E-commerce continues to anchor overall sales at Williams-Sonoma Inc., increasing 9.1% in the second quarter to $569.9 million from $522.6 million year over year.
Online sales accounted for 50.6% of total sales at the home goods retailer, up from 50.3% in the same period a year ago. Net revenue for fiscal Q2 ended Aug. 2 grew 8.5% to $1.127 billion from $1.039 billion a year ago, the company reported Wednesday.
Related: Williams-Sonoma’s e-commerce sales grow 8.4% in Q1
Williams-Sonoma, whose brands include Mark and Graham, Pottery Barn, Pottery Barn Kids, PBteen, Rejuvenation, West Elm, Williams-Sonoma Home and Williams-Sonoma, “delivered a solid quarter despite absorbing incremental shipping and fulfillment-related costs associated with the lingering effects of the West Coast port disruption and investing in our long-term strategic initiatives,” president and CEO Laura Alber told analysts during the Q2 earnings call, according to a transcript from Seeking Alpha. Port operations off the West Coast came to a standstill in for several months earlier this year during a labor dispute, causing inventory shortages and a glut of back orders for retailers and other companies. “While the port disruption was extremely difficult, the good news is that, it caused us to re-examine every single element of our supply chain,” she said.
Heading into the second half of the year, Williams-Sonoma, No. 20 in the Internet Retailer 2015 Top 500 Guide, will focus on rebalancing inventory between distribution centers to reduce costs associated with out-of-market shipping and to improve service, Julie Whalen, chief financial officer, told analysts during the call.
The retailer’s investments in inventory systems “may be an overdue project to harmonize ecomm/store inventory visibility,” Matt Nemer, Wells Fargo senior analyst, wrote.
“In e-commerce, we are improving our onsite search experience, personalizing content on our website, and enhancing our mobile shopping experience,” Alber told analysts, though she did not offer more details.
PBteen continues to increase its social media reach, Alber said. “In July, PBteen announced a partnership with AwesomenessTV, a multiplatform media company that is a global leader in engaging the Gen Z audience,” she told analysts. “Together, AwesomenessTV and PBteen produced an original six-episode, do-it-yourself series titled, Revved Up Rooms, featuring popular YouTube star, Meg DeAngelis, MayBaby on YouTube. This is PBteen’s first video series featuring a blogger. The partnership helps us to reach and engage with a large tween and teen audience in authentic and original way.”
The West Elm home furnishings brand continued to post double-digit sales growth, up 15.7% for the quarter compared with a 16.7% increase a year ago. A West Elm-branded shop will launch online at JohnLewis.com, followed by a shop within a shop debut Sept. 3 in the newly renovated John Lewis flagship on London’s Oxford Street, according to West Elm.
“We are very encouraged by West Elm’s partnership with U.K. department store John Lewis,” said Neil Saunders, managing director of retail research agency Conlumino. “As the leading home retailer within the U.K., John Lewis will help expose the West Elm brand to customers in a way that is cost effective and, if successful, will allow Williams-Sonoma to scale up across more John Lewis stores.”
Also encouraging to Saunders is the growth of Mark and Graham, an online retailer of personalized gifts and accessories. “Growth over the quarter was driven by an expansion of the product assortment as well as a focus on key events such as Father’s day and new graduates,” he said.
Williams-Sonoma also reported for the quarter ended Aug. 2:
- Store sales increased 7.9% to $557.1 million from $516.5 million in the year-ago period.
- Cost of goods sold increased 9.6% to $720.4 million from $657.0 million.
- Net earnings decreased 2.6% to $83.1 million from $85.3 million.
For the first half of fiscal 2015, Williams-Sonoma reported:
- E-commerce sales increased 8.7% to $1.102 billion from $1.014 billion in the year-ago period. As a percent of total sales, e-commerce was 51.1%, up from 50.4%.
- Net revenue increased 7.2% to $2.158 billion from $2.013 billion
- Store sales increased 5.5% to $1.055 billion, from $999.55 million.
- Cost of goods sold increased 8.6% to 1.372 billion from $1.263 billion.
- Net earnings increased 1.6% to $98.46 million from $96.91 million.