ 84 $ 44 $ 46

$

<65>

$

<62>

$ 79 $ 69
Non-GAAP Operating Margin   22.5%   21.6%   8.8%   9.7%  

<6.9%>

 

<7.1%>

  8.4%   7.9%
* See the company’s 10-K and 10-Q filings for additional information on segment reporting.
** Operating Income/<Expense> is defined as earnings before net interest income or expense and income taxes.
*** Operating Margin is defined as operating income as a percentage of net revenues.
 

Reconciliation of FY 12 Guidance and FY 11 Actual GAAP to Non-GAAP
Diluted Earnings Per Share*

(Totals rounded to the nearest cent per diluted share)

                       
Q1 12

ACT

  Q2 12

ACT

  Q3 12

ACT

  Q4 12

GUID

 

Weighted
Share Effect

  FY 12

GUID

  (13 Weeks) (13 Weeks) (13 Weeks) (14 Weeks) (53 Weeks)
2012 GAAP Diluted EPS $0.30 $0.43 $0.49 $1.21 - $1.28 <$0.02> $2.41 - $2.48
Impact of Employee Separation Charges (Note 1) $0.04 - - - - $0.04
Subtotal of Unusual Business Events $0.04 - - - - $0.04

2012 Non-GAAP Diluted EPS Excluding Unusual
Business Events (Note 3)

$0.34 $0.43 $0.49

$1.21 - $1.28

<$0.02>

$2.45 - $2.52
                     
Q1 11

ACT

Q2 11

ACT

Q3 11

ACT

Q4 11

ACT

Weighted
Share Effect

FY 11

ACT

  (13 Weeks) (13 Weeks) (13 Weeks) (13 Weeks) (52 Weeks)
2011 GAAP Diluted EPS $0.29 $0.37 $0.41 $1.17 <$0.02> $2.22

Impact of Asset Impairment and Early Lease
Termination Charges for Underperforming Retail
Stores (Note 2)

$0.01 $0.00 $0.00 $0.01 - $0.02
Subtotal of Unusual Business Events $0.01 $0.00 $0.00 $0.01 - $0.02

2011 Non-GAAP Diluted EPS Excluding Unusual
Business Events (Note 3)**

$0.30 $0.37 $0.41 $1.17

<$0.01>

$2.24
* Due to the differences between quarterly share counts and the year-to-date weighted average share count calculations and the effect of quarterly rounding to the nearest cent per diluted share, the year-to-date calculation of GAAP and non-GAAP diluted EPS may not equal the sum of the quarters.

**

Due to rounding to the nearest cent per diluted share, totals may not equal the sum of the line items in the table above.

 

 

Note 1: Impact of Employee Separation Charges – During Q1 12, we incurred charges of approximately $0.04 per diluted share or approximately 90 basis points of SG&A expenses and less than 10 basis points of gross margin, primarily associated with the previously announced retirement of our former Executive Vice President, Chief Operating and Chief Financial Officer. For FY 12, we anticipate approximately 20 basis points of SG&A expenses and less than 10 basis points of gross margin. These charges were recorded within the unallocated segment.
 
Note 2: Impact of Asset Impairment and Early Lease Termination Charges for Underperforming Retail Stores (FY 11) – During Q1 11, we incurred charges associated with asset impairment and early lease terminations of approximately $0.01 per diluted share or approximately 20 basis points of SG&A expenses. During Q2 11, we incurred charges associated with early lease terminations of approximately $0.00 per diluted share, or less than 10 basis points of SG&A expenses and less than a 10 basis point impact to gross margin. During Q3 11, we incurred charges associated with early lease terminations of approximately $0.00 per diluted share or less than a 10 basis point impact to gross margin. For Q4 11, we incurred charges associated with asset impairment and early lease terminations of approximately $0.01 per diluted share, or less than 10 basis points of SG&A expenses and less than a 10 basis point impact to gross margin. For FY 11, we incurred total charges associated with asset impairment and early lease terminations of approximately $0.02 per diluted share, or approximately 10 basis points of SG&A expenses and less than a 10 basis point impact to gross margin. All of these charges were recorded within the retail segment.
 
Note 3: SEC Regulation G – Non-GAAP Information – This table includes one non-GAAP financial measure, Diluted EPS Excluding Unusual Business Events. We believe that this non-GAAP financial measure provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of our quarterly and FY 12 diluted EPS actual results and guidance on a comparable basis with our quarterly and FY 11 actual results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. This non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Contacts

WILLIAMS-SONOMA, INC.
Julie P. Whalen, 415-616-8524
EVP, Chief Financial Officer
-or-
Stephen C. Nelson, 415-616-8754
VP, Investor Relations
-or-
Gabrielle L. Rabinovitch, 415-616-7727
Director, Investor Relations

Sharing

Contacts

WILLIAMS-SONOMA, INC.
Julie P. Whalen, 415-616-8524
EVP, Chief Financial Officer
-or-
Stephen C. Nelson, 415-616-8754
VP, Investor Relations
-or-
Gabrielle L. Rabinovitch, 415-616-7727
Director, Investor Relations