Williams-sonoma, Inc. · NYSE:WSM
Williams-sonoma — Investor Presentation (June 2014)
50 slides from Williams-sonoma's investor presentation, Jun 4, 2014
Slide 1: Williams-Sonoma, Inc. 2014 Investor Presentation
WILLIAMS-SONOMA, INC. 2014 INVESTOR PRESENTATION JULIE WHALEN PAT C O N N O L LY EVP, CFO Director & EVP, CMO
Slide 2: Forward-Looking Statements
FORWARD-LOOKING S TAT E M E N T S e forward-looking statements included in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. ese statements address the financial condition, results of operations, business initi
Slide 3: Summary
SUMMARY • Williams-Sonoma, Inc.’s multi-channel model creates a differentiated and profitable business that, together with consumer trends in the home market, offers opportunity for sustainable long-term growth. • Approximately 50% of Williams-Sonoma, Inc.’s revenues comes from its ecommerce business,
Slide 4: Corporate Overview
C O R P O R AT E O V E R V I E W • 7 Unique brands with distinct points of view • Total Revenues: $4.4Bn in FY 2013 - Retail: $2.3Bn 44% • 585 Company-owned stores POTTERY BARN • 27 Franchise stores 14% 2013 REVENUES: POTTERY BARN KIDS $1,911M - Ecommerce: $2.1Bn* 2013 REVENUES: $598M • #21 in Inter
Slide 5: Laura Alber, President & CEO: Vision
LAURA ALBER, PRESIDENT & CEO: OUR vision F R O M T H E B E G I N N I N G H A S B E E N T O enhance O U R C U S T O M E R S ’ L I V E S A T H O M E . O U R CUSTOMERS LOVE THEIR HOMES, AND WE HAVE A SINGULAR FOCUS ON helping T H E M M A K E T H E I R HOMES A REFLECTION OF WHO THEY ARE. 5
Slide 6: Creating Shareholder Value
CREATING SHAREHOLDER VALUE PRODUCT LIFESTYLE MERCHANDISING M U LT I - C H A N N E L MARKETING ECOMMERCE EXCELLENCE GROWTH FINANCIAL DISCIPLINE SOCIAL RESPONSIBILITY 6
Slide 7: Product
PRODUCT 7
Slide 8: Product Excellence
PRODUCT PRODUCT EXCELLENCE • Our product is what separates us from others and brings our brands to life. • Because we create and design approximately 90% of what we sell, our brands present to consumers a point of view on taste and style in the home that the customer wants to “make their own”. 8
Slide 9: Global Supply Chain
PRODUCT G L O B A L S U P P LY C H A I N • By year end, we expect to have approximately 1,000 associates in 14 countries, managing every aspect of our product sourcing – quality, packaging, global compliance, and logistics. • is allows us to create unique, high quality product that is offered to the
Slide 10: Global Supply Chain
PRODUCT G L O B A L S U P P LY C H A I N • Over a period of decades, we have built a specialized supply chain that is designed to address the unique needs of home furnishings merchandise. • We work with trusted suppliers and partners around the world. We directly import from over 50 countries. • We
Slide 11: Global Supply Chain: Distribution Locations
PRODUCT G L O B A L S U P P LY C H A I N • Our regionalized distribution infrastructure is highly efficient at delivering heavy, bulky, and fragile merchandise quickly and at the lowest possible cost. D I S T R I B U T I O N L O C AT I O N S • Last year, we shipped over 27 million cartons through the
Slide 12: U.S. Upholstered Furniture Manufacturing
PRODUCT U.S. UPHOLSTERED FURNITURE MANUFACTURING We have “disrupted” the traditional upholstered furniture business in the U.S. • We make over 50% of our upholstered furniture ourselves in our own workshops. • By eliminating the costly overhead of traditional furniture manufacturing, we can deliver
Slide 13: 2013 Deliveries Into the Home
840,000 2013 DELIVERIES INTO THE HOME
Slide 14: Lifestyle Merchandising
LIFESTYLE MERCHANDISING 14
Slide 15: Lifestyle Merchandising: A Customized Experience
LIFESTYLE MERCHANDISING A CUSTOMIZED EXPERIENCE • We have over 25 years of experience in presenting our product categories in an aspirational manner through our catalogs, retail stores and online. • Our goal is to make it easy for the customer to visualize how our products will enhance their home. •
Slide 16: Multi-Channel Marketing
MULTI-CHANNEL MARKETING 16
Slide 17: Multi-Channel Customers Spend 4-5x More
MULTI-CHANNEL MARKETING $ M U LT I - C H A N N E L C U S T O M E R S spend 4-5x more THAN SINGLE-CHANNEL CUSTOMERS 17
Slide 18: The Power of Our Channels
MULTI-CHANNEL MARKETING THE POWER OF OUR CHANNELS ONLINE • We market to our customers primarily through three channels. C ATA L O G • Multi-channel model developed over 40 years. • Each channel has distinct advantages that together, create a competitive advantage. R E TA I L 18
Slide 19: Retail Locations
RETAIL LOCATIONS U . S . R E TA I L L O C AT I O N S At the end of FY 2013, Williams-Sonoma, Inc. had 585 company-owned stores including 554 in the United States, 25 in Canada, 5 in Australia and 1 in the United Kingdom. 12 2 2 10 8 39 2 19 2 6 2 14 3 20 12 9 3 24 16 24 5 5 2 11 21 88 4 8 7 4 1 19 9
Slide 20: Multi-Channel Marketing: Retail
MULTI-CHANNEL MARKETING R E TA I L • Stores are all in “A” malls or high traffic street locations. • Our stores are billboards for our brands. • 585 stores globally. 20
Slide 21: Multi-Channel Marketing: Catalogs
MULTI-CHANNEL MARKETING C ATA L O G S • We mail approximately 250 million catalogs a year. • While we have significantly increased our digital marketing over the past 5 years, catalogs remain a key component of our marketing to customers. • We have found no marketing vehicle that can match the reven
Slide 22: Marketing Spend Evolution
MULTI-CHANNEL MARKETING MARKETING SPEND EVOLUTION Our approach to marketing spend has evolved, but catalogs remain very important. IF WE WAN T TO T H E N W E U TI L I Z E AT TRACT N E W C US TO MERS E MAR K E T IN G DR IVE L IFETIME V AL U E CATA L O G & E MAI L L AUN CH N E W BRAN D L EV E RA GE T
Slide 23: Ecommerce Excellence
ECOMMERCE EXCELLENCE 23
Slide 24: Ecommerce Excellence: $2 Billion in Sales
ECOMMERCE EXCELLENCE SINCE LAUNCHING OUR WEBSITES IN 2000, WE HAVE GROWN TO ALMOST $2 billion in ecommerce sales, A 4 6 % C O M P O U N D A N N U A L G R O W T H R AT E . 24
Slide 25: Ecommerce Overview
ECOMMERCE EXCELLENCE OVERVIEW • Direct sales overall are expected to be approximately 50% of total company revenues in fiscal 2014. • We rank 21st on the Internet Retailer’s Top 500 list with the highest ecommerce % of any multi- channel retailer. • In 2013, WSM reported direct operating contributio
Slide 26: Data-Driven Marketing
ECOMMERCE EXCELLENCE D ATA - D R I V E N M A R K E T I N G • We have a 20 year head start in database development and data-driven marketing with 57 million households in our database across all 3 channels. • A direct selling culture is part of our company DNA. Our senior executives have extensive ex
Slide 27: Revenue Mix by Channel
ECOMMERCE EXCELLENCE REVENUE MIX BY CHANNEL Direct to customer is expected to exceed 50% by the end of fiscal 2014. 52% 48% R E TA I L ECOMMERCE* *includes catalog 27
Slide 28: Online Home Furnishings
ECOMMERCE EXCELLENCE ONLINE HOME FURNISHINGS Internet Retailer Housewares/Home Furnishings Segment Revenue – Top 20 retailers represent 89% of the segment. Source: Internet Retailer, excludes mass merchants. 29% WSM ALL OTHER ONLINE COMPETITORS 28
Slide 29: Top Online Retailers
ECOMMERCE EXCELLENCE T O P 5 0 0 O N L I N E R E TA I L E R S In 2013, WSM grew to be the #21 online retailer. Source: Internet Retailer. TOP 500 RANK 2013 WEB SALES* T O P 5 0 0 R A N K , C O N T. 2013 WEB SALES* 1.. AMAZON.COM $67.855 14.. COSTCO $3.086 2.. APPLE $18.300 15.. BEST BUY $3.040 3.. S
Slide 30: Channel Profitability
ECOMMERCE EXCELLENCE C H A N N E L P R O F I TA B I L I T Y Direct channel operating margin reached approximately 24% in FY 2013. 25% 20% DTC Operating Profit Margin 15% 10% 5% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 30
Slide 31: Ecommerce Penetration
ECOMMERCE EXCELLENCE E C O M M E R C E P E N E T R AT I O N Ecommerce penetration across multi-channel retailers. * As of April 29, 2014 50% 44% 40% % of Ecommerce Penetration 32% 30% 26% 24% 20% 16% 15% 14% 14% 14% 11% 10% 4% 3% <1% 0% BBBY TGT PIR FL JWN GPS ANN M AEO CAB URBN RH WSM $11.5 $72.6 $
Slide 32: Social Media
ECOMMERCE EXCELLENCE SOCIAL MEDIA We have a prominent social media presence that allows us to interact with our customers. *As of April 29, 2014 864k PINTEREST FOLLOWERS FACEBOOK LIKES 3.3M 800k 3.0 700k 2.5 600k 2.0M 2.0 500k 1.6M 400k 1.5 1.5M 1.3M 300k 1.0 200k .5M 120k 0.5 72k 100k 66k .2M 49k 6
Slide 33: Growth
GROWTH WILLIAMS-SONOMA, INC. 33
Slide 34: Fragmented Industry
GROWTH FRAGMENTED INDUSTRY • Home furnishings is a highly fragmented industry. • We currently have approximately 4% market share. • Ecommerce is outpacing overall segment growth. • We continue to take market share. • Domestically, West Elm is our largest opportunity. • Our new brands and brand exten
Slide 35: Growth Opportunity
GROWTH GROWTH OPPORTUNITY We continue to take market share in a fragmented industry. e top 20 industry participants account for ~50% of the market U . S . C E N S U S B U R E A U E S T I M AT E O F F U R N I T U R E & HOME FURNISHINGS STORE SALES (NAICS 442) $120 20% $100 15% $80 $ in Billions % Ma
Slide 36: Secular Shift in Spending
ECOMMERCE EXCELLENCE SECULAR SHIFT IN SPENDING Ecommerce penetration is accelerating across the retail industry. O N L I N E S A L E S O F R E TA I L B Y C AT E G O R Y 25% MEDIA, SPORTING & HOBBY GOODS 20% ELECTRONIC & APPLIANCE SALES Online Share (%) 15% FURNITURE & HOME FURNISHINGS 10% CLOTHING &
Slide 37: Comparative Market Performance
GROWTH C O M PA R AT I V E M A R K E T P E R F O R M A N C E e U.S. home furnishings market has experienced relatively stagnant growth on a compound basis since 2000. Williams-Sonoma, Inc. has consistently outperformed the market. Source: United States Census Bureau. U.S. FURNITURE & HOME WSM SALES
Slide 38: West Elm: Accelerated Growth
GROWTH W E S T E L M : A C C E L E R AT E D G R O W T H • Brand expected to exceed $1Bn. • Planning to enter 7 new domestic markets in 2014. • Recently entered new markets including Australia and the UK. Comparable Brand Revenue Growth Store Count 69 35% 70 30% 58 30% 60 48 25% 50 21% 20% 36 37 40 1
Slide 39: Global Business Summary
GROWTH GLOBAL BUSINESS SUMMARY CANADA AUSTRALIA UNITED KINGDOM • Company-owned model. • Company-owned model. • Company-owned model. • First stores opened in 2001. • 4 stores in Sydney opened • West Elm store opened in • 25 stores. May 2013. December 2013. • 1 store in Melbourne opened • West Elm Eco
Slide 40: Financial Discipline
FINANCIAL DISCIPLINE 40
Slide 41: Historical Revenues
FINANCIAL DISCIPLINE HISTORICAL REVENUES $5.0 $4.6-$4.7 $4.4 $4.5 $3.9 $4.0 $4.0 $3.7 $3.7 $3.5 $3.5 $3.4 $3.5 $3.1 $3.1 $3.0 $2.8 $ in Billions $2.4 $2.5 $2.1 $1.8 $2.0 $1.5 $1.0 $0.5 $0.0 2014E 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 41
Slide 42: Non-GAAP Operating Income
FINANCIAL DISCIPLINE N O N - G A A P O P E R AT I N G I N C O M E $475-$490 $500 $455 $450 $416 $385 $400 $359 $322 $345 $350 $310 $313 $300 $ in Millions $255 $250 $202 $200 $162 $150 $128 $100 $100 $53 $50 $0 2014E 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 42
Slide 43: Non-GAAP Earnings Per Share
FINANCIAL DISCIPLINE NON-GAAP EARNINGS PER SHARE $3.50 $3.07-$3.17 $2.84 $3.00 $2.58 $2.50 $2.24 $1.88 $1.95 $2.00 $1.76 $1.76 $1.60 $1.50 $1.32 $1.04 $0.95 $1.00 $0.65 $0.49 $0.50 $0.35 $0.00 2014E 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 43
Slide 44: Capital Expenditures
FINANCIAL DISCIPLINE C A P I TA L E X P E N D I T U R E S $250 $200-$220 $212 $212 $205 $191 $194 $192 $200 $181 $162 $156 $156 $152 $150 $ in Millions $130 $100 $72 $62 $50 $0 2014E 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 44
Slide 45: Returning Cash to Our Shareholders
FINANCIAL DISCIPLINE RETURNING CASH TO OUR SHAREHOLDERS Since 2009, WSM has returned more than $1Bn to DIVIDENDS shareholders in the form of share repurchases and REPURCHASES dividends. $400 $374 $351 $124 $350 $112 $300 $263 $ in Millions $239 $250 $69 $243 $220 $250 $49 $88 $239 $200 $34 $184 $194
Slide 46: Growth & Profitability Goals
FINANCIAL DISCIPLINE 2 0 1 3 - 2 0 1 5 G R O W T H & P R O F I TA B I L I T Y G O A L S VEHICLE TA R G E T Revenue Growth Mid to high single-digits EPS Growth Low double-digit to mid-teens Capital Expenditures $200M-$220M Dividends 35% to 40% of Net Income Share Repurchases 2013 $750M Share Repurcha
Slide 47: Social Responsibility
SOCIAL RESPONSIBILITY 47
Slide 48: Social Responsibility Overview
SOCIAL RESPONSIBILITY OVERVIEW We aim to create a positive impact for the environment, communities, our customers and our business. Our goals: • Increase our use of FSC-Certified wood. • Increase our use of organic cotton to promote healthy farming practices. • Reduce GHG emissions. • Forge new rela
Slide 49: Fulfilling Our Commitment
SOCIAL RESPONSIBILITY FULFILLING OUR COMMITMENT FSC-CERTIFIED WOOD ORGANIC COTTON Using wood certified to the Forest Stewardship Council (FSC) Organic farming reduces the use of chemicals in the allows us to create beautiful products while protecting Natural production process, protecting farmers, w
Slide 50: If you love what you do, then the world will fall in love with you
“IF YOU LOVE W H AT Y O U D O, then the world WILL FALL IN LOVE WITH YOU” Chuck Williams, circa 1960 50