Williams Sonoma 2Q16 Earnings Call Notes

Williams­Sonoma’s (WSM) CEO Laura Alber on Q2 2016 Results

Retail environment has softened

“Despite this progress on our strategic initiative, the retail environment has softened since we last talked, and our sales are being impacted by a more cautious consumer. While we are confident in our long-term strategies across the company, we believe it is prudent to modify our outlook for the remainder of the year. Julie will provide more details about our guidance later in the call. As always, our focus is on what we can control, which includes our supply chain and inventory initiatives, delivering innovative products at the best value, our marketing strategies to increase new customer acquisition, and enhancing the retail experience.”

Digital has become our largest marketing channel

“In March, I spoke with you about how we would transform our marketing. One key area of focus is digital innovation. We’re seeing a transition in the marketplace that plays into our strengths and competitive advantages. We have advanced multi-dimensional attribution models that guide our investments and it has led us to surgically cut our catalog circulations to rebalance and to optimize our investments into digital channels as they continue to evolve. As a result, digital marketing has become our largest investment channel, outpacing our catalog and store-based marketing investments.”

Innovation in digital

“A big part of our digital story is our innovation. Our proprietary modeling, based on customer profiles and interactions, drives our ability to target audiences more effectively and profitably. We know that relevant marketing drives engagement with targeted audiences converting at 3x that of non-targeted audiences at half the cost. The breadth, depth, and detail in our house file provide us with a material advantage, and we are partnering with great companies to help to advance and take advantage of emerging personalization capabilities for custom segmentation and targeting. ”

Digital strategy does not include twitter

“While we leverage our existing marketing strategies for the parent, there are a number of digital-only tactics we use to capture the increasing purchase influence of the youth audience, including Facebook, Instagram, YouTube, and Snapchat.”

We know mall traffic’s down

“We know mall traffic’s down. Certain categories are more challenged than others. On the flipside, housing metrics appear to be strong, and we also are seeing growth in some of our smaller businesses. Our approach has always been the same. We’re going to focus on the things that we can control, and we would prefer to be self-critical.”

I’m not an economists so not going to go through the reasons

“I would say that it’s both. In retail, there’s reported reduced traffic from all the counter aggregate data you see. And then the customers’ just more careful right now. I’m not an economist, so I’m not going to go through all the reasons that could be.”

Customers are savvy

“Customers are savvy. As I said earlier, they know a value when they see one, including if it’s a higher price point type of item. So a sofa that’s a great value, maybe a lot more money than a candle. The truth of the matter though is that the candle a lot more people can afford. So, as I said earlier, we have to make sure that we are not just driving our furniture business but bringing in really innovative decorating and entertaining ideas into all of our brands. ”

Tupperware 2Q16 Earnings Call Notes

Tupperware Brands (TUP) E. V. Goings on Q2 2016 Results

We’ve got a hill to climb in Turkey

“we’ve got a hill to climb in Turkey. We’ve got a large group of sales force, almost all women who she feeds her family out of this business, and we think it’s going to take some time to fix this. The Erdoğan government, and we’ve stayed close to what’s going on there; has been moving ever since he came into office as Prime Minister, have been moving away from the secular culture which is largely, you see, north of Bosphorus. And what was really established by Atatürk after the fall of the Ottoman Empire, more towards an Islamic influence that you see coming out of the government in Anatolia. So we’re watching this situation closely. It’s a bouncing ball. But we’ve learned from the past. We can continue to grow our businesses in areas even when there is major conflicts.”

The terrorism environment in France causes social and business challenges there

“Also, I don’t need to remind you of the terrorism we’re dealing with in France, which is not only horrific, but it causes challenges to the social and business environment there, where it gets harder to get people to come and leave their house, and come to a Tupperware Party. We don’t know what kind of tale there is going to be on this. You’re beginning to see these kind of actions or more the new normal.”‘

Millenials are looking for opportunities rather than jobs

“one of the things that’s really attractive to us right now is the change in the sales force of the pool where we’re really fishing for new sales force and new recruits, increasingly it’s those born after 1980, millennials. More of them has had commented in the past. It’s actually, the number is 58% are not looking for a job, but they want an opportunity. They want more flexibility. They are cost-oriented, and so I noticed this on my trips doing these through countries. Even I would contrast a country like Indonesia, where I start to see, I can be in remote areas of Indonesia, and the millennials there act like the millennials that I see in Berlin. And they’re looking for this kind of an opportunity.”

The Eurozone is important for European peace

“From a personal standpoint, I’ve got to say, Anna, I think the greater concern of Brexit is that, the more – not to get into beyond macroeconomics, but to more the political (01:29:37), we haven’t had a European war since 1945. Euroland may be sloppy, but there hasn’t been a war since 1945. The Balkans was a civil war. And in the previous 45 years before the war ended in 1945, a 113 million Europeans were killed by other European. And so the point is, Euroland finding some way to work together and to be economically tied. I mean, it really does matter. And what you’re good – if you start to see these boarders and walls, we exist there. You started to see rebuilding of CIS and their military, they’re one, this is the direction that he wants to go. It’s not good, overall, for the world. For the next three years, I don’t think it’s going to have much impact. But we certainly hope this is a different direction for the future just for peace.”

Williams Sonoma 1Q16 Earnings Call Notes

Laura Alber

Julie Whalen

Tough to get a good read on the business at this time

“From a revenue guidance perspective, our second quarter revenue guidance reflects obviously our best estimates of the possible range of outcomes across our portfolio of brands, but it’s early in the quarter and it’s also a Memorial Day shift this year, which actually believe it or not, that holiday is pretty big for us. So it makes it extremely more challenging to get a good read on the business at this time. And like all of us, we’re seeing the relatively negative retail results out there. So at this time, we think our guidance is appropriate and it reflects our best estimate this early in the quarter.”

Supply chain initiatives growing inventories slower than sales

“So as part of our supply chain and inventory initiatives, we’ve actually been working on inventory optimization for a while now. We’ve been speaking to you about and we’re really pleased to be able to see that we’re finally able to demonstrate it, but the results are definitely becoming more apparent as we enter into 2016. As far as what we’ve been doing? We’ve been more aggressively managing the level of weeks on hand for each skew, which has allowed us not only reduce our inventory buys, but also allows us to liquidate our less productive skews and aggressively push more inventory to our outlets and this has allowed our inventory levels to be reduced obviously substantially and will allow us to ultimately generate supply chain savings by freeing up space in our distribution centers, reducing the off-site we’re trying to get out of and improving our labor productivity throughout our network.”