Williams-Sonoma, Inc. announces fourth quarter and fiscal year 2023 results

Q4 comparable brand revenue -6.8%

Q4 operating margin of 20.1%; Q4 diluted EPS of $5.44

Quarterly dividend increase of 26%; new stock repurchase authorization of $1 billion

Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for the fourth quarter and fiscal year ended January 28, 2024 (Fiscal 2023).

“We are pleased with our strong finish to 2023. We delivered an annual operating margin of 16.4% with full-year earnings per share of $14.85, beating our 2023 comp guidance of -10% to -12% and hitting our operating margin range of 16% to 16.5%,” said Laura Alber, President and Chief Executive Officer.

Alber concluded, “We outperformed in 2023 despite the slowest housing market in several decades and geopolitical unrest. Although this pressured our top-line trend, we stayed focused on full-price selling, supply chain efficiencies, and best-in-class customer service. We have transformed our business model and as a result, we delivered an operating margin well ahead of our pre-pandemic profitability.”

FOURTH QUARTER 2023 HIGHLIGHTS

  • Comparable brand revenue -6.8% with a 2-year comp -7.4% and a 4-year comp +29.1%.
  • Gross margin of 46.0% +480bps to LY with selling margin +560bps due to higher merchandise margins and lower costs from supply chain efficiencies, offset by occupancy deleverage of 80bps. Occupancy costs of $208 million, +2.1% to LY.
  • SG&A rate of 25.9% +390bps to LY on a GAAP basis and +460bps to LY on a non-GAAP basis driven by employment and general expense deleverage. SG&A of $591 million, +9.3% to LY on a GAAP basis and +13.0% to LY on a non-GAAP basis.
  • Operating income of $458 million with an operating margin of 20.1%.
  • Diluted EPS of $5.44 per share.

FISCAL YEAR 2023 HIGHLIGHTS

  • Comparable brand revenue -9.9% with a 2-year comp -3.4% and a 4-year comp +35.6%.
  • Gross margin of 42.6%, +20bps to LY on a GAAP basis with selling margin +170bps due to higher merchandise margins and supply chain efficiencies, offset by occupancy deleverage of 150bps. Gross margin of 42.7%, +30bps to LY on a non-GAAP basis with selling margin +170bps due to higher merchandise margins and supply chain efficiencies, and occupancy deleverage of 140bps. Occupancy costs of $814 million, +3.7% to LY on a GAAP basis and +3.6% on a non-GAAP basis.
  • SG&A rate of 26.6%, +150bps to LY on a GAAP basis and 26.3%, +140bps to LY on a non-GAAP basis, driven by employment and general expense deleverage. GAAP SG&A of $2.1 billion, -5.5% to LY, and non-GAAP SG&A of $2.0 billion, -5.8% to LY.
  • GAAP operating income of $1.24 billion with an operating margin of 16.1%; non-GAAP operating income of $1.27 billion with an operating margin of 16.4%.
  • GAAP diluted EPS of $14.55 and non-GAAP diluted EPS of $14.85.
  • Merchandise inventories -14.4% to LY to $1.2 billion.
  • ROIC of 45.0% driven by net earnings.
  • Maintained strong liquidity position of $1.3 billion in cash and $1.7 billion in operating cash flow enabling the company to deliver returns to stockholders of $545 million through $313 million in stock repurchases and $232 million in dividends.

DIVIDENDS AND STOCK REPURCHASE AUTHORIZATIONS

  • Increased our quarterly dividend 26%, or $0.23, to $1.13 per share.
  • Expanded our stock repurchase capacity to $1 billion, superseding the company's current stock repurchase authorization.

OUTLOOK

  • In fiscal 2024, we expect annual net revenue growth in the range of -3% to +3% with comps in the range of -4.5% to +1.5%; and an operating margin between 16.5% to 16.8%.
  • Fiscal 2024 is a 53-week year. Our financial statements will be prepared on a 53-week basis in fiscal 2024 and a 52-week basis in fiscal 2023. However, we will report comps on a 53-week versus 53-week comparable basis. All other year-over-year comparisons will be 53-weeks in fiscal 2024 versus 52-weeks in fiscal 2023. We expect the additional week in fiscal 2024 to contribute 150bps to revenue growth and 10bps to operating margin, both of which are reflected in our guidance.
  • Over the long-term, we continue to expect mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, March 13, 2024, at 7:00 A.M. (PT). The call will be open to the general public via live webcast and can be accessed at http://ir.williams-sonomainc.com/events. A replay of the webcast will be available at http://ir.williams-sonomainc.com/events.

SEC REGULATION G NON-GAAP INFORMATION

This press release includes non-GAAP financial measures. Exhibit 1 provides reconciliations of these non-GAAP financial measures to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We have not provided a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis as we cannot do so without unreasonable efforts due to the potential variability and limited visibility of excluded items; these excluded items include exit costs associated with the closure of our West Coast manufacturing facility and the exiting of Aperture, a division of our Outward, Inc. subsidiary, as well as costs related to reduction-in-force initiatives. For the same reasons, we are unable to address the probable significance of such excluded items. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of current period performance on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for or superior to the GAAP financial measures presented in this press release and our financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include, among other things, statements in the quotes of our President and Chief Executive Officer and our fiscal year 2024 outlook and long-term financial targets.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; the continuing impact of inflation and measures to control inflation, including changing interest rates, on consumer spending; war in Ukraine and the Middle East, and shortages of various raw materials on our global supply chain, retail store operations and customer demand; labor and material shortages; the outcome of our growth initiatives; new interpretations of or changes to current accounting rules; our ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of our merchandise; changes in consumer spending based on weather, political, competitive and other conditions beyond our control; delays in store openings; competition from companies with concepts or products similar to ours; timely and effective sourcing of merchandise from our foreign and domestic vendors and delivery of merchandise through our supply chain to our stores and customers; effective inventory management; our ability to manage customer returns; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce new brands and brand extensions; challenges associated with our increasing global presence; dependence on external funding sources for operating capital; disruptions in the financial markets; our ability to control employment, occupancy, supply chain, product, transportation and other operating costs; our ability to improve our systems and processes; changes to our information technology infrastructure; general political, economic and market conditions and events, including war, conflict or acts of terrorism; the impact of current and potential future tariffs and our ability to mitigate impacts; the potential for increased corporate income taxes; and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the SEC, including our Annual Report on Form 10-K for the fiscal year ended January 29, 2023 and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. We have not filed our Form 10-K for the fiscal year ended January 28, 2024. As a result, all financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates that are identified prior to the time we file the Form 10-K. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

ABOUT WILLIAMS-SONOMA, INC.

Williams-Sonoma, Inc. is the world’s largest digital-first, design-led and sustainable home retailer. The company’s products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — are marketed through e-commerce websites, direct-mail catalogs and retail stores. These brands are also part of The Key Rewards, our loyalty and credit card program that offers members exclusive benefits across the Williams-Sonoma family of brands. We operate in the U.S., Puerto Rico, Canada, Australia and the United Kingdom, offer international shipping to customers worldwide, and have unaffiliated franchisees that operate stores in the Middle East, the Philippines, Mexico, South Korea and India, as well as e-commerce websites in certain locations. We are also proud to be a leader in our industry with our values-based culture and commitment to achieving our sustainability goals. Our company is Good By Design — we’ve deeply ingrained sustainability into our business. From our factories to your home, we’re united in a shared purpose to care for our people and our planet.

For more information on our sustainability efforts, please visit: https://sustainability.williams-sonomainc.com/

WSM-IR

Condensed Consolidated Statements of Earnings (unaudited)

 

 

For the Thirteen Weeks Ended

 

January 28, 2024

 

January 29, 2023

(In thousands, except per share amounts)

$

 

% of

Revenues

 

$

 

% of

Revenues

Net revenues

$

2,278,937

 

100.0

%

 

$

2,453,079

 

100.0

%

Cost of goods sold

 

1,230,322

 

54.0

 

 

 

1,443,229

 

58.8

 

Gross profit

 

1,048,615

 

46.0

 

 

 

1,009,850

 

41.2

 

Selling, general and administrative expenses

 

590,524

 

25.9

 

 

 

540,063

 

22.0

 

Operating income

 

458,091

 

20.1

 

 

 

469,787

 

19.2

 

Interest income, net

 

13,147

 

0.6

 

 

 

1,383

 

0.1

 

Earnings before income taxes

 

471,238

 

20.7

 

 

 

471,170

 

19.2

 

Income taxes

 

116,799

 

5.1

 

 

 

116,177

 

4.7

 

Net earnings

$

354,439

 

15.6

%

 

$

354,993

 

14.5

%

Earnings per share (EPS):

 

 

 

 

 

 

 

Basic

$

5.53

 

 

 

$

5.35

 

 

Diluted

$

5.44

 

 

 

$

5.28

 

 

Shares used in calculation of EPS:

 

 

 

 

 

 

 

Basic

 

64,143

 

 

 

 

66,349

 

 

Diluted

 

65,147

 

 

 

 

67,201

 

 

 

4th Quarter Net Revenues and Comparable Brand Revenue Growth (Decline)1

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

Comparable Brand Revenue

Growth (Decline)

 

(In millions, except percentages)

Q4 23

 

Q4 22

 

Q4 23

 

Q4 22

 

Pottery Barn

$

874

 

$

967

 

(9.6

) %

 

5.8

%

 

West Elm

 

453

 

 

534

 

(15.3

)

 

(10.7

)

 

Williams Sonoma

 

524

 

 

524

 

1.6

 

 

(2.5

)

 

Pottery Barn Kids and Teen

 

311

 

 

323

 

(2.5

)

 

4.0

 

 

Other2

 

117

 

 

105

 

N/A

 

 

N/A

 

 

Total

$

2,279

 

$

2,453

 

(6.8

) %

 

(0.6

) %

 

1 See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue, which is calculated on a 13-week basis for Q4 2023 and Q4 2022, and includes business-to-business revenues.

2 Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham and GreenRow.

 

 

Condensed Consolidated Statements of Earnings (unaudited)

 

 

For the Fiscal Year Ended

 

January 28, 2024

 

January 29, 2023

(In thousands, except per share amounts)

$

 

% of

Revenues

 

$

 

% of

Revenues

Net revenues

$

7,750,652

 

100.0

%

 

$

8,674,417

 

100.0

%

Cost of goods sold

 

4,447,051

 

57.4

 

 

 

4,996,684

 

57.6

 

Gross profit

 

3,303,601

 

42.6

 

 

 

3,677,733

 

42.4

 

Selling, general and administrative expenses

 

2,059,408

 

26.6

 

 

 

2,179,311

 

25.1

 

Operating income

 

1,244,193

 

16.1

 

 

 

1,498,422

 

17.3

 

Interest income, net

 

29,162

 

0.4

 

 

 

2,260

 

 

Earnings before income taxes

 

1,273,355

 

16.4

 

 

 

1,500,682

 

17.3

 

Income taxes

 

323,593

 

4.2

 

 

 

372,778

 

4.3

 

Net earnings

$

949,762

 

12.3

%

 

$

1,127,904

 

13.0

%

Earnings per share (EPS):

 

 

 

 

 

 

 

Basic

$

14.71

 

 

 

$

16.58

 

 

Diluted

$

14.55

 

 

 

$

16.32

 

 

Shares used in calculation of EPS:

 

 

 

 

 

 

 

Basic

 

64,574

 

 

 

 

68,021

 

 

Diluted

 

65,272

 

 

 

 

69,100

 

 

 

Fiscal Year Net Revenues and Comparable Brand Revenue Growth (Decline)1

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

Comparable Brand Revenue

Growth (Decline)

 

(In millions, except percentages)

FY 23

 

FY 22

 

FY 23

 

FY 22

 

Pottery Barn

$

3,206

 

$

3,556

 

(9.7

) %

 

14.9

%

 

West Elm

 

1,855

 

 

2,278

 

(18.8

)

 

2.5

 

 

Williams Sonoma

 

1,260

 

 

1,287

 

(0.7

)

 

(1.7

)

 

Pottery Barn Kids and Teen

 

1,060

 

 

1,133

 

(5.5

)

 

0.4

 

 

Other2

 

370

 

 

420

 

N/A

 

 

N/A

 

 

Total

$

7,751

 

$

8,674

 

(9.9

) %

 

6.5

%

 

1 See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue, which is calculated on a 52-week basis for fiscal 2023 and fiscal 2022, and includes business-to-business revenues.

 

2 Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham and GreenRow.

 

 

Condensed Consolidated Balance Sheets (unaudited)

 

 

As of

(In thousands, except per share amounts)

January 28,

2024

 

January 29,

2023

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

1,262,007

 

 

$

367,344

 

Accounts receivable, net

 

122,914

 

 

 

115,685

 

Merchandise inventories, net

 

1,246,369

 

 

 

1,456,123

 

Prepaid expenses

 

59,466

 

 

 

64,961

 

Other current assets

 

29,041

 

 

 

31,967

 

Total current assets

 

2,719,797

 

 

 

2,036,080

 

Property and equipment, net

 

1,013,189

 

 

 

1,065,381

 

Operating lease right-of-use assets

 

1,229,650

 

 

 

1,286,452

 

Deferred income taxes, net

 

110,656

 

 

 

81,389

 

Goodwill

 

77,306

 

 

 

77,307

 

Other long-term assets, net

 

122,950

 

 

 

116,407

 

Total assets

$

5,273,548

 

 

$

4,663,016

 

Liabilities and stockholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

607,877

 

 

$

508,321

 

Accrued expenses

 

264,306

 

 

 

247,594

 

Gift card and other deferred revenue

 

573,904

 

 

 

479,229

 

Income taxes payable

 

96,554

 

 

 

61,204

 

Operating lease liabilities

 

234,517

 

 

 

231,965

 

Other current liabilities

 

103,157

 

 

 

108,138

 

Total current liabilities

 

1,880,315

 

 

 

1,636,451

 

Long-term operating lease liabilities

 

1,156,104

 

 

 

1,211,693

 

Other long-term liabilities

 

109,268

 

 

 

113,821

 

Total liabilities

 

3,145,687

 

 

 

2,961,965

 

Stockholders' equity

 

 

 

Preferred stock: $0.01 par value; 7,500 shares authorized, none issued

 

 

 

 

 

Common stock: $0.01 par value; 253,125 shares authorized; 64,151 and 66,226 shares issued and outstanding at January 28, 2024 and January 29, 2023, respectively

 

642

 

 

 

663

 

Additional paid-in capital

 

588,602

 

 

 

573,117

 

Retained earnings

 

1,555,595

 

 

 

1,141,819

 

Accumulated other comprehensive loss

 

(15,552

)

 

 

(13,809

)

Treasury stock, at cost

 

(1,426

)

 

 

(739

)

Total stockholders' equity

 

2,127,861

 

 

 

1,701,051

 

Total liabilities and stockholders' equity

$

5,273,548

 

 

$

4,663,016

 

 

 

 

 

 

Retail Store Data

(unaudited)

 

 

 

 

 

 

 

Beginning of quarter

 

 

End of quarter

 

As of

 

 

 

October 29, 2023

Openings

Closings

January 28, 2024

 

January 29, 2023

 

 

Pottery Barn

191

1

(8)

184

 

188

 

 

Williams Sonoma

163

(7)

156

 

165

 

 

West Elm

123

(2)

121

 

122

 

 

Pottery Barn Kids

46

46

 

46

 

 

Rejuvenation

10

1

11

 

9

 

 

Total

533

2

(17)

518

 

530

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

For the Fiscal Year Ended

(In thousands)

January 28,

2024

 

January 29,

2023

Cash flows from operating activities:

 

 

 

Net earnings

$

949,762

 

 

$

1,127,904

 

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

232,590

 

 

 

214,153

 

Loss on disposal/impairment of assets

 

21,869

 

 

 

25,116

 

Non-cash lease expense

 

255,286

 

 

 

231,350

 

Deferred income taxes

 

(29,085

)

 

 

(23,823

)

Stock-based compensation expense

 

84,754

 

 

 

90,268

 

Other

 

(2,796

)

 

 

(2,339

)

Changes in:

 

 

 

Accounts receivable

 

(7,461

)

 

 

15,687

 

Merchandise inventories

 

209,168

 

 

 

(208,908

)

Prepaid expenses and other assets

 

1,016

 

 

 

(11,823

)

Accounts payable

 

99,043

 

 

 

(113,521

)

Accrued expenses and other liabilities

 

4,935

 

 

 

(61,995

)

Gift card and other deferred revenue

 

95,005

 

 

 

31,839

 

Operating lease liabilities

 

(269,162

)

 

 

(242,855

)

Income taxes payable

 

35,349

 

 

 

(18,231

)

Net cash provided by operating activities

 

1,680,273

 

 

 

1,052,822

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(188,458

)

 

 

(354,117

)

Other

 

201

 

 

 

162

 

Net cash used in investing activities

 

(188,257

)

 

 

(353,955

)

Cash flows from financing activities:

 

 

 

Repurchases of common stock

 

(313,001

)

 

 

(880,038

)

Payment of dividends

 

(232,475

)

 

 

(217,345

)

Tax withholdings related to stock-based awards

 

(52,831

)

 

 

(81,290

)

Net cash used in financing activities

 

(598,307

)

 

 

(1,178,673

)

Effect of exchange rates on cash and cash equivalents

 

954

 

 

 

(3,188

)

Net increase (decrease) in cash and cash equivalents

 

894,663

 

 

 

(482,994

)

Cash and cash equivalents at beginning of period

 

367,344

 

 

 

850,338

 

Cash and cash equivalents at end of period

$

1,262,007

 

 

$

367,344

 

 

Exhibit 1

 

 

GAAP to Non-GAAP Reconciliation

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Thirteen Weeks Ended

 

For the Fiscal Year Ended

 

 

 

January 28, 2024

 

January 29, 2023

 

January 28, 2024

 

January 29, 2023

 

 

(In thousands, except per share data)

$

% of

revenues

 

$

% of

revenues

 

$

% of

revenues

 

$

% of

revenues

 

 

Occupancy costs

$

208,020

9.1

%

 

$

203,715

 

8.3

%

 

$

814,290

 

10.5

%

 

$

785,425

 

9.1

%

 

 

Exit Costs1

 

 

 

 

 

 

 

 

(239

)

 

 

 

 

 

 

 

Non-GAAP occupancy costs

$

208,020

9.1

%

 

$

203,715

 

8.3

%

 

$

814,051

 

10.5

%

 

$

785,425

 

9.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

1,048,615

46.0

%

 

$

1,009,850

 

41.2

%

 

$

3,303,601

 

42.6

%

 

$

3,677,733

 

42.4

%

 

 

Exit Costs1

 

 

 

 

 

 

 

 

2,141

 

 

 

 

 

 

 

 

Non-GAAP gross profit

$

1,048,615

46.0

%

 

$

1,009,850

 

41.2

%

 

$

3,305,742

 

42.7

%

 

$

3,677,733

 

42.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

$

590,524

25.9

%

 

$

540,063

 

22.0

%

 

$

2,059,408

 

26.6

%

 

$

2,179,311

 

25.1

%

 

 

Impairment of Aperture2

 

 

 

 

(17,687

)

 

 

 

 

 

 

 

(17,687

)

 

 

 

Exit Costs1

 

 

 

 

 

 

 

 

(15,790

)

 

 

 

 

 

 

 

Reduction-in-force Initiatives3

 

 

 

 

 

 

 

 

(8,316

)

 

 

 

 

 

 

 

Non-GAAP selling, general and administrative expenses

$

590,524

25.9

%

 

$

522,376

 

21.3

%

 

$

2,035,302

 

26.3

%

 

$

2,161,624

 

24.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

458,091

20.1

%

 

$

469,787

 

19.2

%

 

$

1,244,193

 

16.1

%

 

$

1,498,422

 

17.3

%

 

 

Impairment of Aperture2

 

 

 

 

17,687

 

 

 

 

 

 

 

 

17,687

 

 

 

 

Exit Costs1

 

 

 

 

 

 

 

 

17,931

 

 

 

 

 

 

 

 

Reduction-in-force Initiatives3

 

 

 

 

 

 

 

 

8,316

 

 

 

 

 

 

 

 

Non-GAAP operating income

$

458,091

20.1

%

 

$

487,474

 

19.9

%

 

$

1,270,440

 

16.4

%

 

$

1,516,109

 

17.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

Tax rate

 

$

Tax rate

 

$

Tax rate

 

$

Tax rate

 

 

Income taxes

$

116,799

24.8

%

 

$

116,177

 

24.7

%

 

$

323,593

 

25.4

%

 

$

372,778

 

24.8

%

 

 

Impairment of Aperture2

 

 

 

 

2,840

 

 

 

 

 

 

 

 

2,840

 

 

 

 

Exit Costs1

 

 

 

 

 

 

 

 

4,690

 

 

 

 

 

 

 

 

Reduction-in-force Initiatives3

 

 

 

 

 

 

 

 

2,174

 

 

 

 

 

 

 

 

Non-GAAP income taxes

$

116,799

24.8

%

 

$

119,017

 

24.4

%

 

$

330,457

 

25.4

%

 

$

375,618

 

24.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

$

5.44

 

 

$

5.28

 

 

 

$

14.55

 

 

 

$

16.32

 

 

 

 

Impairment of Aperture2

 

 

 

 

0.22

 

 

 

 

 

 

 

 

0.21

 

 

 

 

Exit Costs1

 

 

 

 

 

 

 

 

0.20

 

 

 

 

 

 

 

 

Reduction-in-force Initiatives3

 

 

 

 

 

 

 

 

0.09

 

 

 

 

 

 

 

 

Non-GAAP diluted EPS4

$

5.44

 

 

$

5.50

 

 

 

$

14.85

 

 

 

$

16.54

 

 

 

 

1 During Q1 2023, we incurred exit costs of $17.9 million, including $9.3 million associated with the closure of our West Coast manufacturing facility and $8.6 million associated with the exiting of Aperture, a division of our Outward, Inc. subsidiary.

2
During Q4 2022, we incurred an impairment charge of approximately $17.7 million, including $9.7 million related to the impairment of software and hardware and $8.0 million related to the impairment of goodwill, associated with Aperture, a division of our Outward, Inc. subsidiary.

3 During Q1 2023, we incurred costs related to reduction-in-force initiatives of $8.3 million primarily in our corporate functions.

4 Per share amounts may not sum due to rounding to the nearest cent per diluted share.

 

 

Return on Invested Capital (“ROIC”)

We believe ROIC is a useful financial measure for investors in evaluating the efficient and effective use of capital, and is an important component of long-term shareholder return.

The following table presents the calculation of ROIC, together with a reconciliation of net earnings to non-GAAP net operating profit after tax ("NOPAT"):

 

For the Fiscal Year Ended

(In thousands)

January 28, 2024

Net earnings

$

949,762

 

Interest income, net

 

(29,162

)

Income taxes

 

323,593

 

Operating income

 

1,244,193

 

Exit Costs 1

 

17,931

 

Reduction-in-force Initiatives 1

 

8,316

 

Operating lease costs

 

296,779

 

Adjusted Operating Income

 

1,567,219

 

Income tax adjustment 2

 

(398,074

)

NOPAT (numerator)

$

1,169,145

 

 

1 For more information on the nature of these adjustments, see the footnotes to the GAAP to Non-GAAP Reconciliation.

2 Adjustment reflects a hypothetical provision for income taxes on adjusted operating income, using the Company's effective tax rate of 25.4%.

 

As of

 

 

(In thousands)

January 28, 2024

 

January 29, 2023

 

Average

Total assets

$

5,273,548

 

 

$

4,663,016

 

 

 

Total current liabilities

 

(1,880,315

)

 

 

(1,636,451

)

 

 

Cash in excess of $200 million

 

(1,062,007

)

 

 

(167,344

)

 

 

Invested capital (denominator)

$

2,331,226

 

 

$

2,859,221

 

 

$

2,595,224

 

 

 

 

 

 

 

Return on invested capital

 

 

 

 

 

45.0

%

SEC Regulation G – Non-GAAP Information

These tables include non-GAAP occupancy costs, gross profit, gross margin, selling, general and administrative expense, operating income, Adjusted Operating Income, operating margin, income taxes, effective tax rate and diluted EPS. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our quarterly actual results on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Contacts

Jeff Howie EVP, Chief Financial Officer – (415) 402 4324

Jeremy Brooks SVP, Chief Accounting Officer & Head of Investor Relations – (415) 733 2371

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