Net revenue growth of 8.2%, with comparable brand revenue growth of 5.5%
GAAP diluted EPS of $0.54; non-GAAP diluted EPS of $0.67
Raises 2018 full-year guidance
Williams-Sonoma, Inc. (NYSE: WSM) today announced operating results for
the first fiscal quarter (“Q1 18”) ended April 29, 2018 versus the first
fiscal quarter (“Q1 17”) ended April 30, 2017.
KEY HIGHLIGHTS
1
st
Quarter 2018
-
Net revenue growth of 8.2%
-
Comparable brand revenue growth of 5.5%
-
E-commerce net revenue growth accelerates double-digits, to 53.7% of
total company net revenues
-
GAAP operating margin of 5.5%; non-GAAP operating margin of 6.3%
-
GAAP diluted EPS of $0.54; non-GAAP diluted EPS of $0.67 outperforms
guidance
-
Merchandise inventories growth of 1.5%, significantly below net
revenue growth
These results include the adoption of ASU No. 2014-09, which pertains to
revenue recognition, in the first quarter of 2018. The year-over-year
impact of this change in accounting is a financial benefit of $13.6
million in net revenues, $1.6 million in operating income and $0.01 in
EPS. From a rate perspective, this amounts to a benefit of approximately
130bps of revenue growth, 30bps of comparable brand revenue growth,
70bps of gross margin improvement, 60bps of selling, general and
administrative expense deleverage and 10bps of operating margin
improvement. See Exhibit 2 for more details on the financial impact of
adoption.
Fiscal Year 2018 Guidance
-
Net revenue guidance raised to $5,495 billion – $5,655 billion
-
Non-GAAP diluted EPS raised to $4.15 – $4.25
Laura Alber, President and Chief Executive Officer, commented,
“Following a robust fourth quarter, we saw continued strength in the
first quarter. We achieved strong results against our guidance range
across all metrics, with our e-commerce revenues outpacing to almost 54%
of our total revenues. Our customer growth continued to trend positively
for both new and existing customers, demonstrating the success of our
balanced customer acquisition strategy.”
Alber continued, “These results speak to the power of our established
multi-channel model, distinctive brand portfolio and world-class
customer service heritage – all of which are our company’s competitive
strengths. Based on this strong start to the year, we are raising our
full year guidance for net revenues by $20 million and for EPS by $0.03.”
1
st
QUARTER 2018 RESULTS
Net revenues increased 8.2% to $1.203 billion in Q1 18 from
$1.112 billion in Q1 17. Excluding certain discrete items, non-GAAP net
revenues were $1.202 billion in Q1 18 or an 8.2% increase on Q1 17. See
Exhibit 1.
Comparable brand revenue in Q1 18 increased 5.5% compared to an
increase of 0.1% in Q1 17 as shown in the table below:
|
1
st
Quarter Comparable Brand Revenue
Growth (Decline) by Concept*
|
|
|
|
|
|
|
|
Q1 18
|
|
Q1 17
|
|
Pottery Barn
|
2.7%
|
|
(1.4%)
|
|
West Elm
|
9.0%
|
|
6.0%
|
|
Williams Sonoma
|
5.6%
|
|
3.2%
|
|
Pottery Barn Kids and Teen1
|
5.3%
|
|
(8.0%)
|
|
Total
|
5.5%
|
|
0.1%
|
|
*See the Company’s 10-K and 10-Q filings for the definition of
comparable brand revenue.
|
|
1Starting in Q1 18, the performance of the Pottery Barn
Kids and PBteen brands are being
reported on a combined basis
as Pottery Barn Kids and Teen. For reference, the
comparable
brand revenue growth for Pottery Barn Kids and PBteen were 4.3%
and 8.2%,
respectively, for Q1 18, and (5.7%) and (14.3%),
respectively, for Q1 17.
|
|
|
E-commerce net revenues in Q1 18 increased 11.3% to $646 million
from $581 million in Q1 17. Excluding certain discrete items, non-GAAP
e-commerce net revenues were $645 million in Q1 18 or an 11.2% increase
on Q1 17. See Exhibit 1.
Retail net revenues in Q1 18 increased 4.9% to $557 million from
$531 million in Q1 17.
Operating margin in Q1 18 was 5.5% compared to 5.6% in Q1 17.
Excluding certain discrete items, non-GAAP operating margin was 6.3% in
Q1 18 versus 6.1% in Q1 17. See Exhibit 1.
|
|
|
|
–
|
Gross margin was 35.9% in Q1 18 versus 35.6% in Q1 17. Excluding
certain discrete items, non-GAAP gross margin was 36.0% in Q1 18.
See Exhibit 1.
|
|
|
|
|
|
|
|
|
|
|
–
|
Selling, general and administrative (“SG&A”) expenses were $366
million, or 30.4% of net revenues in Q1 18, versus $333 million,
or 30.0% of net revenues in Q1 17. Excluding certain discrete
items, non-GAAP SG&A expenses were $358 million, or 29.7% of net
revenues in Q1 18 versus $328 million, or 29.5% of net revenues in
Q1 17. See Exhibit 1.
|
The effective income tax rate in Q1 18 was 30.9% versus 36.8% in
Q1 17. Excluding certain discrete items, the non-GAAP effective income
tax rate was 23.8% in Q1 18 versus 34.5% in Q1 17. See Exhibit 1.
EPS in Q1 18 was $0.54 versus $0.45 in Q1 17. Excluding certain
discrete items, non-GAAP EPS was $0.67 in Q1 18 versus $0.51 in Q1 17.
See Exhibit 1.
Merchandise inventories at the end of Q1 18 increased 1.5% to
$1.053 billion from $1.037 billion at the end of Q1 17.
STOCK REPURCHASE PROGRAM
During Q1 18, we repurchased 732,000 shares of common stock at an
average cost of $51.53 per share and a total cost of approximately $38
million. As of April 29, 2018, there was approximately $481 million
remaining under our current stock repurchase program.
|
|
|
FISCAL YEAR 2018 FINANCIAL GUIDANCE
|
|
|
|
2
nd
Quarter 2018 Financial Guidance*
|
|
|
|
Total Net Revenues (millions)
|
$1,250 – $1,275
|
|
Comparable Brand Revenue Growth
|
3% – 5%
|
|
Non-GAAP Diluted EPS
|
$0.65 – $0.70
|
|
|
|
|
|
Fiscal Year 2018 Financial Guidance*
|
|
|
|
Total Net Revenues (millions)
|
$5,495 – $5,655
|
|
Comparable Brand Revenue Growth
|
2% – 5%
|
|
Non-GAAP Operating Margin
|
8.2% – 9.0%
|
|
Non-GAAP Diluted EPS
|
$4.15 – $4.25
|
|
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
|
4
|
(3)
|
204
|
|
West Elm
|
106
|
9
|
(3)
|
112
|
|
Pottery Barn Kids
|
86
|
-
|
(9)
|
77
|
|
Rejuvenation
|
8
|
2
|
-
|
10
|
|
Total
|
631
|
20
|
(30)
|
621
|
|
** 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, May 23,
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 improve performance
and increase our competitive advantage; our focus on operational
excellence; our ability to improve customers’ experience; our optimism
about the future; our ability to drive long-term profitable growth; our
future financial guidance, including Q2 18 and FY 2018 guidance; our
stock repurchase program; 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; 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. 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
|
|
|
|
April 29, 2018
|
|
April 30, 2017
|
|
In thousands, except per share amounts
|
|
$
|
|
% of
Revenues
|
|
$
|
|
% of
Revenues
|
|
E-commerce net revenues
|
|
646,180
|
|
53.7%
|
|
580,510
|
|
52.2%
|
|
Retail net revenues
|
|
556,820
|
|
46.3%
|
|
530,997
|
|
47.8%
|
|
Net revenues
|
|
1,203,000
|
|
100.0%
|
|
1,111,507
|
|
100.0%
|
|
Cost of goods sold
|
|
770,836
|
|
64.1%
|
|
715,747
|
|
64.4%
|
|
Gross profit
|
|
432,164
|
|
35.9%
|
|
395,760
|
|
35.6%
|
|
Selling, general and administrative expenses
|
|
365,614
|
|
30.4%
|
|
333,286
|
|
30.0%
|
|
Operating income
|
|
66,550
|
|
5.5%
|
|
62,474
|
|
5.6%
|
|
Interest (income) expense, net
|
|
1,201
|
|
0.1%
|
|
(103)
|
|
-
|
|
Earnings before income taxes
|
|
65,349
|
|
5.4%
|
|
62,577
|
|
5.6%
|
|
Income taxes
|
|
20,181
|
|
1.7%
|
|
23,022
|
|
2.1%
|
|
Net earnings
|
|
45,168
|
|
3.8%
|
|
39,555
|
|
3.6%
|
|
Earnings per share (EPS):
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.54
|
|
|
|
$0.45
|
|
|
|
Diluted
|
|
$0.54
|
|
|
|
$0.45
|
|
|
|
Shares used in calculation of EPS:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
83,392
|
|
|
|
86,962
|
|
|
|
Diluted
|
|
84,174
|
|
|
|
87,710
|
|
|
|
|
|
|
|
|
|
|
|
Williams-Sonoma, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
|
|
|
|
In thousands, except per share amounts
|
|
April 29,
2018
|
|
January 28,
2018
|
|
April 30,
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
290,244
|
|
$
|
390,136
|
|
$
|
93,975
|
|
Accounts receivable, net
|
|
|
102,630
|
|
|
90,119
|
|
|
63,982
|
|
Merchandise inventories, net
|
|
|
1,052,892
|
|
|
1,061,593
|
|
|
1,037,107
|
|
Prepaid catalog expenses
|
|
|
—
|
|
|
20,517
|
|
|
20,341
|
|
Prepaid expenses
|
|
|
56,333
|
|
|
62,204
|
|
|
64,739
|
|
Other current assets
|
|
|
21,118
|
|
|
11,876
|
|
|
10,901
|
|
Total current assets
|
|
|
1,523,217
|
|
|
1,636,445
|
|
|
1,291,045
|
|
Property and equipment, net
|
|
|
926,320
|
|
|
932,283
|
|
|
920,531
|
|
Deferred income taxes, net
|
|
|
58,842
|
|
|
67,306
|
|
|
124,977
|
|
Other long-term assets, net
|
|
|
148,526
|
|
|
149,715
|
|
|
54,624
|
|
Total assets
|
|
$
|
2,656,905
|
|
$
|
2,785,749
|
|
$
|
2,391,177
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
393,025
|
|
$
|
457,144
|
|
$
|
397,442
|
|
Accrued expenses
|
|
|
99,823
|
|
|
134,207
|
|
|
87,184
|
|
Gift card and other deferred revenue
|
|
|
256,534
|
|
|
300,607
|
|
|
298,113
|
|
Borrowings under revolving line of credit
|
|
|
—
|
|
|
—
|
|
|
45,000
|
|
Income taxes payable
|
|
|
72,036
|
|
|
56,783
|
|
|
37,792
|
|
Other current liabilities
|
|
|
61,403
|
|
|
59,082
|
|
|
47,134
|
|
Total current liabilities
|
|
|
882,821
|
|
|
1,007,823
|
|
|
912,665
|
|
Deferred rent and lease incentives
|
|
|
204,599
|
|
|
202,134
|
|
|
195,201
|
|
Long-term debt
|
|
|
299,472
|
|
|
299,422
|
|
|
—
|
|
Other long-term liabilities
|
|
|
72,779
|
|
|
72,804
|
|
|
73,160
|
|
Total liabilities
|
|
|
1,459,671
|
|
|
1,582,183
|
|
|
1,181,026
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
Preferred stock: $.01 par value; 7,500 shares authorized; none issued
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Common stock: $.01 par value; 253,125 shares authorized; 83,222,
83,726 and
86,883 shares issued and outstanding at April
29, 2018,
January 28, 2018 and April 30, 2017, respectively
|
|
|
833
|
|
|
837
|
|
|
869
|
|
Additional paid-in capital
|
|
|
564,685
|
|
|
562,814
|
|
|
549,281
|
|
Retained earnings
|
|
|
638,774
|
|
|
647,422
|
|
|
671,758
|
|
Accumulated other comprehensive loss
|
|
|
(6,755)
|
|
|
(6,782)
|
|
|
(10,830)
|
|
Treasury stock, at cost
|
|
|
(303)
|
|
|
(725)
|
|
|
(927)
|
|
Total stockholders’ equity
|
|
|
1,197,234
|
|
|
1,203,566
|
|
|
1,210,151
|
|
Total liabilities and stockholders’ equity
|
|
$
|
2,656,905
|
|
$
|
2,785,749
|
|
$
|
2,391,177
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Store Data
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28, 2018
|
|
Openings
|
|
Closings
|
|
April 29, 2018
|
|
April 30, 2017
|
|
Williams Sonoma
|
|
228
|
|
—
|
|
(4)
|
|
224
|
|
233
|
|
Pottery Barn
|
|
203
|
|
1
|
|
(1)
|
|
203
|
|
199
|
|
West Elm
|
|
106
|
|
2
|
|
—
|
|
108
|
|
99
|
|
Pottery Barn Kids
|
|
86
|
|
—
|
|
(2)
|
|
84
|
|
89
|
|
Rejuvenation
|
|
8
|
|
—
|
|
—
|
|
8
|
|
8
|
|
Total
|
|
631
|
|
3
|
|
(7)
|
|
627
|
|
628
|
|
|
|
Williams-Sonoma, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
Thirteen Weeks Ended
|
|
In thousands
|
|
April 29,
2018
|
|
April 30,
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net earnings
|
|
$
|
45,168
|
|
$
|
39,555
|
|
Adjustments to reconcile net earnings to net cash provided by (used
in) operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
47,873
|
|
|
44,950
|
|
Loss on disposal/impairment of assets
|
|
|
414
|
|
|
519
|
|
Amortization of deferred lease incentives
|
|
|
(6,724)
|
|
|
(6,477)
|
|
Deferred income taxes
|
|
|
(3,241)
|
|
|
(3,848)
|
|
Tax benefit related to stock-based awards
|
|
|
6,126
|
|
|
13,742
|
|
Stock-based compensation expense
|
|
|
12,889
|
|
|
9,817
|
|
Other
|
|
|
64
|
|
|
(76)
|
|
Changes in:
|
|
|
|
|
|
Accounts receivable
|
|
|
(9,556)
|
|
|
24,610
|
|
Merchandise inventories
|
|
|
2,388
|
|
|
(60,246)
|
|
Prepaid catalog expenses
|
|
|
—
|
|
|
(844)
|
|
Prepaid expenses and other assets
|
|
|
(4,399)
|
|
|
(11,069)
|
|
Accounts payable
|
|
|
(76,823)
|
|
|
(65,483)
|
|
Accrued expenses and other liabilities
|
|
|
(32,047)
|
|
|
(47,248)
|
|
Gift card and other deferred revenue
|
|
|
4,815
|
|
|
(4,648)
|
|
Deferred rent and lease incentives
|
|
|
10,004
|
|
|
5,806
|
|
Income taxes payable
|
|
|
13,818
|
|
|
14,564
|
|
Net cash provided by (used in) operating activities
|
|
|
10,769
|
|
|
(46,376)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(34,029)
|
|
|
(32,153)
|
|
Other
|
|
|
120
|
|
|
5
|
|
Net cash used in investing activities
|
|
|
(33,909)
|
|
|
(32,148)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Repurchases of common stock
|
|
|
(37,713)
|
|
|
(38,350)
|
|
Payment of dividends
|
|
|
(34,081)
|
|
|
(34,189)
|
|
Tax withholdings related to stock-based awards
|
|
|
(7,438)
|
|
|
(13,780)
|
|
Borrowings under revolving line of credit
|
|
|
—
|
|
|
45,000
|
|
Net cash used in financing activities
|
|
|
(79,232)
|
|
|
(41,319)
|
|
Effect of exchange rates on cash and cash equivalents
|
|
|
2,480
|
|
|
105
|
|
Net decrease in cash and cash equivalents
|
|
|
(99,892)
|
|
|
(119,738)
|
|
Cash and cash equivalents at beginning of period
|
|
|
390,136
|
|
|
213,713
|
|
Cash and cash equivalents at end of period
|
|
$
|
290,244
|
|
$
|
93,975
|
|
|
|
Exhibit 1
1
st
Quarter GAAP to Non-GAAP
Reconciliation*
(unaudited)
(Dollars in thousands, except per share data)
|
|
|
|
Thirteen Weeks Ended April 29, 2018
|
|
|
|
|
|
GAAP Basis
(as reported)
|
|
Outward-Related
1
|
|
Employment-
Related Expense
2
|
|
Tax Reform3
|
|
Impact of Equity
Accounting Rules4
|
|
Non-GAAP Basis
|
|
Net revenues
|
|
$
|
1,203,000
|
|
$
|
(694)
|
|
|
|
|
|
|
|
$
|
1,202,306
|
|
Gross profit
|
|
|
432,164
|
|
|
582
|
|
|
|
|
|
|
|
|
432,746
|
|
% of Revenues
|
|
|
35.9%
|
|
|
|
|
|
|
|
|
|
|
36.0%
|
|
Selling, general and administrative expenses
|
|
|
365,614
|
|
|
(6,344)
|
|
|
(1,702)
|
|
|
-
|
|
|
-
|
|
|
357,568
|
|
% of Revenues
|
|
|
30.4%
|
|
|
|
|
|
|
|
|
|
|
29.7%
|
|
Operating income
|
|
|
66,550
|
|
|
6,926
|
|
|
1,702
|
|
|
-
|
|
|
-
|
|
|
75,178
|
|
% of Revenues
|
|
|
5.5%
|
|
|
|
|
|
|
|
|
|
|
6.3%
|
|
Earnings before income taxes
|
|
|
65,349
|
|
|
6,930
|
|
|
1,702
|
|
|
-
|
|
|
-
|
|
|
73,981
|
|
Income taxes
|
|
|
20,181
|
|
|
1,467
|
|
|
402
|
|
$
|
(3,298)
|
|
$
|
(1,146)
|
|
|
17,606
|
|
Tax rate
|
|
|
30.9%
|
|
|
|
|
|
|
|
|
|
|
23.8%
|
|
Net earnings
|
|
$
|
45,168
|
|
$
|
5,463
|
|
$
|
1,300
|
|
$
|
3,298
|
|
$
|
1,146
|
|
$
|
56,375
|
|
Diluted EPS
|
|
$0.54
|
|
$0.06
|
|
$0.02
|
|
$0.04
|
|
$0.01
|
|
$0.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended April 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Basis
(as reported)
|
|
Severance-Related
Expense5
|
|
Adoption of Equity
Accounting Rules4
|
|
Non-GAAP
Basis
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
$
|
333,286
|
|
$
|
(5,705)
|
|
|
-
|
|
$
|
327,581
|
|
|
|
|
|
% of Revenues
|
|
|
30.0%
|
|
|
|
|
|
|
29.5%
|
|
|
|
|
|
Operating income
|
|
|
62,474
|
|
|
5,705
|
|
|
-
|
|
|
68,179
|
|
|
|
|
|
% of Revenues
|
|
|
5.6%
|
|
|
|
|
|
|
6.1%
|
|
|
|
|
|
Earnings before income taxes
|
|
|
62,577
|
|
|
5,705
|
|
|
-
|
|
|
68,282
|
|
|
|
|
|
Income taxes
|
|
|
23,022
|
|
|
1,971
|
|
$
|
(1,429)
|
|
|
23,564
|
|
|
|
|
|
Tax rate
|
|
|
36.8%
|
|
|
|
|
|
|
34.5%
|
|
|
|
|
|
Net earnings
|
|
$
|
39,555
|
|
$
|
3,734
|
|
$
|
1,429
|
|
$
|
44,718
|
|
|
|
|
|
Diluted EPS
|
|
$0.45
|
|
$0.04
|
|
$0.02
|
|
$0.51
|
|
|
|
|
|
*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
|
|
|
|
|
|
Q1 18
|
|
Q1 17
|
|
Q1 18
|
|
Q1 17
|
|
Q1 18
|
|
Q1 17
|
|
Q1 18
|
|
Q1 17
|
|
|
|
Net revenues
|
|
$
|
646,180
|
|
$
|
580,510
|
|
$
|
556,820
|
|
$
|
530,997
|
|
-
|
|
-
|
|
$
|
1,203,000
|
|
$
|
1,111,507
|
|
|
|
Outward-related1
|
|
|
(694)
|
|
|
|
|
|
|
|
|
|
|
|
|
(694)
|
|
|
|
|
|
Non-GAAP net revenues
|
|
|
645,486
|
|
|
580,510
|
|
|
556,820
|
|
|
530,997
|
|
|
|
|
|
|
1,202,306
|
|
|
1,111,507
|
|
|
|
Net revenue growth
|
|
|
11.3%
|
|
|
0.7%
|
|
|
4.9%
|
|
|
1.8%
|
|
|
|
|
|
|
8.2%
|
|
|
1.2%
|
|
|
|
Non-GAAP net revenue growth
|
|
|
11.2%
|
|
|
0.7%
|
|
|
4.9%
|
|
|
1.8%
|
|
|
|
|
|
|
8.2%
|
|
|
1.2%
|
|
|
|
GAAP operating income (expense)
|
|
|
142,805
|
|
|
132,004
|
|
|
22,061
|
|
|
21,714
|
|
(98,316)
|
|
(91,244)
|
|
|
66,550
|
|
|
62,474
|
|
|
|
GAAP operating margin
|
|
|
22.1%
|
|
|
22.7%
|
|
|
4.0%
|
|
|
4.1%
|
|
(8.2)%
|
|
(8.2)%
|
|
|
5.5%
|
|
|
5.6%
|
|
|
|
Outward-related
1
|
|
|
5,551
|
|
|
-
|
|
|
-
|
|
|
-
|
|
1,375
|
|
-
|
|
|
6,926
|
|
|
-
|
|
|
|
Employment-related expense2
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
1,702
|
|
-
|
|
|
1,702
|
|
|
-
|
|
|
|
Severance-related expenses5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
-
|
|
5,705
|
|
|
-
|
|
|
5,705
|
|
|
|
Non-GAAP operating income (expense)
|
|
|
148,356
|
|
|
132,004
|
|
|
22,061
|
|
|
21,714
|
|
(95,239)
|
|
(85,539)
|
|
|
75,178
|
|
|
68,179
|
|
|
|
Non-GAAP operating margin
|
|
|
23.0%
|
|
|
22.7%
|
|
|
4.0%
|
|
|
4.1%
|
|
(7.9)%
|
|
(7.7)%
|
|
|
6.3%
|
|
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**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:
|
1
|
During Q1 18, we incurred approximately $6.9 million of expense,
primarily associated with acquisition-related compensation
expense, amortization of intangible assets, as well as the
operations of Outward, Inc.
|
|
2
|
During Q1 18, we incurred approximately $1.7 million of
employment-related expense in our corporate functions, which is
recorded in selling, general and administrative expenses within
the unallocated segment.
|
|
3
|
During Q1 18, we recorded income tax expense of approximately 3.3
million, primarily related to the measurement of the income tax
effect of the Tax Cuts and Jobs Act enacted in Q4 17.
|
|
4
|
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.
|
|
5
|
During Q1 17, we incurred approximately $5.7 million for
severance-related reorganization expenses primarily in our corporate
functions, which is recorded in selling, general and administrative
expenses within the unallocated segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 2
ASU No. 2014-09 Impact of Adoption*
(unaudited)
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2018
GAAP
As Reported
|
|
ASU 2014-09
Adjustment
|
|
Q1 2018
GAAP
As Adjusted
|
|
|
|
Net revenues
|
|
$
|
1,203,000
|
|
$
|
(25,101)
|
|
$
|
1,177,899
|
|
|
|
Cost of goods sold
|
|
|
770,836
|
|
|
(6,144)
|
|
|
764,692
|
|
|
|
Gross profit
|
|
|
432,164
|
|
|
(18,957)
|
|
|
413,207
|
|
|
|
SG&A expenses
|
|
|
365,614
|
|
|
(12,262)
|
|
|
353,352
|
|
|
|
Operating income
|
|
$
|
66,550
|
|
$
|
(6,695)
|
|
$
|
59,855
|
|
|
*We adopted ASU No. 2014-09, which pertains to revenue
recognition, in the first quarter of fiscal 2018. This table shows
the impact of adopting ASU No. 2014-09 on our consolidated
statement of earnings for the first quarter of fiscal 2018.
|
|
|
|
|
|
|
|
|
|
Pro Forma Effect of ASU No. 2014-09**
(unaudited)
(Dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
Pro Forma
|
|
|
|
|
|
Q1 2018
Non-
GAAP1
|
|
Q1 2017
Non-
GAAP2
|
|
Q1
Year-
Over-
Year
|
|
Q1 2018
Non-
GAAP1
|
|
Q1 2017 Non-
GAAP Including
the Effect of
ASU 2014-093
|
|
Q1
Year-
Over-
Year
|
|
Year-Over-Year
Impact of
Accounting Change
|
|
Net revenues
|
|
$1,202,306
|
|
$1,111,507
|
|
$90,799
|
|
$1,202,306
|
|
$1,125,131
|
|
$77,175
|
|
$13,624
|
|
Net revenue growth
|
|
|
|
|
|
8.2%
|
|
|
|
|
|
6.9%
|
|
1.3%
|
|
Revenue comp
|
|
|
|
|
|
5.5%
|
|
|
|
|
|
5.2%
|
|
0.3%
|
|
Gross margin %
|
|
36.0%
|
|
35.6%
|
|
0.4%
|
|
36.0%
|
|
36.3%
|
|
-0.3%
|
|
0.7%
|
|
SG&A expenses %
|
|
29.7%
|
|
29.5%
|
|
-0.2%
|
|
29.7%
|
|
30.1%
|
|
0.4%
|
|
-0.6%
|
|
Operating income
|
|
75,178
|
|
68,179
|
|
$6,999
|
|
75,178
|
|
69,751
|
|
$5,427
|
|
$1,572
|
|
Operating margin %
|
|
6.3%
|
|
6.1%
|
|
0.2%
|
|
6.3%
|
|
6.2%
|
|
0.1%
|
|
0.1%
|
|
Diluted EPS
|
|
$0.67
|
|
$0.51
|
|
$0.16
|
|
$0.67
|
|
$0.52
|
|
$0.15
|
|
$0.01
|
|
|
|
** We adopted ASU No. 2014-09 in the first quarter of fiscal 2018
using the modified retrospective method. Results for reporting
periods beginning after January 29, 2018 are presented under ASU No.
2014-09, while prior period amounts are not adjusted and continue to
be reported in accordance with the prior revenue recognition
standard. This table presents the pro forma effect of ASU No.
2014-09 as if the recognition and presentation guidance in the
accounting standard had been applied in fiscal 2017.
|
|
|
|
|
|
|
|
|
|
1
|
|
These numbers represent Q1 2018 non-GAAP financial results as
disclosed in Exhibit 1, and include the impact of adopting the new
revenue standard (ASU 2014-09).
|
|
|
|
|
2
|
|
These numbers represent Q1 2017 non-GAAP financial results as
disclosed in Exhibit 1, and exclude the impact of the new revenue
standard.
|
|
|
|
|
3
|
|
In order to provide a meaningful year-over-year comparison of our
Q1 financial results, we have adjusted our Q1 2017 results for
informational purposes to reflect the impact as if the new revenue
standard had been adopted in Q1 2017.
|
