Net revenue growth of 4.4%, with comparable brand revenue growth of 3.1%
GAAP diluted EPS of $1.00; non-GAAP diluted EPS of $0.95 at high-end of guidance
Reiterates 2018 full-year guidance
SAN FRANCISCO--(BUSINESS WIRE)--Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for
the third fiscal quarter (“Q3 18”) ended October 28, 2018 versus the
third fiscal quarter (“Q3 17”) ended October 29, 2017.
KEY HIGHLIGHTS
3
rd
Quarter 2018
-
Net revenue growth of 4.4%
-
Comparable brand revenue growth of 3.1%
-
E-commerce net revenue growth accelerates to 55.0% of total company
net revenues
-
GAAP operating margin of 7.0%; non-GAAP operating margin of 7.6%
-
GAAP diluted EPS of $1.00; non-GAAP diluted EPS of $0.95 at high-end
of guidance
-
Merchandise inventories growth of 1.8%, significantly below net
revenue growth
Reiterates Fiscal Year 2018 Guidance
-
Non-GAAP net revenue of $5,565 billion – $5,665 billion
-
Comparable brand revenue growth of 3.0% – 5.0%
-
Non-GAAP operating margin of 8.4% – 9.0%
-
Non-GAAP diluted EPS of $4.26 – $4.36
Laura Alber, President and Chief Executive Officer, commented,
“We delivered third quarter with EPS at the high end of guidance and
continued strength in demand and customer growth. This performance
demonstrates our team’s strong execution, the ongoing benefits of our
strategic initiatives and the power of our multi-channel, multi-brand
model.” Alber continued, “Given the substantial progress we’ve made in
our business this year and our compelling pipeline of innovative product
and inspiring content, we believe we are well-prepared to deliver this
holiday season and remain on track to meet our full year guidance.”
3
rd
QUARTER 2018 RESULTS
Net revenues increased 4.4% to $1.357 billion in Q3 18 from
$1.299 billion in Q3 17. Excluding certain discrete items, non-GAAP net
revenues were $1.356 billion in Q3 18 or an increase of 4.4% over Q3 17.
See Exhibit 1.
Comparable brand revenue in Q3 18 increased 3.1% compared to an
increase of 3.3% in Q3 17 as shown in the table below:
|
|
|
3
rd
Quarter Comparable Brand Revenue
Growth (Decline) by Concept*
|
|
|
|
|
|
|
|
|
|
|
Q3 18
|
|
|
Q3 17
|
|
Pottery Barn
|
|
1.4%
|
|
|
(0.3%)
|
|
West Elm
|
|
8.3%
|
|
|
11.5%
|
|
Williams Sonoma
|
|
2.1%
|
|
|
2.3%
|
|
Pottery Barn Kids and Teen
|
|
0.0%
|
|
|
0.9%
|
|
Total
|
|
3.1%
|
|
|
3.3%
|
|
*See the Company’s 10-K and 10-Q filings for the definition of
comparable brand revenue.
|
E-commerce net revenues in Q3 18 increased 8.2% to $747 million
from $690 million in Q3 17. Excluding certain discrete items, non-GAAP
e-commerce net revenues were $746 million in Q3 18 or an 8.1% increase
over Q3 17. See Exhibit 1.
Retail net revenues in Q3 18 increased 0.2% to $610 million from
$609 million in Q3 17.
Operating margin in Q3 18 was 7.0% compared to 8.5% in Q3 17.
Excluding certain discrete items, non-GAAP operating margin was 7.6% in
Q3 18. See Exhibit 1.
|
|
|
|
|
|
-
|
|
Gross margin was 36.5% in Q3 18 versus 35.9% in Q3 17.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Selling, general and administrative (“SG&A”) expenses were $401
million, or 29.5% of net revenues in Q3 18, versus $356 million, or
27.4% of net revenues in Q3 17. Excluding certain discrete items,
non-GAAP SG&A expenses were $392 million, or 28.9% of net revenues
in Q3 18. See Exhibit 1.
|
|
|
|
|
|
|
|
|
|
The effective income tax rate in Q3 18 was 11.5% versus 35.3% in
Q3 17. Excluding certain discrete items, the non-GAAP effective income
tax rate was 23.0% in Q3 18. See Exhibit 1.
EPS in Q3 18 was $1.00 versus $0.84 in Q3 17. Excluding certain
discrete items, non-GAAP EPS was $0.95 in Q3 18. See Exhibit 1.
Merchandise inventories at the end of Q3 18 increased 1.8% to
$1.198 billion from $1.177 billion at the end of Q3 17.
These results include the adoption of ASU No. 2014-09, which pertains to
revenue recognition. See Exhibit 2 for more details.
STOCK REPURCHASE PROGRAM
During Q3 18, we repurchased 742,508 shares of common stock at an
average cost of $61.15 per share for a total cost of approximately $45
million. As of October 28, 2018, there was approximately $299 million
remaining under our current stock repurchase program.
|
|
|
FISCAL YEAR 2018 FINANCIAL GUIDANCE
|
|
|
|
4
th
Quarter 2018 Financial Guidance*
|
|
|
|
|
|
Non-GAAP Total Net Revenues (millions)
|
|
$1,733 – $1,833
|
|
Comparable Brand Revenue Growth
|
|
0.0% – 5.0%
|
|
Non-GAAP Diluted EPS
|
|
$1.89 – $1.99
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2018 Financial Guidance*
|
|
|
|
|
|
Non-GAAP Total Net Revenues (millions)
|
|
$5,565 – $5,665
|
|
Comparable Brand Revenue Growth
|
|
3.0% – 5.0%
|
|
Non-GAAP Operating Margin
|
|
8.4% – 9.0%
|
|
Non-GAAP Diluted EPS
|
|
$4.26 – $4.36
|
|
Non-GAAP Income Tax Rate
|
|
24.0% – 26.0%
|
|
Capital Spending (millions)
|
|
$200 – $220
|
|
Depreciation and Amortization (millions)
|
|
$185 – $195
|
|
*We have not provided a reconciliation of non-GAAP guidance
measures to the corresponding GAAP
measures on a
forward-looking basis due to the potential variability of discrete
items.
|
|
|
|
Store Opening and Closing Guidance by Retail Concept**
|
|
|
|
|
|
|
FY 2017 ACTUAL
|
|
|
FY 2018 GUIDANCE
|
|
|
|
Total
|
|
|
New
|
|
Close
|
|
End
|
|
Williams Sonoma
|
|
228
|
|
|
5
|
|
(15
|
)
|
|
218
|
|
Pottery Barn
|
|
203
|
|
|
6
|
|
(5
|
)
|
|
204
|
|
West Elm
|
|
106
|
|
|
9
|
|
(3
|
)
|
|
112
|
|
Pottery Barn Kids
|
|
86
|
|
|
-
|
|
(10
|
)
|
|
76
|
|
Rejuvenation
|
|
8
|
|
|
2
|
|
-
|
|
|
10
|
|
Total
|
|
631
|
|
|
22
|
|
(33
|
)
|
|
620
|
|
** Included in the FY 17 store count are 19 stores in Australia
and two stores in the UK. FY 18 guidance includes one
additional
UK store.
|
|
|
CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. will host a live conference call today, November
15, 2018, at 2:00 P.M. (PT). The call, hosted by Laura Alber, President
and Chief Executive Officer, 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 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. 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
financial 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
statements relating to: our ability to continue to successfully execute
our strategic initiatives; our optimism about the future; our ability to
drive long-term profitable growth; our future financial guidance,
including Q4 18 and FY 2018 guidance; our stock repurchase program; our
preparation for the holiday season; and our proposed store openings and
closures.
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; new
interpretations of or changes to current accounting rules or tax
regulations; the potential impact of tariffs, including our ability to
mitigate the potential impact; 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;
successful catalog management, including timing, sizing and
merchandising; 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 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; 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 28, 2018 and all subsequent quarterly reports
on Form 10-Q and current reports on Form 8-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 a specialty retailer of high-quality products
for the home. These products, representing distinct merchandise
strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, West Elm,
PBteen, Williams Sonoma Home, Rejuvenation, and Mark and Graham — are
marketed through e-commerce websites, direct-mail catalogs and retail
stores. These brands are also part of The Key Rewards, our free-to-join
loyalty 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 and South Korea, as
well as e-commerce websites in certain locations. In 2017, we acquired
Outward, Inc., a 3-D imaging and augmented reality platform for the home
furnishings and décor industry.
|
|
|
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Earnings
(unaudited)
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
Thirty-nine Weeks Ended
|
|
|
|
October 28, 2018
|
|
October 29, 2017
|
|
October 28, 2018
|
|
October 29, 2017
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
% of
|
|
In thousands, except per share amounts
|
|
$
|
|
Revenues
|
|
$
|
|
Revenues
|
|
$
|
|
Revenues
|
|
$
|
|
Revenues
|
|
E-commerce net revenues
|
|
746,716
|
|
55.0%
|
|
690,045
|
|
53.1%
|
|
2,079,838
|
|
54.2%
|
|
1,901,348
|
|
52.6%
|
|
Retail net revenues
|
|
610,267
|
|
45.0%
|
|
609,291
|
|
46.9%
|
|
1,755,319
|
|
45.8%
|
|
1,711,101
|
|
47.4%
|
|
Net revenues
|
|
1,356,983
|
|
100.0%
|
|
1,299,336
|
|
100.0%
|
|
3,835,157
|
|
100.0%
|
|
3,612,449
|
|
100.0%
|
|
Cost of goods sold
|
|
861,999
|
|
63.5%
|
|
832,269
|
|
64.1%
|
|
2,444,067
|
|
63.7%
|
|
2,326,911
|
|
64.4%
|
|
Gross profit
|
|
494,984
|
|
36.5%
|
|
467,067
|
|
35.9%
|
|
1,391,090
|
|
36.3%
|
|
1,285,538
|
|
35.6%
|
|
Selling, general and administrative expenses
|
|
400,600
|
|
29.5%
|
|
356,254
|
|
27.4%
|
|
1,155,990
|
|
30.1%
|
|
1,030,667
|
|
28.5%
|
|
Operating income
|
|
94,384
|
|
7.0%
|
|
110,813
|
|
8.5%
|
|
235,100
|
|
6.1%
|
|
254,871
|
|
7.1%
|
|
Interest expense, net
|
|
2,288
|
|
0.2%
|
|
594
|
|
-
|
|
5,073
|
|
0.1%
|
|
974
|
|
-
|
|
Earnings before income taxes
|
|
92,096
|
|
6.8%
|
|
110,219
|
|
8.5%
|
|
230,027
|
|
6.0%
|
|
253,897
|
|
7.0%
|
|
Income taxes
|
|
10,631
|
|
0.8%
|
|
38,906
|
|
3.0%
|
|
51,681
|
|
1.3%
|
|
90,112
|
|
2.5%
|
|
Net earnings
|
|
81,465
|
|
6.0%
|
|
71,313
|
|
5.5%
|
|
178,346
|
|
4.7%
|
|
163,785
|
|
4.5%
|
|
Earnings per share (EPS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$1.01
|
|
|
|
$0.84
|
|
|
|
$2.17
|
|
|
|
$1.90
|
|
|
|
Diluted
|
|
$1.00
|
|
|
|
$0.84
|
|
|
|
$2.15
|
|
|
|
$1.89
|
|
|
|
Shares used in calculation of EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
80,475
|
|
|
|
84,940
|
|
|
|
82,070
|
|
|
|
86,111
|
|
|
|
Diluted
|
|
81,641
|
|
|
|
85,384
|
|
|
|
82,951
|
|
|
|
86,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williams-Sonoma, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
|
|
|
|
|
In thousands, except per share amounts
|
|
October 28,
2018
|
|
January 28,
2018
|
|
October 29,
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
164,414
|
|
|
$
|
390,136
|
|
|
$
|
90,779
|
|
|
Accounts receivable, net
|
|
|
113,582
|
|
|
|
90,119
|
|
|
|
92,282
|
|
|
Merchandise inventories, net
|
|
|
1,197,554
|
|
|
|
1,061,593
|
|
|
|
1,176,941
|
|
|
Prepaid catalog expenses
|
|
|
—
|
|
|
|
20,517
|
|
|
|
19,051
|
|
|
Prepaid expenses
|
|
|
94,071
|
|
|
|
62,204
|
|
|
|
69,267
|
|
|
Other current assets
|
|
|
21,805
|
|
|
|
11,876
|
|
|
|
12,141
|
|
|
Total current assets
|
|
|
1,591,426
|
|
|
|
1,636,445
|
|
|
|
1,460,461
|
|
|
Property and equipment, net
|
|
|
931,361
|
|
|
|
932,283
|
|
|
|
931,131
|
|
|
Deferred income taxes, net
|
|
|
45,999
|
|
|
|
67,306
|
|
|
|
131,793
|
|
|
Goodwill
|
|
|
85,649
|
|
|
|
18,838
|
|
|
|
18,769
|
|
|
Other long-term assets, net
|
|
|
64,324
|
|
|
|
130,877
|
|
|
|
38,230
|
|
|
Total assets
|
|
$
|
2,718,759
|
|
|
$
|
2,785,749
|
|
|
$
|
2,580,384
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
487,733
|
|
|
$
|
457,144
|
|
|
$
|
468,566
|
|
|
Accrued expenses
|
|
|
132,398
|
|
|
|
134,207
|
|
|
|
101,434
|
|
|
Gift card and other deferred revenue
|
|
|
275,567
|
|
|
|
300,607
|
|
|
|
299,031
|
|
|
Borrowings under revolving line of credit
|
|
|
60,000
|
|
|
|
—
|
|
|
|
170,000
|
|
|
Income taxes payable
|
|
|
9,903
|
|
|
|
56,783
|
|
|
|
48,865
|
|
|
Other current liabilities
|
|
|
71,119
|
|
|
|
59,082
|
|
|
|
49,655
|
|
|
Total current liabilities
|
|
|
1,036,720
|
|
|
|
1,007,823
|
|
|
|
1,137,551
|
|
|
Deferred rent and lease incentives
|
|
|
205,143
|
|
|
|
202,134
|
|
|
|
195,220
|
|
|
Long-term debt
|
|
|
299,571
|
|
|
|
299,422
|
|
|
|
—
|
|
|
Other long-term liabilities
|
|
|
85,388
|
|
|
|
72,804
|
|
|
|
75,439
|
|
|
Total liabilities
|
|
|
1,626,822
|
|
|
|
1,582,183
|
|
|
|
1,408,210
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
Preferred stock: $.01 par value; 7,500 shares authorized; none issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Common stock: $.01 par value; 253,125 shares authorized; 80,282,
83,726 and 84,478 shares issued and outstanding at October 28, 2018,
January 28, 2018 and October 29, 2017, respectively
|
|
|
803
|
|
|
|
837
|
|
|
|
845
|
|
|
Additional paid-in capital
|
|
|
570,924
|
|
|
|
562,814
|
|
|
|
557,198
|
|
|
Retained earnings
|
|
|
532,172
|
|
|
|
647,422
|
|
|
|
623,170
|
|
|
Accumulated other comprehensive loss
|
|
|
(11,757
|
)
|
|
|
(6,782
|
)
|
|
|
(8,314
|
)
|
|
Treasury stock, at cost
|
|
|
(205
|
)
|
|
|
(725
|
)
|
|
|
(725
|
)
|
|
Total stockholders’ equity
|
|
|
1,091,937
|
|
|
|
1,203,566
|
|
|
|
1,172,174
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
2,718,759
|
|
|
$
|
2,785,749
|
|
|
$
|
2,580,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Store Data
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 29, 2018
|
|
Openings
|
|
Closings
|
|
October 28, 2018
|
|
October 29, 2017
|
|
Williams Sonoma
|
|
226
|
|
—
|
|
—
|
|
226
|
|
233
|
|
Pottery Barn
|
|
205
|
|
—
|
|
—
|
|
205
|
|
202
|
|
West Elm
|
|
109
|
|
3
|
|
—
|
|
112
|
|
105
|
|
Pottery Barn Kids
|
|
84
|
|
—
|
|
(2)
|
|
82
|
|
88
|
|
Rejuvenation
|
|
8
|
|
—
|
|
—
|
|
8
|
|
8
|
|
Total
|
|
632
|
|
3
|
|
(2)
|
|
633
|
|
636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
Thirty-nine
Weeks Ended
|
|
In thousands
|
|
October 28,
2018
|
|
October 29,
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net earnings
|
|
$
|
178,346
|
|
|
$
|
163,785
|
|
|
Adjustments to reconcile net earnings to net cash provided by (used
in) operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
141,167
|
|
|
|
135,473
|
|
|
Loss on disposal/impairment of assets
|
|
|
5,290
|
|
|
|
1,299
|
|
|
Amortization of deferred lease incentives
|
|
|
(19,728
|
)
|
|
|
(18,987
|
)
|
|
Deferred income taxes
|
|
|
12,170
|
|
|
|
(11,884
|
)
|
|
Tax benefit related to stock-based awards
|
|
|
10,361
|
|
|
|
15,439
|
|
|
Stock-based compensation expense
|
|
|
40,953
|
|
|
|
30,164
|
|
|
Other
|
|
|
(389
|
)
|
|
|
(416
|
)
|
|
Changes in:
|
|
|
|
|
|
Accounts receivable
|
|
|
(21,851
|
)
|
|
|
(2,341
|
)
|
|
Merchandise inventories
|
|
|
(143,723
|
)
|
|
|
(197,757
|
)
|
|
Prepaid catalog expenses
|
|
|
—
|
|
|
|
447
|
|
|
Prepaid expenses and other assets
|
|
|
(50,171
|
)
|
|
|
(19,814
|
)
|
|
Accounts payable
|
|
|
8,689
|
|
|
|
7,728
|
|
|
Accrued expenses and other liabilities
|
|
|
19,002
|
|
|
|
(28,775
|
)
|
|
Gift card and other deferred revenue
|
|
|
24,048
|
|
|
|
(4,108
|
)
|
|
Deferred rent and lease incentives
|
|
|
23,695
|
|
|
|
17,000
|
|
|
Income taxes payable
|
|
|
(48,358
|
)
|
|
|
25,677
|
|
|
Net cash provided by operating activities
|
|
|
179,501
|
|
|
|
112,930
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(128,326
|
)
|
|
|
(135,821
|
)
|
|
Other
|
|
|
1,804
|
|
|
|
458
|
|
|
Net cash used in investing activities
|
|
|
(126,522
|
)
|
|
|
(135,363
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Repurchases of common stock
|
|
|
(220,221
|
)
|
|
|
(154,321
|
)
|
|
Payment of dividends
|
|
|
(105,654
|
)
|
|
|
(101,928
|
)
|
|
Borrowings under revolving line of credit
|
|
|
60,000
|
|
|
|
170,000
|
|
|
Tax withholdings related to stock-based awards
|
|
|
(13,906
|
)
|
|
|
(14,836
|
)
|
|
Other
|
|
|
—
|
|
|
|
(20
|
)
|
|
Net cash used in financing activities
|
|
|
(279,781
|
)
|
|
|
(101,105
|
)
|
|
Effect of exchange rates on cash and cash equivalents
|
|
|
1,080
|
|
|
|
604
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(225,722
|
)
|
|
|
(122,934
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
390,136
|
|
|
|
213,713
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
164,414
|
|
|
$
|
90,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 1
3
rd
Quarter and Year-to-Date GAAP to
Non-GAAP Reconciliation*
(unaudited)
(Dollars in thousands, except per share data)
|
|
|
|
|
|
Thirteen Weeks Ended October 28, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Basis
(as reported)
|
|
Outward-related1
|
|
Employment-
related Expense2
|
|
Impairment and
Early Termination
Charges3
|
|
Tax
Legislation4
|
|
Non-GAAP Basis
|
|
Net revenues
|
|
$
|
1,356,983
|
|
|
$
|
(1,110
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,355,873
|
|
|
Gross profit
|
|
|
494,984
|
|
|
|
(124
|
)
|
|
|
-
|
|
|
$
|
190
|
|
|
|
-
|
|
|
|
495,050
|
|
|
% of Revenues
|
|
|
36.5
|
%
|
|
|
|
|
|
|
|
|
|
|
36.5
|
%
|
|
Selling, general and administrative expenses
|
|
|
400,600
|
|
|
|
(6,128
|
)
|
|
$
|
(1,869
|
)
|
|
|
(937
|
)
|
|
|
-
|
|
|
|
391,666
|
|
|
% of Revenues
|
|
|
29.5
|
%
|
|
|
|
|
|
|
|
|
|
|
28.9
|
%
|
|
Operating income
|
|
|
94,384
|
|
|
|
6,004
|
|
|
|
1,869
|
|
|
|
1,127
|
|
|
|
-
|
|
|
|
103,384
|
|
|
% of Revenues
|
|
|
7.0
|
%
|
|
|
|
|
|
|
|
|
|
|
7.6
|
%
|
|
Earnings before income taxes
|
|
|
92,096
|
|
|
|
6,007
|
|
|
|
1,869
|
|
|
|
1,127
|
|
|
|
-
|
|
|
|
101,099
|
|
|
Income taxes
|
|
|
10,631
|
|
|
|
1,300
|
|
|
|
479
|
|
|
|
303
|
|
|
$
|
10,564
|
|
|
|
23,277
|
|
|
Tax rate
|
|
|
11.5
|
%
|
|
|
|
|
|
|
|
|
|
|
23.0
|
%
|
|
Net earnings
|
|
$
|
81,465
|
|
|
$
|
4,707
|
|
|
$
|
1,390
|
|
|
$
|
824
|
|
|
$
|
(10,564
|
)
|
|
$
|
77,822
|
|
|
Diluted EPS
|
|
$
|
1.00
|
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
(0.13
|
)
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended October 28, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Basis
(as reported)
|
|
Outward-related1
|
|
Employment-
related Expense2
|
|
Impairment and
Early Termination
Charges3
|
|
Tax
Legislation4
|
|
Impact of Equity
Accounting Rules5
|
|
Non-GAAP
Basis
|
|
Net revenues
|
|
$
|
3,835,157
|
|
|
$
|
(2,511
|
)
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,832,646
|
|
|
Gross profit
|
|
|
1,391,090
|
|
|
|
727
|
|
|
|
-
|
|
|
$
|
909
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,392,726
|
|
|
% of Revenues
|
|
|
36.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
36.3
|
%
|
|
Selling, general and administrative expenses
|
|
|
1,155,990
|
|
|
|
(17,192
|
)
|
|
$
|
(5,445
|
)
|
|
|
(5,515
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,127,838
|
|
|
% of Revenues
|
|
|
30.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
29.4
|
%
|
|
Operating income
|
|
|
235,100
|
|
|
|
17,919
|
|
|
|
5,445
|
|
|
|
6,424
|
|
|
|
-
|
|
|
|
-
|
|
|
|
264,888
|
|
|
% of Revenues
|
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
6.9
|
%
|
|
Earnings before income taxes
|
|
|
230,027
|
|
|
|
17,929
|
|
|
|
5,445
|
|
|
|
6,424
|
|
|
|
-
|
|
|
|
-
|
|
|
|
259,825
|
|
|
Income taxes
|
|
|
51,681
|
|
|
|
3,822
|
|
|
|
1,349
|
|
|
|
1,592
|
|
|
$
|
4,378
|
|
|
$
|
(1,146
|
)
|
|
|
61,676
|
|
|
Tax rate
|
|
|
22.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
23.7
|
%
|
|
Net earnings
|
|
$
|
178,346
|
|
|
$
|
14,107
|
|
|
$
|
4,096
|
|
|
$
|
4,832
|
|
|
$
|
(4,378
|
)
|
|
$
|
1,146
|
|
|
$
|
198,149
|
|
|
Diluted EPS
|
|
$
|
2.15
|
|
|
$
|
0.17
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.01
|
|
|
$
|
2.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended October 29, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Basis
(as reported)
|
|
Severance-related
Expense6
|
|
Impact of Equity
Accounting Rules5
|
|
Non-GAAP Basis
|
|
Selling, general and administrative expenses
|
|
$
|
1,030,667
|
|
|
$
|
(5,705
|
)
|
|
|
-
|
|
|
$
|
1,024,962
|
|
|
% of Revenues
|
|
|
28.5
|
%
|
|
|
|
|
|
|
28.4
|
%
|
|
Operating income
|
|
|
254,871
|
|
|
|
5,705
|
|
|
|
-
|
|
|
|
260,576
|
|
|
% of Revenues
|
|
|
7.1
|
%
|
|
|
|
|
|
|
7.2
|
%
|
|
Earnings before income taxes
|
|
|
253,897
|
|
|
|
5,705
|
|
|
|
-
|
|
|
|
259,602
|
|
|
Income taxes
|
|
|
90,112
|
|
|
|
1,971
|
|
|
$
|
(1,429
|
)
|
|
|
90,654
|
|
|
Tax rate
|
|
|
35.5
|
%
|
|
|
|
|
|
|
34.9
|
%
|
|
Net earnings
|
|
$
|
163,785
|
|
|
$
|
3,734
|
|
|
$
|
1,429
|
|
|
$
|
168,948
|
|
|
Diluted EPS
|
|
$
|
1.89
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
1.95
|
|
|
*Per share amounts may not sum across due to rounding to the nearest
cent per diluted share.
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP By Segment**
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
E-commerce
|
|
Retail
|
|
Unallocated
|
|
Total
|
|
|
|
Q3 2018
|
|
Q3 2017
|
|
Q3 2018
|
|
Q3 2017
|
|
Q3 2018
|
|
Q3 2017
|
|
Q3 2018
|
|
Q3 2017
|
|
Net revenues
|
|
$746,716
|
|
$690,045
|
|
$610,267
|
|
$609,291
|
|
-
|
|
-
|
|
$1,356,983
|
|
$1,299,336
|
|
Outward-related1
|
|
(1,110)
|
|
|
|
|
|
|
|
|
|
|
|
(1,110)
|
|
|
|
Non-GAAP net revenues
|
|
745,606
|
|
690,045
|
|
610,267
|
|
609,291
|
|
-
|
|
-
|
|
1,355,873
|
|
1,299,336
|
|
Net revenue growth
|
|
8.2%
|
|
|
|
0.2%
|
|
|
|
|
|
|
|
4.4%
|
|
|
|
Non-GAAP net revenue growth
|
|
8.1%
|
|
|
|
0.2%
|
|
|
|
|
|
|
|
4.4%
|
|
|
|
GAAP operating income (expense)
|
|
152,204
|
|
142,865
|
|
45,052
|
|
42,804
|
|
(102,872)
|
|
(74,856)
|
|
94,384
|
|
110,813
|
|
GAAP operating margin
|
|
20.4%
|
|
20.7%
|
|
7.4%
|
|
7.0%
|
|
(7.6)%
|
|
(5.8)%
|
|
7.0%
|
|
8.5%
|
|
Outward-related1
|
|
4,622
|
|
|
|
|
|
|
|
1,382
|
|
|
|
6,004
|
|
|
|
Employment-related expense2
|
|
|
|
|
|
|
|
|
|
1,869
|
|
|
|
1,869
|
|
|
|
Impairment and Early Termination Charges3
|
|
|
|
|
|
1,127
|
|
|
|
|
|
|
|
1,127
|
|
|
|
Non-GAAP operating income (expense)
|
|
156,826
|
|
142,865
|
|
46,179
|
|
42,804
|
|
(99,621)
|
|
(74,856)
|
|
103,384
|
|
110,813
|
|
Non-GAAP operating margin
|
|
21.0%
|
|
20.7%
|
|
7.6%
|
|
7.0%
|
|
(7.3)%
|
|
(5.8)%
|
|
7.6%
|
|
8.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**See the Company’s 10-K and 10-Q filings for additional information on
segment reporting and the definition of operating income (expense) and
operating margin.
SEC Regulation G – Non-GAAP Information – These tables include
non-GAAP net revenues, gross profit, gross margin, SG&A, operating
income, operating margin, earnings before income taxes, income taxes,
effective tax rate, net earnings 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. Non-GAAP financial measures as presented herein
may not be comparable to similarly titled measures used by other
companies.
Notes to Exhibit 1:
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1
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During Q3 and year-to-date 2018, we incurred approximately $6.0
million and $17.9 million of expense, respectively, primarily
associated with acquisition-related compensation expense,
amortization of intangible assets, as well as the operations of
Outward, Inc.
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2
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During Q3 and year-to-date 2018, we incurred approximately $1.9
million and $5.4 million, respectively, of employment-related
expense associated with a one-time special equity grant.
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3
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During Q3 and year-to-date 2018, we incurred approximately $1.1
million and $6.4 million of expense, respectively, primarily
associated with impairment and early lease termination charges.
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4
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During Q3 and year-to-date 2018, we recorded a net income tax
benefit of approximately $10.6 million and $4.4 million,
respectively, associated with tax legislation changes.
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5
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During Q1 18 and Q1 17, we recorded income tax expense of
approximately $1.1 million and $1.4 million, respectively,
associated with the adoption of accounting rules related to
stock-based compensation.
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6
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During Q1 17, we incurred approximately $5.7 million for
severance-related reorganization expenses primarily in our
corporate functions.
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Exhibit 2
ASU No. 2014-09 Impact of Adoption
(unaudited)
(Dollars in thousands)
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Q3 2018
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Q3 2018
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GAAP
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ASU 2014-09
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GAAP
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As Reported
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Adjustment
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As Adjusted
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Net revenues
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$
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1,356,983
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$
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(17,390
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)
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$
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1,339,593
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Cost of goods sold
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861,999
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(2,775
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)
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859,224
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Gross profit
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494,984
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(14,615
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)
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480,369
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SG&A expenses
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400,600
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(10,334
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)
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390,266
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Operating income
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$
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94,384
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$
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(4,281
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)
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$
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90,103
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