Williams Sonoma 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

balance near term market realities with commitment to strategic vision

“We are pleased that we were able to deliver these results against a more promotional backdrop. Our team’s skill in balancing near-term market realities with the commitment to our strategic vision is a defining characteristic of the organization.”

Expect a strong holiday season

“Based on the trends we are seeing, we believe our holiday decorating and gifting season from Halloween to Thanksgiving to Christmas will be successful. We are prepared to offer our customers the best quality, design and price in our category and continue to work diligently on operational improvements that will further differentiate us from the competition.”

Different promotions hit different margin lines

“because we’re 50% effectively e-commerce and 50% retail, we have a choice we can make, an operational decision. Do we get the sale by having a deeper promotion? Do we get the sale by offering free ship, for example? Those 2 hit gross margin. Do we get the sale by more e-mails, more catalogs, more paid search? That hits SG&A. ”

The customer was reacting to deeper promotions

“the customer was reacting better to deeper promotions this quarter.”

promotional environment out there

“The promotional environment I was referring to, I think, is touching every brand in the marketplace, including all of ours. The outdoor categories were most specifically promotional. You saw a lot of people come out of the gate on sale. And also in the kitchen, Williams-Sonoma Kitchen business, the outdoor product was much more promotional than we expected. ”

fight promotions by driving operational improvements and investing in supply chain

“it’s a reality of the marketplace that we have been talking about for a long time. And our long-term perspective on it is that is why we’re so aggressive on driving operational improvements and investing in our supply chain because we still see great opportunity to reduce our costs and efficiencies in those areas, and mostly because those areas are the most important areas that touch the customer. I think at the end of the day, the customer does like a sale, but when you’re buying furniture, you want quality. And you want to know that you’ve got the design you wanted and that you have incredible service. And for me, the service piece is key to why we continue to outperform. We’re obsessed with it, both online and offline, and we worked really diligently to create that really high-touch experience in all of our channels. “

William Sonoma 1Q14 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Rolling out new site design every 4 weeks

“n the e-commerce front, we continue to make investments. We launched enhanced capabilities on our site relating to search and personalization to improve the user experience. We have also transitioned to rolling out new releases to our site every four weeks and set of every six weeks. Agile release cycles allow us to continuously deliver improved site functionality and stay ahead.”

Still a promotional environment

” We continue to see that the market is promotional which is why we’re working so hard as Julie said to take costs out of our supply chain and to develop inspiring and appealing products for our customer.”

Innovative products are key

“We think one of the reasons we continue to win is that we have exclusive and innovative products. And we also have a static diversification across all of our brands which allows customers to develop their own unique individual style, but also give them confidence to comeback”

You can win home shopping customers with a style and keep them coming back

“if you think about, a customer’s previous purchase really weighs heavily on their future purchases. And this further isolates us from competitors we believe that are using heavier promotions. You are simply not going to buy something for your house that doesn’t go with the rest of it just because of cheaper.”

Teasing some breakthrough developments in e-commerce

“We’re really excited that we’re seeing opportunities particularly in e-commerce that we’re going to build on. The customer trends are strong and it is driven by our marketing strategies and through testing over the past few quarters, we’ve encovered several breakthrough developments.”

Fedex move to price shipping by weight not an impact because UPS hasn’t followed suit

“A great deal of our products that we ship would not be impacted as we have a lot of heavy weight product the reality is the UPS has not followed suit with FedEx at this point. We have long-term agreement in place with the UPS. So we don’t expect it to impact us.”

Build a flexible model

“it’s hard to predict, but what I want to talk about again is the power of our operating models that allows us to be flexible, which I think is key in this retail environment.”

Williams Sonoma 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Christmas is a long time ago already

“So on the Christmas season, the holiday season, it feels like a long time ago already. We’re already actually working on holiday ’14.”

Plenty of room to toy with operating margin

“There is absolutely no structural reason why we can’t raise our operating margin, as we did in 2013, but we are invested in our business and future growth and we are focused on operating margins dollars”

Customer doesn’t expect free shipping on furniture

“we have never believed that free shipping was a good idea in furniture, in particular, because when two people to come to deliver that sofa to your door, you know that it’s not free.”

Brick and Mortar is a bill board for the brand

“We believe our stores are billboards for our brands and that they are the face of our brand and that the great service. And the in-store experience really supports our e-commerce sales and makes our customer confident in ordering from us, because they’ve been to our stores and they see our stores in their mind as they place the goods online, the orders online.”

It’s possible to grow rapidly and profitably at the same time

“we actually believe that ultimately the greatest stockholder value will accrue to those companies that can demonstrate both growth and a high rate of earnings.

And we’ve started six e-commerce businesses here and all of our e-commerce websites have been profitable within a matter of months, while growing rapidly. So we believe you can grow and be profitable at the same time. And we’re one of the few retailers that actually brings out and shows their e-commerce operating contribution on their financial statements.”

Online is a good testing ground for new concepts

“that is the way we have incubated most of our businesses here, I think all of them is to start online first and to really build the customer base and test new things, before we do anything at retail.”