While many retailers and home goods stores will struggle in 2023, Williams-Sonoma (WSM) has maintained its post-pandemic momentum, thanks in part to its strategy of holding the line on pricing.
CEO Laura Alber made the decision to “stop discounting” while physical stores are closed due to COVID-19 mandates. Now it's part of the company's operating model.
“It took me a while to get up the courage, but now it's clear to me,” Alber told Yahoo Finance's Brian Sozzi and Julie Hyman at the World Economic Forum in Davos, Switzerland. It has become the way we do business.”
The company lowers prices “if we're overbuying something or it's just not working,” she said.
In addition to Williams-Sonoma's stance on pricing, Oppenheimer analyst Brian Nagel wrote in a note to clients that “Sales continue to struggle. “Nevertheless, we are focused on generating better margins and profitability.”
In the most recent quarterly results, the company's sales decreased by 14.6% compared to the same period last year. Compared to two years ago he is down 6.5%, but compared to four years ago he is still up nearly 35%. Operating profit margin was 17%, and earnings per share were $3.66, exceeding expectations.
Investors praised the home retailer, which also owns the brands Pottery Barn and West Elm, along with its namesake chain. The company's stock is up more than 65% in the past year, outpacing the S&P 500 index's (^GSPC) gain of 21%, and more than 280% over the past five years. Nagel believes the company will continue to move forward even in a difficult environment.
“As industry headwinds such as excessive price promotions subside, Williams-Sonoma is stronger, better positioned, and more profitable in the broader luxury home category, with a more profitable, omnichannel business,” he said. I am optimistic that he will emerge as a leading figure.” .
Alber said the company could also benefit from recent health trends. “Everyone knows that making your own meals at home is the healthiest way… Excited to see all [our] This is a product that supports this. ”
Alber said the company is leveraging artificial intelligence to drive sales and customer interactions.
“There are a lot of different things that you might be surprised to hear,” she said of Williams-Sonoma's AI efforts. “The most obvious one is marketing's ability to tailor its messages to the customer by using patterns to make them more relevant.”
During the company's latest earnings call, Alber said the team increased spending starting in the second quarter because it wants to ensure marketing investments.[give] It gave us the ability to test new formats, connect with new customers, and introduce the brand to existing customers and “brand enthusiasts.” ”
AI can also be used to optimize supply chains and reduce delivery times and costs, Alber said. Other use cases include customer service copilot software that can generate insights and pull information to assist agents, and AI writing tools that can assist with website copywriting.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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