San Francisco – Unlike nearly all of their competitors, Williams-Sonoma Inc.’s nameplates are still chasing inventory.
Furniture accounts for the lion’s share of the backlog, but overall demand remains strong – as demonstrated by Williams-Sonoma Inc.’s second quarter financial results. With a rising share of business coming from Gen Z and Millennials, the company is eliminating broad promotional sales across its businesses.
During a recent quarterly investor call, company president and CEO Laura Alber was frank about the current retail environment.
“The industry is already very promotional, particularly with the big box retailers faltering. There’s a lot [of home merchandise] that they’re flushing through,” she said.
The 3 major reasons the company expects to continue gaining market share:
Consumer sentiment: Despite recession talk, Alber said the company is seeing consumer sentiment improve as inflation cools. “Although one could conclude that we’re more insulated because our customer is in a better situation from an income perspective,” she added.
Customer spending: There isn’t a much differentiation in income levels across the company’s nameplates (Pottery Barn brands, West Elm, Williams Sonoma, Mark and Graham, and Rejuvenation), Alber said. However, customers whose average spend is around $1,000 are accelerating their purchases while those who spend less than $200 are slowing down.
Housing market: Although the housing market has slowed, most of Williams-Sonoma Inc.’s customers have seen significant appreciation of their own home values – and they are investing in those homes.
“We also know that home furnishings [sales] always lag the home sale and the home remodel. Therefore, the current period metrics on home sales and interest rates don’t necessary align with the home improvement journey,” said Alber.
As a result, she added, “We continue to believe there’s significant runway ahead for home furnishings sales.”