Williams-Sonoma (WSM) 16 Mar 232022 Q4 Earnings call transcript

Welcome to the Williams-Sonoma, Inc. Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks.

I would now like to turn the call over to Jeremy Brooks, Chief Accounting Officer and Head of Investor Relations. ahead. go Please

thank call. And joining fourth our Good you earnings quarter morning. for

I'd this best and that make you these and like remind to We outlook. during guidance fiscal with believe to our long-term including reflect forward-looking respect call, future performance, events our financial statements for 'XX estimates. statements will we

and differ significantly may However, make assurances any results we these our actual expectations. cannot statements will materialize, from

events these or to obligation publicly or statements no after to of call. reflect that undertakes Company The today's circumstances revise update arise may any

Additionally, measures. results. we be be for non-GAAP will read refer to should These considered certain financial and GAAP not measures should our together with replacements

we our our our fourth have and for affect our quarter use associated impairment room and Specifically, in goodwill planning or not of charge portfolio off Outward million impairment been charge Aperture, strategy does brands hardware $XX.X Accordingly, the to division a results subsidiary. of our the costs design an with year charge. 'XX fourth and in This of recorded this and certain fiscal technology impairment ongoing non-GAAP for of in adjusted write software Outward functionality. quarter the and

measures filings appears with non-GAAP this the SEC. the our of most reconciliation GAAP call the should measure This morning. full A release we comparable in considered in with conjunction directly to X earlier Exhibit to press issued also be

Investor Relations Finally, a our replay of website. on will this available call be

to Executive like turn over Laura Chief Officer. I'd Now and call our to Alber, the President

and for thank joining you the Thank you, Jeremy. morning, call. everyone, Good

With to peers. profitable record customer we despite revenue macro growth, on compelling and of products, delivered year we're we our Inc., At focus proud environment, that declining our continue relentless Williams-Sonoma, and outperform record earnings. service another the

the continue largest design-led gain digital-first, home world's as to And ourselves share. retailer. continue We sustainable we distinguish to market

to home deliver organization. distinguish other us to high-quality, furnishings that other With value company And that's but proprietary things at the the transforming digital-only our integrated be largest not channel experience. and vertically of sourcing e-commerce customer these company furnishings what platform, one States. products design It digital-first United our offers in capabilities players best our home offers e-commerce No are found No anywhere market strategy us? allows that we in-house cannot are the sustainable else. the

hubs. optimize Our in-house analytic deliver transition no not value CRM store consumers only stores great has but spend expanded And to our customer to company also centers with services our outstanding experience, and strong furnishings we our customer data as other connections. record home digital teams in want And ship and we our in service an on XXXX, today. our omni-fulfillment design many that also stores

to named Assessment Capital Morgan QX, North XXXX. the us AAA in to to ESG In added only rating, Sustainability companies. on XXXX retailer we a be proud International of Newsweek's S&P the responsible we Stanley America The Dow North the the most America, new possible. highest Index list for And America's are included list Jones gave were

new our our are our our profitability are of initiatives growth has cross outside by with brands. been key differentiators, and/or and driven brand Along success that core

our due came and in a BXB XX% a and driving business, win BXB our wide year-over-year range to hotels, design we products XXX% we the largest multi-brand accounts ambitious basis. We office in Our company. close, to everywhere And our very of this furnish furnishings reach our Williams-Sonoma, is a and capabilities just to continue billion Inc. restaurants to home on from We set growth is spaces. $X offered no in two-year demand growth cross-brand longer driver portfolio. to customers football business-to-business. goal from year stadiums

is three websites our expectations our tremendous conversion initiative Another opportunity. market new we India product a to off market very relaunched and in India, And brands. see the and in a improvements differentiated In exclusive and With and Reliance of global Group where AUR line, outperforming our markets. stores is massive start. our across strong our the into expansion growth partnership successful are in website in saw our Canada, we with

with Rejuvenation, kitchen we new travel wall and resonating our expanding nearly on And and cabinet also and into and vanities, growth personalization luggage and million including hardware customers, Mark Graham, business Together, space, white needs growth. gift brands In to have at the and lighting. we're bathroom, businesses, including outsized and space XX% in and see service our $XXX in high-quality remodel two they categories represented revenues customers. comp custom These the provided and our fiscal Mark XXXX, of is year. Rejuvenation drove related Graham, incremental in nearly At accessories. a

on all Pottery together see We're our that the are West you proud contributors reporting Our and And key delivered are comp guidance in initiatives. our that 'XX also and today. Pottery differentiators core line Barn brands, Barn, it to top Put a Pottery operating key results an Barn X.X%. fiscal fiscal Kids, are XX.X%. our the Teen, Williams-Sonoma XXXX, of achieved together at X.X% we Elm growing growth and we annual margin strong

over year. the $XX.XX from EPS per to At last we $XX.XX XX% time, of same drove growth share

grew top, peers. the X%. industry than the at X%, In grew said to we our more continue a outperform year we where I As

record is and in this we are impressive QX of against given the and of up QX the declining macro XXXX. particularly demand in XXXX that All backdrop

than margin our and from to billion doubled to X.X% more we've last it's operating our looking revenues back since line. for than clear years, more moment a that XX.X%. XX top We've And $X.X also delivered. the at we've adding consistently XXXX, Stepping recently, XX%, the grown more

specifically talk QX. about Now let's

were results QX Our weakened. backdrop while the achieved macro

our of a were total comps and comp leading portfolio comp revenue demand Our across mid-single-digit X.X% of in the brands, range to were net negative inconsistent company. negative

per with in QX. SG&A addition, cost savings, share headwinds pressured earnings these cost were increases In of although margin $X.XX chain operating offset margins, able producing of we supply an XX.X% and our to

a Now and the on for let's brands and full full comp a a year. year. QX On Pottery XX% about inspirational Pottery XX.X% like ran execution for the holiday the generated a comp. Accessible Barn our three-year Apartment was our in initiatives the basis, Marketplace offering Barn performance. Barn’s Home, positive Also, X.X% successful. product of drove offering and growth its talk QX and successful Pottery

As with a new we price look has ahead, and offerings, product sharp to great the brand lineup including the year strong points. products of design

only business in a we'll an provides app should from our highlight Barn functionality Growth comp We've brands. both for seeing ran business easy-to-use continued our we're Children's which interface. and continue but customers Also, have another to year. to is for And a live the XX.X% short a excited our app, other are X.X% Pottery with Barn Barn and Kids a to and is LoveShackFancy, Children's collaboration Teen, and launched introduction to the expectations. results Pottery on read with a apps positive launch a Pottery dorm. response, our On brings successful fashion exclusive X% enhanced in QX the and positive which positive outperforming three-year generated been shopping we comp. determine basis, we time, driven if baby of trending be with the The brand,

brand the to West in-stock an environment. by will The Elm which benefited benefit On coming Elm business West very is off comps. full West a operating year and this Elm ran basis, a most XX.X% QX, this macro children's West strong the stage a basis, was brand comp year. business a to critical negative position, us three-year life tough improved from X.X% margins. On In multiyear the ran affected QX, continue In XX.X%, strong Elm a comp. generated very and

design a we're a very proven Elm West chapter expanding success April president and Kornbluth and growth and Day acquisition; growing with track of Day of four furnishings She'll has ahead, its the on value; excited product announcement new brand record recent and customer opportunity. Looking next brand Xrd. home brands. into about space; the lead focus awareness leveraging effective as previous channel industry-leading increased through growth white areas:

this short-term Elm. market Given the continue very those growth areas, trajectory brand, be see opportunity to cautious long-term Day continue on we the West addressable the consumer, total and the four Kornbluth optimistic to softness. focus with leading But of we about

Finally, January. the ran largely a but driven holiday in a had in negative QX, by comp softness season, X.X% successful Williams-Sonoma brand

On a XX.X% price brand generated basis, year, ran Williams-Sonoma And comp. team the increasing On a selling. full and a Williams-Sonoma market the full the three-year negative has remains on relevant housewares product X.X% promotional, content while comp. the exclusivity, innovation, focused extremely become

furnishings innovative business. we new see have from product Williams-Sonoma year, the the of the our pipeline collaborations and assortment of a launches throughout into planned chef integration We opportunities kitchen home and

uncertainty a With With focus differentiators consumer. with growth confident weak housing remain we ahead, initiatives, there's with on Looking we inventory gain and our the our a our reducing our of market, possible our and recession, billion recognize share. remaining line. at furnishings we're top lot TAM, Nevertheless, in confident. confident we're layoffs and the fragmented, market key BXB on we're that large including estimated we market costs home that managing continue bottom the an line. and $XX And confident levels, market will to with the

focus than growth down, detail. will come will in on drive more confident XX%, compelling relentless inflation margins Jeff we're of and and customer as service profitable and more products, shipping costs, With operating including our that discuss its

through growth the algorithm. in I Looking environment better coming of even peers. than further get believe out, we're our confident we to long-term any going remain our

least We improves. a growth of our growth, at high-single-digit are delivering we we the going external XX% operating top can environment believe mid- deliver and to once sustain to profitable and line margin keep

with everywhere. furnish culture vision brands. strength values of team, talent, is we're the our great This to company innovation ahead And our our our with moving great and and a customers our with of

As and it we all turn deliver and to I'll our for outperform that with Jeff. peers our will do, shareholders. we employees customers, confident continue of over And we're that, to

Laura, everyone. Thank good you, and morning,

service and and said, Laura initiatives, our another peers, on XXXX our compelling growth, have gain of we year growth differentiators share. key and outperformed profitable revenue record customer was our earnings. of we market focus With products, relentless to because and continue As

our will through our and fiscal XXXX you guidance. results results, walk Now, then XXXX QX I

with inflationary absorbed growing full of channels, represents XX% digital XX.X% basis XXXX. revenues in of a line at our platform, $X.XXX supply points both Gross the ongoing grew XX.X%. guidance the impact That XX% E-commerce as X.X% revenues, top happened XXX deleveraged revenues. a net our we first X.X% global with and margin on comp specifically, of year. e-commerce total our to finishing digital-only More not pressure. at With retail COVID XXXX disruption comp growth comp chain we now of XX% billion, last and saw and year in across net from in comp but XXXX mid- high-single-digit growth, of

to able of basis were With our in and Operating operating of we strong full net offset leveraged in XX.X% of profitability materially revenue, fiscal discipline and financial was these year. as results SG&A headwinds margin of last guidance 'XX our margin consistent line year our from with demonstrates year XX.X% our materially at control, cost the with resiliency and gross XXX models. points being

Diluted year earnings another $XX.XX grew last $XX.XX, shareholders. earnings our year's per of over share XX% for record of

for constitutes fact, that example XXXX fourth year growth our we've another flow our cash growth, support in million to our increase shareholders, to how we're excess generate ability of us proud consecutive business cash to our capital our operations, $XXX allowed sheet and the billion delivered. over Likewise, return fortress balance consistent In and to of consistently $X fund investments free shareholders. long-term our to EPS

consecutive $XXX shows we our shareholders. strong increased our Dividend our approximately payouts with the for our $XXX repurchases Coupled $X.XX commitment returns of XXth per year were to or million, share, represented dividend. have million total this maximizing share

another example our commitment driving And shareholders. long-term for growth discipline of here's financial to our and

retail capital. investments best our increased our XX% the ROIC levels, on Our capital the invested is Inclusive industry. and return inventory among higher of in

results. dedication sum our of have driving to hard all proud great delivered our we're results, work want another earnings. to record these XXXX in associates year and thank and I their revenues To for

Turning results. our to QX

choppiness our demand outperform With through said, brands, we was and the market continue share macroeconomic declining the and our of our family the quarter's despite of Laura line peers. to stable backdrop. This As in-house our design gain industry. ability proprietary outperformed top to ongoing strong our strength and

the a revenue revenues profitability. mid-single-digit Our negative at and resilient the decelerating January. holiday We came quarter to demonstrates range, model in the operating saw on our of brand in operating comparable November X.X%. with billion, ended Net soft demand margin sustain QX's book at Demand soft by comp $X.XXX trends. from growth a power a strong early season negative was

fulfillment, order we ability even strong inconsistent were as market continue momentum and driven revenues take experience to net Our continued initiatives ongoing our in by demand. our share growth to

line expectations. demurrage at as reflects Coming our Gross of costs, points was the efforts Moving statement, input product down service basis in our with in to the impact statement. flowing it XXX through last XX.X% including and higher well margin higher costs income detention our ocean as customers’ year, income meet expectations. below our freight, the

decreased absorb product ocean the detention margins ongoing higher started higher freight, This our costs, to last commitment as we our by pricing site-wide our command Merchandise from costs and forgo into power, and from by year was partially promotions. offset to the demurrage income proprietary products statement. capitalized

customer attributable decline to outbound margin higher also gross was costs. The shipping

typically cases, which inventory shipping serve would shipping regional continue been our inventory hard times customers and to out-of-market improve location shipment. to fulfilled We're centers, by multiunit a some and, in have for distribution rebalance We working to composition costs orders, to customer our in multiple single our service. these from incur best higher

We gradually few over expect the customer next service quarters. improve to

Occupancy were at X.X% costs above last to points occupancy of dollars year, X% million. increasing net $XXX XX approximately basis with revenues

on partially optimization cost customers our distribution initiatives incremental service time from new over These Coasts. new East drive centers and ongoing distribution centers our West for costs the offset support improve efficiencies both retail Our will store growth, time. and long-term our

leverage be Our in employment discipline leveraging incentive last trends points compensation to costs, SG&A last financial manage with with a XXX accordance adjusted rate our low as variable continues ability year showcasing at year, to line our we XX.X%, control performance. top business costs over employment and basis at and historic to

the leverage agile, reflects marketing advertising of Our performance-driven our proficiency team.

that SG&A from competitive quarter. the recoveries data advertising to fourth drive capabilities, the us advantage in insurance Our includes real near in-house we in first-party evolve business. and as efficient platform trends underappreciated see multi-brand an are time also allows in spend

of line, to durability operating and inflationary points which challenging basis environment. regard QX we margin headwinds profitability, XXX cost and With income the despite in macroeconomic the year, another reflects a XX.X%, solid last significant pressures. quarter at operating our only delivered bottom of earnings million $XXX below is of

share record of above $X.XX fourth Our share year's or was earnings record diluted earnings per $X.XX last quarter X.X% $X.XX. of per

maximizing quarterly inclusive and On we sheet, consistently the million our the no paying of value. balance and cash commitment repurchasing with balance This opportunistically of a with ended $XXX quarter outstanding. our is debt dividend shares shareholder to

billion, Merchandise include are while important increased over XX% inventory three in-transit last inventories, which increased here. over on year, to $X.XXX at inventory, XX% hand There last emphasize year. points

our XX% turnover levels by year's growth apples-to-apples an over An have time. First, increase skewed inventory XX% on disruption, inventory how XXXX hand only our we've supply our versus comparison as revenue highlights last chain of on-hand artificially low improved inventory during against pandemic-related that base. increased is creating

QX transit earlier expected anticipated in transit as adjusted Second, receipts supply we pandemic our than in we during normalize. many congestion chain substantially eased the received and retailers, earlier than Like times QX. times

reduce to backlog levels. inventory enabled levels, normalized contributed increased substantially to this us to it our our While

growth lower reflects demand we've our merchandise future in aligned the outlook. as in XX% macroeconomic cautious inventory Third, sheet reduction order a on given balance forward-looking our with transit,

we've To our sum industry. QX up our outperformed results,

Our top ability market to our take share. proves line

Our per operating commitment share record the of is maximize margin our to earnings to profitability, testimony demonstrates and our returns. shareholder resiliency our

margins are we range are providing range revenues guidance operating and the ahead be comp to comp, positive macroeconomic 'XX. to XX%. X of XX% XXXX for net of X XXXX. a look Due the between down to uncertainty, let's in to Now, wide with expected

materially first the be the tougher. year expect half of We will

yield will last demand with the order line, year's comparisons the top On coupled likely comps. year-over-year high back macro and negative declining fill, our

tailwinds in costs On line customers. costs that income as margin well continue continue to service our line, become the our pressure, gross our our higher pressures The to turn saw into will tailwinds shipping profitability. as gross top on sheet get headwinds back margin to support the foresee bottom year, In we easier and of comparisons should the QX. half year-over-year balance our these we statement input sitting ongoing incremental as our as into amortize

for our funding Our capital allocation investing operations plans our and in growth. long-term business XXXX prioritize

$XXX spend This expenditures XXXX, business. of invest the of efficiency through in million to in growth constitutes to with dedicated e-commerce expect XX% capital enhancements our leadership to from a XX% technology We long-term driving decrease the spend and chain supply our initiatives.

ongoing expect of We continue return share to in to excess to shareholders dividend payouts our and cash form quarterly increased the repurchases.

our year quarterly payout be or dividend to. the we another proud which of increased Again, we double-digit of committed share. XXth XX% For in increase $X.XX announced will payout, fiscal are $X.XX consecutive dividends, to and both 'XX dividend per year of today,

today, approved repurchases, for which Board will share deliver a share stock new our under shareholders. has we repurchase returns our also announced For repurchase to authorization, billion our opportunistically $X we

and increase returning shareholders. our continue new to authorization share dividend repurchase to our Combined, our commitment excess cash

shareholders we how to fact, over the last is of we've example delivered. In five years, consistently returned another which yet billion $X.X over our

confident look said, of in Laura we XXXX. we the long-term business fundamentals remain as As our beyond

Our to line top with operating margins high-single-digit long-term floor a continue growth of exceeding drive will to mid- algorithm growth, XX%.

our competitive our the digital of strength for our world's of the initiatives, retailer, we're design-led profitability fortress gain ability the digital-first, but furnishings the sheet. continue fractured and balance of peers to strength confident home not and digital-only outperform of costs, market sustainable growth the share advantage As profitable we'll reasons: to control to our largest in channel of ability industry, our these our in-house the proprietary deliver design, our resiliency the our first strategy, growth durability home

open With for call that, questions. the I'll

Capital Loop with of from Markets. Your Instructions] comes Chukumba [Operator first question line Anthony

pronunciation last It was morning. Good my of name. a good

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cost, there It Elm -- leapfrog honestly, out And creates are this even to and brands, opportunity though there's West creates there, opportunity. reduce opportunity all and be to out peers as said, more us our Anthony, of for And efficient take many our share else peers stronger struggle. drive It to weaker service. on also as come gives our market growth. profitable opportunity opportunity and I than the anyone negatives

real of to growth weed. Very expectation it. thoughts terms And BXB for one in your just a love sales follow-up. helpful. just in Would BXB Got grow continue sales like then XXXX. Thanks. quick

as year a Anthony. year growing most one morning, our you exciting growth Good BXB $X XXX% and we a finished initiatives, know, this two-year. shy of billion, and one of XX% is just in on

neighborhood see going our In terms XXX comps basis accretive it to really exciting There's probably where we 'XX. in year, of about things be some comps, continue should to of our the on next in in to BXB. points

our clients. know, as free And deal. talk In wins liberty about. we're outfitted at not of Jr.'s corporate QX, was there we saw the Carl's some not no space, can notable And office part food, about talk in unfortunately, we office. was you to But we always

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capture QX date. continues here customer we not the is first to of can capabilities In multiple digital-only that leverages we and point to was ways. It our largest share winning billion BXB us, brands, contract the fragmented for a strategy design be to quarter continue digital of global $XX key the in fact, strategy The and but BXB portfolio service market and our sourcing market. in-house means BXB in

from of Max Your next the TD question line Cowen. comes Rakhlenko with

through the how both comps comp and should to the high well we guidance the EBIT about So as for XQ, guide strong can versus market January? mid-singles scenarios the you you walk including both the demand low end end margin that as think dynamics And of softer Thank you. first, get versus down in running 'XX? us

Good morning, Max. seeing. Well, we're what here's

As we is contemplates our of uncertainty, ongoing continued choppiness a anticipate and wide help. certainly week in the don't in past range events the macroeconomic outcomes. which demand this And all reflected of of guidance,

prepared As first of in materially we our tougher. year the said the remarks, half will be

order On our talked as top year's macro, on about margin high declining well input last sheet as to we comps, also balance yield in we've as amortize coupled the the headwinds to year-over-year with top the continue ongoing shipping our And demand line to headwind did toughest pressure from comps line. see incremental on see and we'll the all bottom higher service line, is costs on customer. we’ll negative our fill, actually sitting costs, as our in the our gross QX in P&L we going as see likely they our back

is back half But a different here's story. the

as as headwinds see our year. year-over-year gross comparisons tailwinds last become Our top Labor started mentioned margin demand And especially Day after easier, in decelerate before, the back we line demand get half. we've to

We're to take any like market share positioned make. I'd to the here's key uniquely in So environment. point

balance market us in growth take will to any pressures share and And -- our positions differentiators our enables initiatives us take sheet position to not. key competitors environment. to withstand of fortress many Our

your XXXX walk outlooks, us confidence lower in it. Got you XXXX And your helpful. That's as the significant then well as margin expectations step-up achievable Can of a as from promotions? you the meaningfully give embedded through that you. Thank is EBIT so regards. very And lock as this well best -- long-term factors levels. both that

cost in 'XX a In pressures expanded Look, our basis a 'XX, cost we've by us and of the 'XX and channel tailwind discipline. guided we've first initiatives, into XXXX op result growth strategy sustainability our the almost since of confidence be the about, significant near gives half Sure. half term, our just of we but our short-term as and a some headwind our XXX I points margin talked have that will of then back become through in margins. the that as

in beyond the 'XX our and long-term business. fundamentals look macroeconomic uncertainty, confident we current of the remain As we

continue -- algorithm growth with will margins high-single-digit which exceeding to top drive a XX%. growth, mid- to Our line operating of floor

We six XX% margin see underpinning drivers operating key this floor.

our over the our chain supply margin is become First headwinds half our been I’ve efficiency. will sustain tailwinds talking gross term. Like to, will that first long

optimization. our is Second cost ad

Our in-house model to with our first-party spend. data ad on continue allows and us optimize to own hands the keyboard

is pricing Second our -- our is third power.

ongoing remain in basis. design, and to our cost reductions. site-wide as the committed Our inventory proprietary promotions enable command products, we price higher promotions. point an market, in-house a Fourth, that and us forgo site-wide And foregoing mention I'll

discipline to cost and Our our speak results controls. financial

we contribution where key we've is e-commerce our e-commerce. margin targeting could profitable and go The Next point our sales to retail And more fewer where mix with more leverage sustainable from in operating to, XX% which stores. higher higher our the we're is growth finally revenues. channel of higher at continue here the strategy, is even is drive optimization and spoken

Your Wintermantel next comes question Oliver the from with Evercore. of line

You but already are the quarter. into X.X-month the now January, soft first we mentioned

but for be the quarter on half, first some started the good How lower pretty than would far? first outlook You the maybe the how the -- performed second said details meaningfully is you half quarter. it's helpful. so So did -- quarter

Good morning, Oli.

helping, week. past environment performance with recent is choppy the the to the inconsistent, much not our and macro especially continues So, in be like events and it QX, was in

our in is of range guidance, this outcomes. of wide reflected contemplates All which a

Here's the we know. thing

differentiators us to position uniquely take on any environment. key in three market capitalize share to opportunities Our

can it's to we so us, drive profitable the business. do take for about and growth not what It's in our about market share So, much macro.

Got have And achieve would as term? is it. you. what areas. you've done SG&A? Thank a to longer the good that And in How to follow-up, job leverage cost-cutting a comp sustainable you really

our managing in SG&A. successful very been we've Yes, you. Thank

discipline and our distribution I model And our and call think sustain effectively. believe of continue from our centers a cost centers. our it controls. mix leverage ad majority stores, commitment our financial and to we is speaks costs to can We employment and employment and to perform SG&A operating our comes and those of costs. in The manage

our the competitive in the the I leverage to is prepared I as agile have And advantage. of which, my reflects underappreciated remarks, ability we capabilities, performance-driven think advertising mentioned again, an So, our sales. flex proficiency in-house

discipline, ability any flexibility the in So, do our so can leverage and we're environment, of commitment we to to which our future. to shows control continue operating SG&A our model, costs the financial our in confident

said. to add Jeff I, here recession as through that, been you just also for best time we in storm the XXXX we the and We and many to and pull, and but stronger, situation, -- levers companies and pandemic this we're want and have one we've again. don't positioned be proven we've and a the I’d come to any this out certainly of can time while, weather

before. have team through most. it how They to navigate been we who's foremost, and this know tenured than First management better a

full then, us we better know blown than balance in much And our situation recession. to a are sheet most. not waiting strong see about a You that puts

for speak and pulling way, more drives aggressively that we which, the We are levers have the up us operations, we service. to set as efficient cost-cutting better by

tailwinds. transportation continue costs our from And to higher pressure will of mentioned, resulting costs and costs customers. chain additional incur supply have last as they and as our costs been servicing inbound because serve will will of be continue and under we Jeff down, come to So, do these the large tremendous But year.

be. We've Our to orders, normalized service want service. normalized not where is we has back it it improved. but We've

It's higher. so reach improvements that standard that margin lot a our much been before. never a level, level And we've Our of chain we for seen investing supply can we've us. and yield will in is in

from from remember, Also, labor vendor higher and and it's But changing. board these been seeing across fuel. starting we suppliers our is expenses inflation reality higher vendors. costs, we mitigate costs. raw the affects to come And have And the our higher are costs costs costs, higher down material seeing the vendors from

how businesses, what people large and advantage -- our no but channels And e-commerce is. with then mean competitive also, we I mentioned stores. you our see

really who in multichannel go because sit but earlier, it using store. actually differently. we're expanding from have shopper us. in experience the We're ship people them big pick it's online our can this stores shops we and inventory don't see in I for is store. more know these enormous people in do they're it And we invest in what sofa turn for, can research the the And better e-commerce. and said can able a looking we much the stores as that to advantage stores, and You they and up they And

down And we we looking have immediacy. we've investing that do first-party tech able Jeff us and also in been, costs. our we're as how have keyboards, data, we said, costs our And on ad as because, helps ramp we are said, we with can and looking at at this constantly ad hands to improve

backfilling and on cautious did that in have unlike QX cuts. us it's We others, important On and extremely that we, labor to been to regard has people well positions positioned leave. when QX, in this note labor,

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the is Telsey with Cristina of Group. question from line next the Fernández Your Advisory

furniture, responding provide I what doing better consumer to is wanted worth? guess, had some particularly demand. was like over the been lower in and I an perform existing you sales to environment home price furniture I categories a question typically very And is how but past in couple depreciation? does strong -- and on of has home what see I what color interested I of the years, if that what could décor. know is

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that than brands. said, the and still for durability celebrate And going we year baby assortment And portfolio The are I may perspective too on that see better give people gift-giving I set they're a and don't and exciting aesthetics seasonal, to gear. both more assortment others and really that Williams-Sonoma that continue into because as or up into with have brings I a be So, scale, stores from go things is very not the people registry their move the want into serve to a gifts. still these life brands to trends news strong. holidays to going I who think far and time. there's not of this lot of mean, than people price around the Easter stage have we good all points our reading

their all is asset. of of On And to have this mind XX%. the pandemic. increased homes. learned greatest now the housing's they the us and People that continue love back how really sales dinner top cook realize know have especially for people decreased home most in on our is home going XX%, for spending -- to expensive. values but elsewhere, call as they out home I know their They that cut to customers, And of

and party is full force, back on. in area So, we're dinner it's the an focusing really that

just dynamic other if do remind what you buy you do? move, remodel, you you furniture. remodel. new Eventually, The you is, everybody to When can't

brands, of is our our are that what portfolio another able think are those So, inflection some with of we at because look the about, we think as build to to point of and market we consumer. things

the thinking in question for just It like the SG&A, That's year. I how looks But margin about more versus to XXXX to probably helpful. outlook, the And for then, the second decline the controlling had, you're get costs. Jeff, gross

in first gross deleverage margin a those in be the and should most the due or be the you headwinds would to combination it decline mentioned So, both? we of half, to of expect

glad that Thank you you, Cristina. I'm up. brought

detention as line guide become cost into everyone half, But don't line. pressure continue ocean 'XX. P&L. I on say, Those our the my to of will in amortize as all I and the of to will I back higher we So, half demurrage gross product and think the especially And first as freight cost knows. specific items, capitalized and our 'XX the a tailwind said into margin remarks, will be the in prepared in

from that's in 'XX. P&L a we'll standpoint pressure see the So where

-- line standpoint, that discipline we've effectively. believe to and said, we us SG&A to our financial allow an as control cost to that continue From manage will we continue

I specifics, of that So, the you we're how flavor a going we're not to thinking will think but guide give about it.

with Your Marni next question from the Shapiro of comes Retail Tracker. line

you Marni? are we Marni, Hello, have Do Marni. Good morning. there?

I'm Hello? here. I’m Hello? here. Hello?

hear We Yes. you. can

tough the you rates it's know a and for just step banks Laura, Okay. want not it on connecting the big for guys. congrats moment. environment a interest through what's I making away But nicely. I from actually market focus been bit very and don't little why to picture housing

guess, traffic talk wanted I had you to one on about in actually And some come in witness comment down regular Are stores really of up that that the most few picture I stores? follow a this you a I sit and couches, said on they could to people bringing little Are these about you're Could and good basis. new recently a LoveShackFancy. then, collaborations, You've collaborations? the they customers? bigger bit, driving on

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how the and changed model? kind store and of that how sales staffing the So, you has approach

Thank you, Marni.

It's let's So, interesting. with collaboration. begin the

design of sometimes have designers recognize and children's children that the categories. like all many And business taught different know those kids As our Wars our seems as Harry give we little in world we there our things, when are and and the things, that a out actually them importance as not in team, in-house Star we that to much collaborations Porter so own love young -- us incredible doing they're adjacent miss.

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us chef. not category want come community done them oftentimes, are talk knows mutually also -- you've seen these best but another and collaborations just develop all than exclusive with important than pan about work we the to what products would don't have chef products our the because who we've to symbiotic. brands. our that better chefs are a be you in in, not to we and collaborations And that with is forget have Chef it's how to chef about And

because our sometimes So, customers that don't brands. consumers these does also the have in of of driving bringing very new this know but collaborators sales, set impact have different a

loyal a in in collaborators. new these are good these Pottery helps people. that. And And bring people really to B Julia example that of us is so, very very, Barn

that continue pipeline. feed to going to we're So,

coming this have ones up competitive We exciting confidential That's some great. very year.

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backyard Williams-Sonoma. You a is we in tested here might And we with seen outperforming. back put our were and of format And Madera, really that together new Corte years have we it. a right in it couple thrilled

things less up come we And as same the investments stores. do that to so, those to more able freshen carefully it up renewal, making in means the are space. or it And we're doesn't -- for

have mix to it you We sell you prepared think be like some might buy. Williams-Sonoma to also And that need. those also furnishings that parking. furniture, other retailers. that than food, home and want to that But in and furniture-based destinations. And and people and stores something of you to come We and but dinnerware you're accessories prepare of our We're when more comfortable. inspired we to it and things come visits buy decorative in in don't why is to and traditional create tabletop so, you the we all come make buy, right

helpful. guys guess, very backlog mentioned due have you And there's I can And way I think the that because on That's still follow a the COVID, people to rethinking, are extraordinary you also seen really of growth. their kind are just necessitates growing I the offices -- up same some team, really -- of you them at this point? downsizing are just are this to are keep it nimble and Do which renovation. BXB still and you moving, you small able

design our resources global BXB have team we as what Fortunately, well merchandising all team, and organization, our supply sourcing in-house team. leverages our the does chain a of it inventory our as company, is as

investment works with and terms BXB about to There design, brands, contract what means care the of to as to strategy our and service the more digital-only can -- larger are service a portfolio tight. overall, dedicated So, really much really team channel our is then we're our we're we incremental the sourcing space But this in-house team able business. multiple ways. first of. resources our taken but in global capability organic our our orders customer keep sure to pretty existing in able make customer advantages drive of have leverage that digital without we not the It's

a and in continue we strategy, capture continues a fragmented be market share So to marketplace. to for it us, winning

turn to would closing like Company for this I time, the the over call back to At remarks.

next Yes. for to Goodbye. look joining Thank to time. you and you all us, talking forward

This call. for conference participating. today's gentlemen, thank concludes you and Ladies

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