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Williams-Sonoma, Inc. Announces Third Quarter 2000 Results; Total Sales Up 23%; Comparable Store Sales Up 4.7%; Direct-to-Customer Sales Up 30%.



Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 14, 2000

WILLIAMS-SONOMA Williams-Sonoma, Inc. (NYSE: WSM) is an American company that sells specialty cooking utensils and other housewares, along with a variety of foods including gourmet coffees. Its principal office is in San Francisco, California. , INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic.

Antonym: dec.
.(NYSE NYSE

See: New York Stock Exchange
:WSM WSM Samoa (ISO Country code)
WSM Wave Structure of Matter
WSM Workers Solidarity Movement (Ireland)
WSM Web Services Management
WSM Weston-Super-Mare (Somerset, England) 
) Chairman and Chief Executive Officer W. Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk.  Lester Les´ter

n. 1. (Meteor.) A dry sirocco in the Madeira Islands.
 announced operating results for the third quarter ended October October: see month.  29, 2000. Net sales Net Sales

The amount a seller receives from the buyer after costs associated with the sale are deducted.

Notes:
This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight
 increased 23% to $398.7 million versus $324.1 million in Q3 1999. Net earnings for the quarter were $2.3 million or $.04 per share, compared with net earnings for the 13 weeks ended October 31, 1999 of $9.2 million, or $.16 per share. Mr. Lester commented, "Our earnings are consistent with the expectations communicated on October 9, 2000. The slowdown For articles with similar titles, see Slow Down (disambiguation).
A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties.
 in consumer response that we saw early in the quarter continued on a downward trend through October. Lower than expected sales from Fall and Early Holiday catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C.  mailings, higher catalog advertising costs (driven by lower catalog sales) and depressed margins in the retail division due to increased promotional activity and higher than expected freight costs contributed to the lower earnings."

Retail sales for the quarter were $223.8 million -- an increase of 18%. Comparable store sales increased 4.7% over the third quarter of 1999, but came at the expense of increased promotional activity. The Williams-Sonoma concept led the comparable store sales increase. The Company operated 370 stores at the end of the third quarter, compared to 336 stores at the end of the same period last year.

Direct-to-customer sales for the quarter were $174.9 million -- an increase of 30% versus the third quarter of 1999. The Pottery Barn Pottery Barn is an American-based chain of home furnishing stores with stores in the United States and Canada. It is a wholly owned subsidiary of Williams-Sonoma, Inc. History  and Chambers brands and continued e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers.  success drove this increase.

Gross margin expressed as a percentage of net sales decreased approximately 40 basis points to 40% in the third quarter of 2000 as compared to the third quarter of 1999. Higher promotional activity and increased transportation costs from the distribution center to the stores more than offset the favorable fa·vor·a·ble  
adj.
1. Advantageous; helpful: favorable winds.

2. Encouraging; propitious: a favorable diagnosis.

3.
 impact of vertical integration and sourcing initiatives.

Selling, general and administrative expense expressed as a percentage of net sales for the third quarter of 2000 increased approximately 290 basis points as compared to the third quarter of 1999. The increase is primarily due to higher advertising costs in the mail order business. As mentioned in the October 9, 2000 conference call, the Company produced and mailed catalogs to achieve a projected increase of 40% in direct-to-customer sales. As the actual direct-to-customer sales increase for the quarter was 30%, catalog advertising was substantially higher than last year.

With aggressive inventory management and higher promotional activity, inventories for the period grew 22% compared to sales growth of 23%, despite lower than expected direct-to-customer sales during the quarter. This is in line with previous guidance.

Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city.  Friedman Fried·man   , Milton Born 1912.

American economist. He won a 1976 Nobel Prize for his theories of monetary control and governmental nonintervention in the economy.

Noun 1.
, President, commented, "We aggressively reacted to the slowdown that we began to see in late September September: see month. . With heavy promotional activity, we were able to maintain sales momentum at retail. We also intensified in·ten·si·fy  
v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies

v.tr.
1. To make intense or more intense:
 our controllable cost control initiatives to offset the impact of higher mail order advertising costs in SG&A."

Mr. Lester remarked, "Based on the latest consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level.  information available, we are cautious about any short-term Short-term

Any investments with a maturity of one year or less.


short-term

1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time.
 improvement in sales trends and believe that we will continue to see sales and margin pressures in the fourth quarter and beyond. We will be heavily focused on our execution for the peak Holiday season, inventory management and controllable cost initiatives."

Williams-Sonoma, Inc. will host a live conference call today, Tuesday Tuesday: see week.  November November: see month.  14, at 9:00am (PST PST Paroxysmal supraventricular tachycardia, see there ). The call, hosted by Howard Lester, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.  and Chairman, and Gary Friedman, President, will be open to the general public and can be accessed by dialing (212) 231-6015 and referencing the Williams-Sonoma, Inc. conference call. Additionally, a replay of the call will be available today, November 14, 2000, from 1:00 p.m. (PST) until Friday Friday: see Sabbath; week.

Friday

young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe]

See : Servant
, December 1st , 2000, at 6:00 p.m. (PST). The replay can be accessed by dialing (858) 812-6440, access code: 16754070.

Williams-Sonoma, Inc. is a nationwide specialty retailer of high quality products for the home. These products, representing six distinct merchandise strategies, Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed + Bath, Hold Everything, and Chambers, are marketed through 370 stores, six mail order catalogs and three e-commerce web sites.

The forward-looking statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.
 included in this press release with respect to the financial condition, results of operations and business of the company are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in such statements. These risks and uncertainties include, without limitation, the following: the companys ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of its merchandise; timely and effective sourcing of its merchandise from its foreign and domestic vendors and delivery thereof through its supply chain to its stores and customers; successful catalog management, including timing, sizing and merchandising merchandising

Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product.
; construction and other delays in store openings; uncertainties in Internet marketing See Internet advertising. , infrastructure and regulation; changes in consumer spending based on weather, economic, competitive and other conditions beyond the companys control; multi-channel and multi-brand complexities; effective inventory management commensurate com·men·su·rate  
adj.
1. Of the same size, extent, or duration as another.

2. Corresponding in size or degree; proportionate: a salary commensurate with my performance.

3.
 with customer demand; dependence on external funding sources for operating funds; the companys ability to control employment, occupancy and other operating costs operating costs nplgastos mpl operacionales ; its ability to improve and control its systems and processes; and other risks and uncertainties contained in the companys public announcements, reports to stockholders and SEC filings, including but not limited to Reports on Forms 10-K, 8-K and 10-Q. The company has not undertaken, nor is it required, to publicly update or revise any of its forward-looking statements, even if experience or future events make it clear that the results set forth in such statements will not be realized.


WILLIAMS-SONOMA, INC.

SUMMARY INCOME STATEMENTS (UNAUDITED)
PERIODS ENDED OCTOBER 29, 2000 AND OCTOBER 31, 1999
(DOLLARS IN THOUSANDS)

                                            THIRD QUARTER
                                      2000                 1999
                                      ----                 ----
                                   (13 Weeks)           (13 Weeks)
                                          % OF                  % OF
                                  $       SALES        $       SALES
                              ----------------------------------------

RETAIL SALES                  $ 223,771    56.1 %  $ 189,732    58.5 %
DIRECT-TO-CUSTOMER SALES        174,885    43.9      134,416    41.5

NET SALES                       398,656   100.0      324,148   100.0

TOTAL COGS AND OCCUPANCY        238,489    59.8      192,748    59.5

GROSS MARGIN                    160,167    40.2      131,400    40.5

TOTAL SG&A                      152,843    38.3      114,880    35.4

EARNINGS FROM OPERATIONS          7,324     1.9       16,520     5.1
GAIN/(LOSS) ON SALE OF ASSETS         -     0.0          (23)    0.0
INTEREST EXPENSE                  3,520     0.9        1,226     0.4

EARNINGS  BEFORE TAX              3,804     1.0       15,271     4.7
TAX PROVISION                     1,464     0.4        6,032     1.8

NET EARNINGS                     $2,340     0.6 %     $9,239     2.9 %

                                            YEAR TO DATE
                                      2000                 1999
                                      ----                 ----
                                   (39 Weeks)           (39 Weeks)
                                          % OF                 % OF
                                  $       SALES        $       SALES
                              ----------------------------------------

RETAIL SALES                  $ 626,425    57.7 %  $ 520,583    61.5 %
DIRECT-TO-CUSTOMER SALES        459,198    42.3      326,240    38.5
NET SALES                     1,085,623   100.0      846,823   100.0

TOTAL COGS AND OCCUPANCY        660,845    60.9      518,720    61.3

GROSS MARGIN                    424,778    39.1      328,103    38.7

TOTAL SG&A                      397,694    36.6      298,062    35.2

EARNINGS FROM OPERATIONS         27,084     2.5       30,041     3.5
GAIN/(LOSS) ON SALE OF ASSETS         -     0.0        3,977     0.5
INTEREST EXPENSE                  7,181     0.7        1,901     0.2

EARNINGS  BEFORE TAX             19,903     1.8       32,117     3.8
TAX PROVISION                     7,662     0.7       12,686     1.5

NET EARNINGS                    $12,241     1.1 %    $19,431     2.3 %

                               13 Weeks  13 Weeks  39 Weeks  39 Weeks
                                 Ended     Ended     Ended    Ended
                               10/29/00  10/31/99  10/29/00  10/31/99
                               ------------------  ------------------
AVERAGE NUMBER OF
SHARES OUTSTANDING (000's):

  BASIC                          55,717    55,827    55,931    55,761
  DILUTED                        58,440    58,908    58,291    58,502

EARNINGS PER SHARE:

  BASIC                          $ 0.04    $ 0.17    $ 0.22    $ 0.35
  DILUTED                        $ 0.04    $ 0.16    $ 0.21    $ 0.33

STORE TABLE
                            At October 29, 2000   At October 31, 1999

WILLIAMS-SONOMA                             199                   185
POTTERY BARN                                129                   110
POTTERY BARN KIDS                             3                     0
HOLD EVERYTHING                              28                    33
OUTLETS                                      11                     8

 TOTAL                                      370                   336

                         WILLIAMS-SONOMA, INC.

           CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                        (DOLLARS IN THOUSANDS)

                                               10/29/00   10/31/99
                                               --------   --------
ASSETS

CURRENT ASSETS
   CASH & CASH EQUIVALENTS                     $  5,889   $  4,791
   NOTES & ACCOUNTS RECEIVABLE                   38,403     29,980
   MERCHANDISE INVENTORIES                      369,446    301,665
   PREPAID EXPENSES & OTHER                      13,174     10,968
   PREPAID CATALOG EXPENSES                      29,002     27,068
   DEFERRED TAXES                                 9,265      4,077
                                               --------   --------

       TOTAL CURRENT ASSETS                     465,179    378,549

INVESTMENTS & OTHER ASSETS                        9,120      9,576
PROPERTY & OTHER EQUIPMENT - NET                466,815    302,718
                                               --------   --------

       TOTAL ASSETS                            $941,114   $690,843
                                               ========   ========

LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
   ACCOUNTS PAYABLE                            $135,215   $106,115
   ACCRUED EXPENSES                              36,340     21,750
   LINE OF CREDIT                               173,700     61,980
   CUSTOMER DEPOSITS                             45,009     30,515
   CURRENT PORTION OF LONG-TERM DEBT             12,196      5,966
   INCOME TAXES PAYABLE                           2,628      6,481
   OTHER LIABILITIES                             13,656      7,691
                                               --------   --------

       TOTAL CURRENT LIABILITIES                418,744    240,498

NON-CURRENT LIABILITIES
   DEFERRED LEASE CREDITS                       103,877     85,610
   DEFERRED TAX LIABILITY                         8,520      3,339
   LONG-TERM DEBT                                23,000     35,497
   OTHER OBLIGATIONS                              5,782      4,709
                                               --------   --------

       TOTAL LIABILITIES                        559,923    369,653

SHAREHOLDERS' EQUITY                            381,191    321,190
                                               --------   --------

       TOTAL LIABILITIES & EQUITY              $941,114   $690,843
                                               ========   ========
COPYRIGHT 2000 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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