Jeff Howie: We continue to operate a world-class retail business and our stores serve as billboards for the brand and operate as profit centers. They’re beautifully designed and curated with aspirational assortments, and we believe we will continue to serve as a competitive advantage. We continue on our journey of retail optimization. Since 2019, we closed about 15% of our store count. And over the next 3 to 5 years, about 50% of our leases come due, and we’ll continue to guide that we anticipate about 20% of those will close over time. Now, there’s multiple aspects to our retail optimization strategy. First, obviously, we’ll close any of the least-performing stores from a profitability standpoint or a brand denigrating, that’s the low-hanging fruit.
The second point, which is really the exciting one is the repositioning of our retail fleet. And this is where we’re taking a look at some of our older stores that in our older malls that the customer is not shopping as frequently in or moving in more vibrant lifestyle centers. And here, we’re seeing not only a better customer engagement, better top line, but better economics as well. And we’ll continue to look to reposition our fleet to right locations as leases come due. And of course, it all comes down to negotiations. It’s part of the real estate business, as we all know. We’re probably — and from an innings standpoint, we’re probably in inning 6, I think, inning 5 or 6. And on our journey here, there’s more work to do. We have — like I said, we have a lot of lease coming due.
But the key point here is we continue to improve our retail profitability. And I’ll give one example of where this is continuing to resonate. And I know used in the last call, but it continues to be an outstanding example of where the strategy of retail positioning — retail optimization really works, and that’s our Pottery Barn store in Westport, Connecticut, which we moved from downtown Westport, not the best location for us, to a location on the Post Road that is more vibrant, more customer-friendly. And I said in Q3 that the results were 30% better than the prior store — I mean, in Q2, that the results were 3% better than prior store. They’re now up 45% to the prior store. So, this strategy continues to gain traction. The key for us is that our world-class stores, coupled with our best-in-class e-commerce tools, demonstrates our digital first but not digital-only channel strategy as a key differentiator in the home furnishings industry.
Peter Benedict: Well, good. Nice to see my recent visit to the Westport store showing up in the numbers there, I guess.
Jeff Howie: Thank you for your business, Peter.
Peter Benedict: Yes. Not exactly. So, next question just would be around the cash balance, obviously it continues to rise. You’ve slowed the buyback here of late. Just curious, is this just prudent caution given all the macro pressures, the risks that are out there, or is there something more strategic that’s maybe at play here in terms of building the cash balance? Thank you.
Jeff Howie: Yes. Peter, as you know, we don’t commit to a consistent cadence of repurchases. We do remain committed to driving long-term shareholder returns, and will opportunistically buy back stock and drive shareholder returns. In Q3, we had extremely strong performance in our stock price relative to the broader market. We exceeded all three major indexes, a collection of hardlines retail and softlines retail. So, we outperformed. So, it’s not what we consider opportunistic.
Operator: Your next question comes from the line of Max Rakhlenko with TD Cowen. Please go ahead.
Max Rakhlenko: Congrats on the nice quarter. So first, Laura, how are the brands performing against your own internal expectations? And, which brands do you view to have the bigger opportunities to take market share from some of your struggling or closing peers?
Laura Alber: It’s a great question. We are disappointed in the top line performance. As you know, in most of our brands this year, except for our emerging brands, we’ve seen slower-than-expected furniture performance. That said, we’ve seen really strong seasonal performance, and these life stage businesses and certain categories are better than expected. So it’s a big change for us that we’ve really focused on and made the shift into quickly with our marketing and our inventory purchases. But, as I think about the long term and we think about where we sit vis-à-vis the market, market, as you know it’s very large and very-fractured. And so, there’s huge opportunity for us to gain share with all of our brands. I think that the names of our brands are stronger than the volumes that they produce.
When you think about the Williams Sonoma name, the brand, Williams Sonoma, you think about how small it is, and the consolidation of the industry and with Bed Bath & Beyond closing its retail footprint and others going out of business, and not seeing anyone deliver on exclusive proprietary products for high-end kitchen, you can see what a tremendous opportunity we have. And with that also, we have Williams Sonoma Home, which sits in that higher-end space where there’s not many, particularly in the aesthetics that we’re serving. I actually have Felix sitting right next to me. And I — we invited him today because we’re upon the very large holiday season that we’re looking forward to. And as you know, Williams Sonoma really spikes during the holiday season.