Williams-Sonoma, Inc. (NYSE:WSM) Q2 2023 Earnings Call Transcript

I give you that as an example of a category that is really outperforming what you see in our total average numbers and there are a lot of other examples like that, whether it is Hold Everything and Williams-Sonoma. Williams-Sonoma itself, I think you see the performance in the kitchen business. That team has worked very hard to build new businesses and expand their branded assortments as a percent total. Those are things that they are designing and developing that cannot be found elsewhere. That has been a very important strategy and yes, furniture is softer. There is definitely a pullback in furniture and we are planning that this will be the case until the environment strengthens and so as you look at us to the back half of the year, the reality is these holidays, entertaining, gift-giving, those are strong points for us and so we are going to be leaning into them with exciting new products and really relevant marketing as we go to the holiday season.

Operator: Our next question comes from Chuck Grom from Gordon Haskett. Please go ahead. Your line is open.

Chuck Grom: Hey, thanks very much. Laura, I wanted you to talk about the health of your customer today and overall demand indicators that you guys evaluate. As we have progressed through earnings here, a number of retailers, some off-price names have called out the categories as rebasing a little bit. I was wondering if you would share in that thought process. And then my follow-up is just on your overall pricing strategy. You talked about it a little bit in your prepared remarks, but I was wondering if you could elaborate a little bit more on that and how big of an advantage it is for Sonoma.

Laura Alber: Yes, thank you, Chuck. It is definitely an uneven macro environment. Every day we hear different messages, right? So you have the positive indicators in the stock market and jobs, but there is still a fear of layoffs at the higher income levels. And then you also have the obvious negative indicators for businesses like ours, like interest rates and housing. So it is a mixed bag, but the consumer confidence is up. They spend a lot of money on travel and services. We all know that there is definitely a movement of categories like ours into some of those other areas. And yet at the same time, we talked about this when we were in New York, customers love their homes. And right now is not a time when they are buying a new one or moving as much, but they are always thinking about it and thinking about the next project.

And easy updates to the home and life stage changes and gift giving around the home are very relevant and as relevant today as they have ever been. In terms of pricing, Jeff touched on it in the beginning, but I just want to remind everybody what makes us really, really different than other people in this business. We design and source 90% of our products. And as a result, we are able to deliver a higher quality value equation to our customers and we have scale. And so the vendors are very happy to work with us to value engineer our products and it’s a huge advantage. There are a lot of people out there buying offline and so it’s a race to the bottom on pricing because there’s not a lot of differentiation. Honestly, they’re selling a totally different level of quality and then there’s people who are really at the high end and just substantially more expensive than we are, but honestly, we care about all of them and so we’re constantly checking our prices against competition and we are constantly reviewing our products in person vis-a-vis the competition.