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Williams-Sonoma, Inc. announces record fourth quarter and fiscal year 2021 results

Q4 GAAP EPS of $5.41; non-GAAP EPS of $5.42, growing 37% over last year

Q4 comparable brand revenue growth of 10.8% with 21.0% GAAP operating margin

FY21 comparable brand revenue growth accelerates to 22.0%, a 39.0% 2YR comp

FY21 GAAP operating margin of 17.6%; non-GAAP operating margin of 17.7% expanding 350bps

Reiterates long-term outlook

Williams-Sonoma, Inc. (NYSE: WSM), the world’s largest digital-first, design-led and sustainable home retailer, today announced operating results for the fourth fiscal quarter (“Q4 21”) and fiscal year 2021 ("FY 21") ended January 30, 2022.

“We are thrilled to deliver a strong finish to fiscal 2021, driving record results, with Q4 comps of 10.8% and operating margin expansion of 310 basis points. These results reflect the resilience in our business model, as we successfully navigated unprecedented challenges within the supply chain, material and labor shortages, and capacity limitations from our incredible consumer demand. This resilience, coupled with continued execution in our growth initiatives, fueled an annual comp of 22%; operating margin expansion of 350 basis points; and EPS growth of 64% to $14.85 per share,” said Laura Alber, President and Chief Executive Officer.

Alber concluded, “We are immensely proud of our accomplishments, our record fiscal year results, and the outstanding work of our team. I am confident that we will continue to raise the bar and extend this momentum in fiscal 2022.”

FOURTH QUARTER 2021

  • Comparable brand revenue growth of 10.8%, including West Elm at 18.3%, Pottery Barn accelerating to 16.2%, and Williams Sonoma at 4.5% on top of 26.2% last year

  • Gross margin of 45.0%, expanding 290bps driven by higher year-over-year merchandise margins as well as occupancy leverage of approximately 20bps; occupancy costs were $193 million

  • Operating margin of 21.0%; GAAP operating margin expansion of 350bps; non-GAAP operating margin expansion of 310bps

  • GAAP diluted EPS of $5.41 and non-GAAP diluted EPS of $5.42 increasing 37% over last year

FISCAL YEAR 2021

  • Comparable brand revenue growth accelerated to 22.0%, with double-digit comparable revenue growth in all brands, including West Elm at 33.1%, Pottery Barn at 23.9%, Pottery Barn Kids and Teen at 11.6%, and Williams Sonoma at 10.5%

  • Gross margin of 44.0%; GAAP gross margin expansion of 510bps; non-GAAP gross margin expansion of 500bps

  • GAAP operating margin of 17.6%, expanding approximately 420bps; non-GAAP operating margin of 17.7%, expanding approximately 350bps to an all-time high

  • GAAP diluted EPS of $14.75; non-GAAP diluted EPS of $14.85, or 64% higher than last year

  • Return on invested capital ("ROIC") of 57.9%, compared to 38.1% last year, driven by record earnings and inventory optimization (See Exhibit 1)

  • Strong returns to shareholders of nearly $1.1 billion through $188 million in dividends and nearly $900 million in additional share repurchases

  • Maintained a strong liquidity position of $850 million in cash, and over $1 billion in operating cash flow, enabling the company to authorize an increase in its quarterly dividend and a new stock repurchase authorization of $1.5 billion, as announced in a separate press release today

OUTLOOK

Fiscal Year 2022 and Long-Term

Given the ongoing strength of our business as we enter fiscal year 2022, the continued success of our new initiatives, and our competitive advantages that are rooted in our key differentiators (our in-house design, our digital-first channel strategy, and our values), we are planning for our fiscal year 2022 financial performance to be in line with our long-term financial guidance of mid-to-high single digit annual net revenue growth, increasing revenues to $10 billion by fiscal year 2024, and operating margins relatively in-line with our fiscal year 2021 operating margin.

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, March 16, 2022, 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 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 and limited visibility of excluded items; these excluded items may include expenses related to the impact of inventory write-offs, the acquisition of Outward, Inc., asset impairment charges, and income tax benefit associated with non-recurring tax adjustments. 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. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. 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 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, among other things, statements in the quotes of our President and Chief Executive Officer, our fiscal year 2022 outlook and long-term financial targets, and statements regarding our growth strategies and macro trends.

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; the continuing impact of the coronavirus on our global supply chain, retail store operations and customer demand; labor and material shortages; the impact of inflation on consumer spending; new interpretations of or changes to current accounting rules; 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; the impact of current and potential future tariffs and our ability to mitigate impacts; the potential for increased corporate income taxes; 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 31, 2021 and all subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. We have not filed our Form 10-K for the fiscal year ended January 30, 2022. As a result, all financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates that are identified prior to the time we file the Form 10-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 the world’s largest digital-first, design-led and sustainable home retailer. The company’s products, representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, 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, South Korea and India, as well as e-commerce websites in certain locations. We are also proud to be a leader in our industry with our Environmental, Social and Governance (“ESG”) efforts. Our company is Good By Design — we’ve deeply ingrained sustainability into our business. From our factories to your home, we are united in a shared purpose to care for our people and our planet.

For more information on our ESG efforts, please visit: https://sustainability.williams-sonomainc.com/

WSM-IR

Condensed Consolidated Statements of Earnings (unaudited)

 

 

For the Quarter Ended

 

January 30, 2022

 

January 31, 2021

(In thousands, except per share amounts)

$

 

% of

Revenues

 

$

 

% of

Revenues

Net revenues

$

2,501,029

 

 

100

%

 

$

2,292,673

 

 

100

%

Cost of goods sold

 

1,375,792

 

 

55.0

 

 

 

1,327,449

 

 

57.9

 

Gross profit

 

1,125,237

 

 

45.0

 

 

 

965,224

 

 

42.1

 

Selling, general and administrative expenses

 

600,665

 

 

24.0

 

 

 

563,137

 

 

24.6

 

Operating income

 

524,572

 

 

21.0

 

 

 

402,087

 

 

17.5

 

Interest (income) expense, net

 

(89

)

 

 

 

 

2,264

 

0.1

 

Earnings before income taxes

 

524,661

 

 

21.0

 

 

 

399,823

 

 

17.4

 

Income taxes

 

121,720

 

 

4.9

 

 

 

90,868

 

 

4.0

 

Net earnings

$

402,941

 

 

16.1

%

 

$

308,955

 

 

13.5

%

Earnings per share (EPS):

 

 

 

 

 

 

 

Basic

$

5.56

 

 

 

 

$

4.04

 

 

 

Diluted

$

5.41

 

 

 

 

$

3.92

 

 

 

Shares used in calculation of EPS:

 

 

 

 

 

 

 

Basic

 

72,494

 

 

 

 

 

76,507

 

 

 

Diluted

 

74,503

 

 

 

 

 

78,845

 

 

 

 

4th Quarter Net Revenues and Comparable Brand Revenue Growth (Decline) by Concept*

 

 

 

 

 

 

 

 

 

 

Net Revenues

(In millions)

Comparable Brand Revenue

Growth (Decline)

 

 

 

Q4 21

Q4 20

Q4 21

Q4 20

 

 

Pottery Barn

$

921

 

$

799

 

16.2

%

25.7

%

 

 

West Elm

 

598

 

 

511

 

18.3

 

25.2

 

 

 

Williams Sonoma

 

552

 

 

540

 

4.5

 

26.2

 

 

 

Pottery Barn Kids and Teen

 

314

 

340

(6.1

)

25.7

 

 

Other**

 

116

 

 

103

 

N/A

 

N/A

 

 

 

Total

$

2,501

 

$

2,293

 

10.8

%

25.7

%

 

 

 

 

 

 

 

 

 

* See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue, which is calculated on a 13-week basis for Q4 2021 and Q4 2020. Comparable stores that were temporarily closed due to COVID-19 were not excluded from the comparable stores calculation.

** Primarily consists of net revenues from Rejuvenation, our international franchise operations and Mark and Graham.

 

 

Condensed Consolidated Statements of Earnings (unaudited)

 

 

For the Fiscal Year Ended

 

January 30, 2022

 

January 31, 2021

(In thousands, except per share amounts)

$

 

% of

Revenues

 

$

 

% of

Revenues

Net revenues

$

8,245,936

 

100

%

 

$

6,783,189

 

100

%

Cost of goods sold

 

4,613,973

 

 

56.0

 

 

 

4,146,920

 

 

61.1

 

Gross profit

 

3,631,963

 

 

44.0

 

 

 

2,636,269

 

 

38.9

 

Selling, general and administrative expenses

 

2,178,847

 

 

26.4

 

 

 

1,725,572

 

 

25.4

 

Operating income

 

1,453,116

 

 

17.6

 

 

 

910,697

 

 

13.4

 

Interest expense, net

 

1,865

 

 

 

 

 

16,231

 

 

0.2

 

Earnings before income taxes

 

1,451,251

 

 

17.6

 

 

 

894,466

 

 

13.2

 

Income taxes

 

324,914

 

 

3.9

 

 

 

213,752

 

 

3.2

 

Net earnings

$

1,126,337

 

 

13.7

%

 

$

680,714

 

 

10.0

%

Earnings per share (EPS):

 

 

 

 

 

 

 

Basic

$

15.17

 

 

 

 

$

8.81

 

 

 

Diluted

$

14.75

 

 

 

 

$

8.61

 

 

 

Shares used in calculation of EPS:

 

 

 

 

 

 

 

Basic

 

74,272

 

 

 

 

 

77,260

 

 

 

Diluted

 

76,354

 

 

 

 

 

79,055

 

 

 

 

Fiscal Year Net Revenues and Comparable Brand Revenue Growth by Concept*

 

 

 

 

 

 

 

 

 

 

Net Revenues

(In millions)

Comparable Brand Revenue

Growth

 

 

 

FY 21

FY 20

FY 21

FY 20

 

 

Pottery Barn

$

3,121

$

2,526

23.9

%

15.2

%

 

 

West Elm

 

2,235

 

 

1,682

 

33.1

 

15.2

 

 

 

Williams Sonoma

 

1,345

 

 

1,242

 

10.5

 

23.8

 

 

 

Pottery Barn Kids and Teen

 

1,140

 

 

1,043

 

11.6

 

16.6

 

 

 

Other**

 

405

 

 

290

 

N/A

 

N/A

 

 

 

Total

$

8,246

 

$

6,783

 

22.0

%

17.0

%

 

 

 

 

 

 

 

 

 

* See the Company’s 10-K and 10-Q filings for the definition of comparable brand revenue, which is calculated on a 52-week basis for fiscal 2021 and fiscal 2020.

** Primarily consists of net revenues from Rejuvenation, our international franchise operations and Mark and Graham.

 

 

Condensed Consolidated Balance Sheets (unaudited)

 

(In thousands, except per share amounts)

January 30,

2022

 

January 31,

2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

850,338

 

 

$

1,200,337

 

Accounts receivable, net

 

131,683

 

 

 

143,728

 

Merchandise inventories, net

 

1,246,372

 

 

 

1,006,299

 

Prepaid expenses

 

69,252

 

 

 

93,822

 

Other current assets

 

26,249

 

 

 

22,894

 

Total current assets

 

2,323,894

 

 

 

2,467,080

 

Property and equipment, net

 

920,773

 

 

 

873,894

 

Operating lease right-of-use assets

 

1,132,764

 

 

 

1,086,009

 

Deferred income taxes, net

 

56,585

 

 

 

61,854

 

Goodwill

 

85,354

 

 

 

85,446

 

Other long-term assets, net

 

106,250

 

 

 

87,141

 

Total assets

$

4,625,620

 

 

$

4,661,424

 

Liabilities and stockholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

612,512

 

 

$

542,992

 

Accrued expenses

 

319,924

 

 

 

267,592

 

Gift card and other deferred revenue

 

447,770

 

 

 

373,164

 

Income taxes payable

 

79,554

 

 

 

69,476

 

Current debt

 

 

 

 

299,350

 

Operating lease liabilities

 

217,409

 

 

 

209,754

 

Other current liabilities

 

94,517

 

 

 

85,672

 

Total current liabilities

 

1,771,686

 

 

 

1,848,000

 

Deferred lease incentives

 

16,360

 

 

 

20,612

 

Long-term operating lease liabilities

 

1,066,839

 

 

 

1,025,057

 

Other long-term liabilities

 

106,528

 

 

 

116,570

 

Total liabilities

 

2,961,413

 

 

 

3,010,239

 

Stockholders' equity

 

 

 

Preferred stock: $0.01 par value; 7,500 shares authorized, none issued

 

 

 

 

 

Common stock: $0.01 par value; 253,125 shares authorized; 71,982 and 76,340 shares issued and outstanding at January 30, 2022 and January 31, 2021, respectively

 

720

 

 

 

764

 

Additional paid-in capital

 

600,942

 

 

 

638,375

 

Retained earnings

 

1,074,084

 

 

 

1,019,762

 

Accumulated other comprehensive loss

 

(10,828

)

 

 

(7,117

)

Treasury stock, at cost

 

(711

)

 

 

(599

)

Total stockholders' equity

 

1,664,207

 

 

 

1,651,185

 

Total liabilities and stockholders' equity

$

4,625,620

 

 

$

4,661,424

 

 

 

 

 

 

Retail Store Data*

(unaudited)

 

 

 

 

 

 

 

Beginning of quarter

 

 

End of quarter

 

As of

 

 

 

October 31, 2021

Openings

Closings

January 30, 2022

 

January 31, 2021

 

 

Pottery Barn

195

1

(8

)

188

 

195

 

 

Williams Sonoma

194

 

1

 

(21

)

174

 

 

198

 

 

 

West Elm

121

 

1

 

(1

)

121

 

 

121

 

 

 

Pottery Barn Kids

57

 

 

(5

)

52

 

 

57

 

 

 

Rejuvenation

10

 

 

(1

)

9

 

 

10

 

 

 

Total

577

 

3

 

(36

)

544

 

 

581

 

 

 

* Retail store data for fiscal 2021 and fiscal 2020 includes stores temporarily closed due to COVID-19. All stores were reopened as of the end of fiscal 2021.

 

 

Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

For the Year Ended

(In thousands)

January 30,

2022

 

January 31,

2021

Cash flows from operating activities:

 

 

 

Net earnings

$

1,126,337

 

 

$

680,714

 

Adjustments to reconcile net earnings to net cash provided by (used in) operating

activities:

 

 

 

Depreciation and amortization

 

196,087

 

 

 

188,655

 

Loss on disposal/impairment of assets

 

1,015

 

 

 

32,365

 

Amortization of deferred lease incentives

 

(4,282

)

 

 

(5,783

)

Non-cash lease expense

 

216,888

 

 

 

216,368

 

Deferred income taxes

 

2,535

 

 

 

(13,061

)

Stock-based compensation expense

 

95,240

 

 

 

73,185

 

Other

 

288

 

 

 

(264

)

Changes in:

 

 

 

Accounts receivable

 

11,896

 

 

 

(31,503

)

Merchandise inventories

 

(239,981

)

 

 

99,144

 

Prepaid expenses and other assets

 

(2,060

)

 

 

(16,388

)

Accounts payable

 

56,674

 

 

 

25,489

 

Accrued expenses and other liabilities

 

49,460

 

 

 

129,142

 

Gift card and other deferred revenue

 

75,460

 

 

 

82,841

 

Operating lease liabilities

 

(224,567

)

 

 

(232,989

)

Income taxes payable

 

10,157

 

 

 

46,933

 

Net cash provided by operating activities

 

1,371,147

 

 

 

1,274,848

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(226,517

)

 

 

(169,513

)

Other

 

270

 

 

 

629

 

Net cash used in investing activities

 

(226,247

)

 

 

(168,884

)

Cash flows from financing activities:

 

 

 

Repurchases of common stock

 

(899,433

)

 

 

(150,000

)

Repayment of long-term debt

 

(300,000

)

 

 

 

Payment of dividends

 

(187,539

)

 

 

(157,645

)

Tax withholdings related to stock-based awards

 

(104,235

)

 

 

(31,729

)

Debt issuance costs

 

(778

)

 

 

(3,645

)

Borrowings under revolving line of credit

 

 

 

 

487,823

 

Repayments under the revolving line of credit

 

 

 

 

(487,823

)

Net cash used in financing activities

 

(1,491,985

)

 

 

(343,019

)

Effect of exchange rates on cash and cash equivalents

 

(2,914

)

 

 

5,230

 

Net (decrease) increase in cash and cash equivalents

 

(349,999

)

 

 

768,175

 

Cash and cash equivalents at beginning of period

 

1,200,337

 

 

 

432,162

 

Cash and cash equivalents at end of period

$

850,338

 

 

$

1,200,337

 

 

Exhibit 1

 

GAAP to Non-GAAP Reconciliation

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

For the Fiscal Year Ended

 

 

 

January 30, 2022

 

January 31, 2021

 

January 30, 2022

 

January 31, 2021

 

 

 

$

% of

revenues

 

$

% of

revenues

 

$

% of

revenues

 

$

% of

revenues

 

 

Gross profit

$

1,125,237

 

45.0

%

 

$

965,224

 

42.1

%

 

$

3,631,963

 

44.0

%

 

$

2,636,269

 

38.9

%

 

 

Inventory write-off 1

 

 

 

 

 

 

 

 

 

 

 

 

 

11,378

 

 

 

 

Non-GAAP gross profit

$

1,125,237

 

45.0

%

 

$

965,224

 

42.1

%

 

$

3,631,963

 

44.0

%

 

$

2,647,647

 

39.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

$

600,665

 

24.0

%

 

$

563,137

 

24.6

%

 

$

2,178,847

 

26.4

%

 

$

1,725,572

 

25.4

%

 

 

Outward-related 2

 

(812

)

 

 

 

(3,174

)

 

 

 

(9,160

)

 

 

 

(12,092

)

 

 

 

Asset impairment 3

 

 

 

 

 

(5,094

)

 

 

 

 

 

 

 

(27,069

)

 

 

 

Non-GAAP selling, general and administrative expenses

$

599,853

 

24.0

%

 

$

554,869

 

24.2

%

 

$

2,169,687

 

26.3

%

 

$

1,686,411

 

24.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

524,572

 

21.0

%

 

$

402,087

 

17.5

%

 

$

1,453,116

 

17.6

%

 

$

910,697

 

13.4

%

 

 

Outward-related 2

 

812

 

 

 

 

3,174

 

 

 

 

9,160

 

 

 

 

12,092

 

 

 

 

Inventory write-off 1

 

 

 

 

 

 

 

 

 

 

 

 

 

11,378

 

 

 

 

Asset impairment 3

 

 

 

 

 

5,094

 

 

 

 

 

 

 

 

27,069

 

 

 

 

Non-GAAP operating income

$

525,384

 

21.0

%

 

$

410,355

 

17.9

%

 

$

1,462,276

 

17.7

%

 

$

961,236

 

14.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

Tax rate

 

$

Tax rate

 

$

Tax rate

 

$

Tax rate

 

 

Income taxes

$

121,720

 

23.2

%

 

$

90,868

 

22.7

%

 

$

324,914

 

22.4

%

 

$

213,752

 

23.9

%

 

 

Outward-related 2

 

(49

)

 

 

 

248

 

 

 

 

1,397

 

 

 

 

1,913

 

 

 

 

Inventory write-off 1

 

 

 

 

 

 

 

 

 

 

 

 

 

2,940

 

 

 

 

Asset impairment 3

 

 

 

 

 

1,269

 

 

 

 

 

 

 

 

6,593

 

 

 

 

Deferred tax asset/liability adjustment 4

 

 

 

 

 

4,383

 

 

 

 

 

 

 

 

5,030

 

 

 

 

Non-GAAP income taxes

$

121,671

 

23.2

%

 

$

96,768

 

23.7

%

 

$

326,311

 

22.3

%

 

$

230,228

 

24.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

$

5.41

 

 

 

$

3.92

 

 

 

$

14.75

 

 

 

$

8.61

 

 

 

 

Outward-related 2

 

0.01

 

 

 

 

0.04

 

 

 

 

0.10

 

 

 

 

0.13

 

 

 

 

Inventory write-off 1

 

 

 

 

 

 

 

 

 

 

 

 

 

0.11

 

 

 

 

Asset impairment 3

 

 

 

 

 

0.05

 

 

 

 

 

 

 

 

0.26

 

 

 

 

Deferred tax asset/liability adjustment 4

 

 

 

 

 

(0.06

)

 

 

 

 

 

 

 

(0.06

)

 

 

 

Non-GAAP diluted EPS*

$

5.42

 

 

 

$

3.95

 

 

 

$

14.85

 

 

 

$

9.04

 

 

 

 

* Per share amounts may not sum due to rounding to the nearest cent per diluted share

 

SEC Regulation G – Non-GAAP Information

These tables include non-GAAP gross profit, gross margin, selling, general and administrative expense, operating income, operating margin, income taxes, effective tax rate 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.

Notes to Exhibit 1:

1

 

During FY 2020, we incurred approximately $11.4 million of inventory write-offs for inventory with minor damage that we could not liquidate through our outlets due to store closures resulting from COVID-19.

2

 

During Q4 2021 and FY 2021, we incurred approximately $0.8 million and $9.2 million, respectively, associated with acquisition-related compensation expense and the amortization of acquired intangibles for Outward, Inc. During Q4 2020 and FY 2020, we incurred approximately $3.2 million and $12.1 million, respectively, associated with acquisition-related compensation expense and the amortization of acquired intangibles for Outward, Inc.

3

 

During Q4 2020 and FY 2020, we incurred approximately $5.1 million and $27.1 million, respectively, of expense associated with store asset impairments due to the impact that COVID-19 had on our retail stores.

4

 

During Q4 2020 and FY 2020, we recorded approximately $4.4 million and $5.0 million, respectively, of tax benefit resulting from a non-recurring adjustment to certain deferred tax assets and liabilities.

Return on Invested Capital (“ROIC”)

We believe ROIC is a useful financial measure for investors in evaluating the efficient and effective use of capital, and is an important component of long-term shareholder return.

We define ROIC as non-GAAP net operating profit after tax ("NOPAT"), divided by our average invested capital. NOPAT is defined as non-GAAP operating income, plus rent expense, less estimated taxes at the company’s effective tax rate. Average invested capital is defined as the two-year average of total assets less current liabilities, plus capitalized leases, less cash in excess of $200 million.

ROIC is not a measure of financial performance under GAAP, and should be considered in addition to, and not as a substitute for other financial measures prepared in accordance with GAAP. Our method of determining ROIC may differ from other companies’ methods and therefore may not be comparable.

Contacts

Julie Whalen – EVP, Chief Financial Officer – (415) 616 8524

-or-

Jeremy Brooks – SVP, Chief Accounting Officer & Head of IR – (415) 616 8571

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