Sonoma’s CEO Discusses Q3 2013 Results
Marni Shapiro The Retail TrackerWelcome to the Williams Sonoma, Inc. Third Quarter Fiscal Year 2013 Earnings Conference Call. [ Instructions] This call is being recorded.
I would now like to turn the call over to Gabrielle Rabinovitch, Director of Investor Relations, to discuss non GAAP financial measures and forward looking statements. Please go ahead.
Thank you, Ann. Good afternoon. This call should be considered in conjunction with the press release that we issued earlier today. Our press release and this call contain non GAAP financial measures that exclude the impact of unusual business events. A reconciliation of these non GAAP financial measures to the most directly comparabl mulberry bags e GAAP financial measures and our explanation of why these non GAAP financial measures are useful are discussed in our release.
This call also contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which address the financial condition, results of operations, business initiatives, trends, guidance, growth plans and prospects of the company in 2013 and beyond, and are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements.
Please refer to the company’s current press releases and SEC filings, including the most recent 10 Q, for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward looking statements to reflect events or circumstances that may arise after the date of this call.
I will now turn the conference call over to Laura Alber, our President and Chief Executive Officer, to discuss our third quarter 2013 results and our outlook for the remainder of fiscal 2013.
Thank you, Gabrielle. Good afternoon, and thank you all for joining us. With me today are Julie Whalen, our Chief Financial Officer; and Pat Connolly, our Chief Marketing Officer.
Our strong third quarter and our performance year to date illustrates the power of our business model and the relevancy of our brands. We delivered an 11% increase in revenue and EPS growth in excess of 18%. Importantly, we delivered this revenue growth and accompanying operating margin expansion while simultaneously investing in our multifaceted growth initiatives. We believe we are well positioned headed into the holiday season, and will continue to execute our key strategies to deliver an exceptional experience for our customers. We are focused on generating top line results in conjunction with operational and capital discipline to deliver long term shareholder value.
In the beginning of the year, we outlined to you our key strategic initiatives for delivering sustainable, profitable growth and increasing shareholder value. They are: growing our existing brands, launching new businesses and expanding the reach of our brands globally. We believe that the results we’ve reported today demonstrate disciplined execution across each of these initiatives. Our existing brands grew, and we made progress in our new businesses and in our global expansion. At the same time, we returned $115 million to our shareholders in the form of stock repurchases and dividends. All year, we have been making investments in our business to drive long term, sustainable growth, as well as to prepare us for the fourth quarter. We believe we are well positioned as the destination for cooking, entertaining, decorating and furnishing your home this holiday season. We have a strong holiday product lineup and the widest assortment of personalized goods that we have ever offered.
We’ve also made substantial investments in our supply chain and our information technology infrastructure, 2 of our core competencies, to deliver an elevated experience to our customers in whichever channel they choose to shop.
In our supply chain, we have made upgrades to better serve our customers. We opened a new distribution center in New Jersey that is dedicated to retail store fulfillment in the Northeast. This facility has increased our flexibility in how we service these stores while reducing our inventory replenishment cycle time. In the past 2 weeks, we have completed the in sourcing of 2 major furniture hubs as we continue to increase our control over and improve the customer experience of furniture home delivery.
In addition, the regionalization of our Sutter Street upholstered furniture manufacturing capacity allows us to handle more volume while reducing transportation cost and delivery times.
Another supply chain enhancement we have made is in personalization. We have invested in additional personalization equipment, including a new material handling system that improves throughput. And we have trained seasonal associates in personalization techniques. Personalization helps make gifts more meaningful, and we are leveraging our state of the art monogramming, etching and embossing capabilities this holiday to grow the gift businesses in all of our brands. Also, we have upgraded our information technology infrastructure in advance of our peak selling season.
Finally, our multi year e commerce investments are also yielding returns. This year, we’ve launched more than 50 products projects, with over 400 customer facing enhancements across all of our websites. The combination of our open platform, agile development processes and an aligned organizational structure is a competitive advantage that allows us to deliver new functionality every 6 weeks.
Here are some examples of key improvements we have made.
We’ve improved our on site personalization, as we believe relevancy is crucial to driving engagement. We have substantially enhanced order tracking visibility for our customers. Our new AB testing platform is allowing us to optimize the customer experience across virtually every section of our site through a robust test versus control and rollout strategy. Mobile devices are becoming a very important tool for connected customers at every stage of the purchase decision, and we are testing enhancements to our mobile sites to mulberry bags be more user friendly, more image driven, easy to search and shop, and more useful for finding a local store. The first site wher mulberry bags e we have deployed upgrades is Pottery Barn, where changes are being met with great response. And also, our e marketing strategies encompass many different programs which continue to evolve and become more sophisticated, with the result that we are driving more revenue from existing customers and acquiring new ones at lower cost.
I would now like to update you on our new business initiatives. We continue to see opportunity, both domestically and internationally, to help our customers decorate, furnish, cook and entertain at home, across demographics and life stages. Our global footprint is mulberry bags expanding and, in the third quarter, our revenue from foreign operations increased 31% to $51 million. In addition to the stores in Bondi Junction, we opened a West Elm store in Melbourne in September. In Australia, the response to our fully integrated, direct to customer business has exceeded our expectations.