Direct Sales, Ecommerce Key Big 3Q for Williams-Sonoma

Kitchen/home goods merchant Williams-Sonoma posted impressive numbers for its third quarter ended Oct. 28, punctuated by a 14.7% rise in direct-to-customer sales and a 16.7% increase in ecommerce revenue.

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Direct-to-customer sales reached $447 million, up from $390 million in the same quarter last year, while ecommerce sales hit $396 million, up from $339 million. According to a press release, the solid growth was sparked by the Pottery Barn, West Elm, Pottery Barn Kids and Williams-Sonoma brands. Direct-to-customer sales accounted for 47% of total third-quarter sales, up from 45% in the same period last year.

Operating margin increased to 8.4% from 7.9% in the third quarter last year.

Williams-Sonoma president and CEO Laura Alber said in the press release that the company delivered “stronger-than-expected” revenue in the quarter. Alber cited a pair of recent launches – West Elm Market, a West Elm Brand extension, and Mark and Graham, a new online brand featuring personalized gifts and accessories.

Williams-Sonoma launched this week branded product lines that represent the next generation in cooking technology, Alber said, including new tech-driven Williams-Sonoma smart tools for the home cook and professional chef.

Third-quarter retail sales increased 4.2%, to $497 million from $478 million.

Abe Garver, principal at Focus Investment Banking, was impressed by Williams-Sonoma’s third-quarter performance, citing that direct-to-customer sales accounted for 47% of total company revenue.

“The Pottery Barn business continues to be the standout from a financial perspective, with year-over-year revenue growth increasing from 7.0% to 11.1%,” Garver said. “I don’t believe Hurricane Sandy will have a material impact on the fourth quarter.”

Lee Helman, managing director for investment firm Financo, said “it always comes to great product, and Williams Sonoma’s brands consistently deliver excellent product.”

Helman praised Williams-Sonoma as “brilliant marketers” who know “exactly how to drive customers to specific channels based on their sophisticated marketing strategies and rich data.”

Strong direct-to-customer and ecommerce sales bode well for the holiday season, Helman said. “The best products always win, and Williams-Sonoma has a terrific track record at delighting their customers.”

Jim Tierney (jim.tierney@penton.com) is a senior writer for Multichannel Merchant. You can connect with him on Twitter (TierneyMCM) and LinkedIn, or call him at 203-358-4265.

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