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Williams-Sonoma’s e-commerce growth outpaces expectations

US-based Williams-Sonoma, Inc. has raised its guidance for fiscal year 2018 by US$20 million after a strong first quarter in which e-commerce business outpaced analyst expectations.

The company, which operates the Williams-Sonoma, West Elm, Pottery Barn, Pottery Barn Kids and Rejuvenation retail brands, reported net revenues of US$1.203 billion in Q1 18, an 8.2 per cent increase from net revenues of $1.112 billion in Q1 17.

Excluding certain discrete items, non-GAAP net revenues were US$1.202 billion in the quarter, an 8.2 per cent on Q1 17.

The company’s e-commerce business saw net revenue growth of 11.2 per cent to US$646 million in the quarter ended April 29, 2018.

Online net revenues made up 53.7 per cent of the company’s total revenues in the quarter, outpacing analyst expectations, according to Williams-Sonoma’s president and CEO Laura Alber.

“Following a robust fourth quarter, we saw continued strength in the first quarter. We achieved strong results against our guidance range across all metrics, with our e-commerce revenues outpacing to almost 54 per cent of our total revenues,” she said.

Based on its strong first-quarter performance, Williams-Sonoma said it is raising its full-year guidance for net revenues by US$20 million to between US$5.495 billion and US$5.655 billion and non-GAAP diluted EPS by US$0.03 to between US$4.15 and US$4.25.

“These results speak to the power of our established multi-channel model, distinctive brand portfolio and world-class customer service heritage – all of which are our company’s competitive strengths,” Alber said.

In addition to the company’s websites, which offer international shipping to customers worldwide, the retailer has a physical presence in the US, Puerto Rico, Canada and the UK, as well as 19 stores in Australia.

Alber said customer growth has trended positively for both new and existing customers, demonstrating the success of the company’s customer acquisition strategy.

Selling, general and administrative (SG&A) expenses were US$366 million, equating to 30.4 per cent of net revenues in Q1 18. This was slightly higher than SG&A expenses in Q1 17, which equated to 30 per cent of net revenues.

Non-GAAP SG&A expenses were US$358 million, or 29.7 per cent of net revenues in Q1 18 versus US$328 million, or 29.5 per cent of net revenues in Q1 17.

Operating margin in the quarter was 5.5 per cent compared to 5.6 per cent in Q1 17. Non-GAAP operating margin was 6.3 per cent in Q1 18 versus 6.1 per cent in Q1 17.

Merchandise inventories grew 1.5 per cent in the quarter, significantly below net revenue growth.

EPS in Q1 18 was US$0.54 versus US$0.45 in Q1 17. Non-GAAP EPS was US$0.67 in Q1 18 versus US$0.51 in Q1 17.

The company’s quarterly reporting includes its global earnings.


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