Williams-Sonoma Surges in Q4
March 27, 2006,
Fueled by strong same-store sales and interest earned on banked money, diversified home goods retailer Williams-Sonoma Inc. pushed fourth-quarter profits up by 6.2%, to $120.8 million from $113.7 million last year.
Same-store sales improved by 5.8%, far ahead of a smaller gain of 1.5% last year. Comps were strongest in outlet stores, up 11.9%, and grew by 5.9% in the company's flagship Williams-Sonoma stores. Pottery Barn grew by 5.6%, and Pottery Barn Kids by 3.9%. The Hold Everything franchise still lagged behind; same-store sales fell by 3.2%, but still managed to improve on a deeper decline of 8.4% a year ago.
In addition to stronger comps, $2.1 million in interest income provided a lift to earnings. It was more than triple the $575,000 earned last year.
But acting as a drag, margins thinned during the all-important holiday quarter, narrowing by 120 basis points, or 1.2 percentage points, to 43.6% from 44.8% last year. Operating costs improved slightly, declining by 10 basis points, or a tenth of a percentage point, to 27.7% of sales from 27.8% the preceding year.
|Qtr. 1/29 (x000)||2005||2004||% change|
|a. Fourth-quarter results include a $13.5 million pre-tax charge, or $0.07 per share, stemming from asset impairment and lease termination costs associated with the shutdown of its Hold Everything stores, and the consolidation of the brand into other Williams-Sonoma nameplates; and $2.1 million in interest income, compared with $575,000 during the same period last year. The Hold Everything charge reduced gross profit by $4.5 million, reducing average gross margin; and added $9.0 million to operating costs, increasing the expense ratio in both the fourth quarter and 12-month periods.
b. Twelve-month results include the $13.5 million charge tied to the Hold Everything restructuring; and $3.7 million in interest income, compared with $236,000 last year.
|Oper. income (EBIT)||192,830||184,040||4.8|
|Per share (diluted)||1.02||0.95||7.4|
|Average gross margin||43.6%||44.8%||–|
|12 months||2005||2004||% change|
|Oper. income (EBIT)||345,090||309,969||11.3|
|Per share (diluted)||1.81||1.60||13.1|
|Average gross margin||40.6%||40.5%||–|
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