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What changed in Williams-Sonoma, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Williams-Sonoma, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+330 added−340 removedSource: 10-K (2025-03-27) vs 10-K (2024-03-20)

Top changes in Williams-Sonoma, Inc.'s 2025 10-K

330 paragraphs added · 340 removed · 263 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe digitally-native brand is known for high quality collections, ranging from home gifts to luggage to handbags, designed in-house that can be personalized with more than 100 monograms. GreenRow GreenRow, established in 2023, is an internally designed and developed brand specializing in the use of sustainable materials and manufacturing practices to create colorful, vintage-inspired heirloom quality products.
Biggest changeMark and Graham Established in 2012, Mark and Graham is a leading monogrammed lifestyle brand that offers thoughtfully designed personalized products and custom gifts. The digitally-native brand is known for high quality collections, ranging from home gifts to luggage to handbags, designed in-house that can be personalized with hundreds of monograms.
Our products in our portfolio of nine brands — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — are marketed through e-commerce websites, direct-mail catalogs and our retail stores.
Our products in our portfolio of nine brands — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — are marketed through e-commerce websites, our retail stores and direct-mail catalogs.
We offer shipping from many of our brands to countries worldwide, while our catalogs reach customers throughout the U.S. The e-commerce and retail businesses complement each other by meeting the customers where they are; building brand awareness and acting as effective advertising vehicles.
We offer shipping from many of our brands to countries worldwide, while our catalogs reach customers throughout the U.S. The e-commerce and retail businesses complement each other by meeting customers where they are; building brand awareness and acting as effective advertising vehicles.
Our e-commerce websites, retail stores and direct-mail catalogs compete with other retailers, including e-commerce retailers, large department stores, discount retailers, other specialty retailers offering home-centered assortments and other direct-mail catalogs.
Our e-commerce websites, retail stores and direct-mail catalogs compete with other retailers, including e-commerce retailers, large department stores, discount retailers, specialty retailers offering home-centered assortments and other direct-mail catalogs.
A leading specialty retailer of high-quality products for the kitchen and home, the brand seeks to provide world-class service and an engaging customer experience. Williams Sonoma products include everything for cooking, dining and entertaining, including: cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture and a vast library of cookbooks.
A leading specialty retailer of high-quality products for the kitchen and home, the brand seeks to provide world-class service and an engaging customer experience. Williams Sonoma products offer everything for cooking, dining and entertaining, including: cookware, tools, electrics, cutlery, tabletop and bar, outdoor, furniture and a vast library of cookbooks.
The continued shift to e-commerce has encouraged the entry of many new competitors, including discount retailers selling undifferentiated products at reduced prices, new business models and increased competition from established companies.
The continued shift to e-commerce has encouraged the entry of many new competitors, including discount retailers selling undifferentiated products at reduced prices and new business models, as well as increased competition from established companies.
Our in-house teams design our own products and work with our talented suppliers to bring quality, sustainable products to market through our high-touch multi-channel platform. Our business is subject to substantial seasonal variations in demand.
Our in-house teams design our proprietary products and work with our talented suppliers to bring high-quality, sustainable products to market through our high-touch multi-channel platform. Our business is subject to substantial seasonal variations in demand.
We also created learning programs to further build skills and career opportunities for associates, notably focused on design and core retail skills. We also foster other team-based programs to develop talent at all levels of the Company, supplying associates with new skills and training.
We also host learning programs to further build skills and career opportunities for associates, notably focused on design, technical and core retail skills. We foster other team-based programs to develop talent at all levels of the Company, supplying associates with new skills and training.
We also have multi-year franchise agreements with third parties in the Middle East, the Philippines, Mexico, South Korea and India that currently operate 138 franchised locations as well as e-commerce websites in certain locations. 4 Table of Contents SUPPLIERS We purchase most of our merchandise from numerous foreign and domestic manufacturers and importers, the largest of which accounted for approximately 3% of our purchases during fiscal 2023.
We also have multi-year franchise agreements with third parties in the Middle East, the Philippines, Mexico, South Korea and India that currently operate 126 franchised locations as well as e-commerce websites in certain locations. 5 Table of Contents SUPPLIERS We purchase most of our merchandise from numerous foreign and domestic manufacturers and importers, the largest of which accounted for approximately 3% of our purchases during fiscal 2024.
Our ability to leverage insights from both these channels, our omni-channel positioning and our marketing efforts, focused on digital advertising complemented by targeted catalogs, drive sales to each of our channels.
Our ability to leverage insights, our omni-channel positioning and our marketing efforts, focused on digital advertising complemented by targeted catalogs, drive sales to each of our channels.
Our human resources department maintains an open-door policy for associates to report concerns, and we provide an anonymous reporting hotline, which is available in multiple languages and managed by an independent company not affiliated with us.
Our human resources department maintains an open-door policy for associates to report concerns, and we provide an anonymous reporting hotline, which is available in multiple languages and managed by an independent company.
ITEM 1. BUSINESS OVERVIEW Williams-Sonoma, Inc., (the "Company”, "we", or "us") incorporated in 1973, is an omni-channel specialty retailer of high-quality products for the home. In 1956, our founder, Chuck Williams, turned a passion for cooking and eating with friends into a small business with a big idea.
ITEM 1. BUSINESS OVERVIEW Williams-Sonoma, Inc., (the “Company”, “we”, or “us”) incorporated in 1973, is an omni-channel specialty retailer of high-quality products for the home. In 1956, our founder, Chuck Williams, turned a passion for cooking and eating with friends into a small business with a big idea.
OPERATIONS As of January 28, 2024, we had the following merchandise strategies: Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow, which sell our products through our e-commerce websites, retail stores and direct-mail catalogs.
OPERATIONS As of February 2, 2025, we had the following merchandise strategies: Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow, which sell our products through our e-commerce websites, retail stores and direct-mail catalogs.
Information on our website is not, and will not, be deemed a part of this report or incorporated into any other filings we make with the SEC. 8 Table of Contents
Information on our website is not, and will not, be deemed a part of this report or incorporated into any other filings we make with the SEC, unless expressly noted. 9 Table of Contents
Historically, a significant portion of our net revenues and net earnings have been realized during the period from October through January, and levels of net revenues and net earnings have typically been lower during the period from February through September. We believe this is the general pattern associated with the retail industry.
Historically, a significant portion of our net revenues and net earnings have been realized during our peak selling season, the period from October through January, and levels of net revenues and net earnings have typically been comparatively lower during the period from February through September. We believe this is the general pattern within our industry.
Through these programs, we give our associates the tools to succeed, learn new skills and develop their careers. We have a transparent process to post open jobs throughout the company and communicate opportunities for individuals to be considered for career advancement both within their current teams and across the company.
Through these programs, we give our associates the tools to succeed, continue learning and develop their careers while building a strong talent bench to support our future success. We have a transparent process to post open jobs throughout the Company and communicate opportunities for individuals to be considered for career advancement both within their current teams and across the Company.
REGULATION As a company with global operations, we are subject to the laws of the U.S. and multiple foreign jurisdictions in which we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions.
Collectively, the intellectual property rights and proprietary technology that we hold are of material importance to us. REGULATION As a company with global operations, we are subject to the laws of the U.S. and multiple foreign jurisdictions in which we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions.
Consistent with our published privacy policies, we leverage our proprietary customer file which is a unified view of customers across brands and channels, for digital, email, and catalog marketing purposes, augmented by our propensity to buy models developed by our in-house analytics team.
Consistent with our published privacy policies, we leverage our proprietary customer file, which is a unified view of customers across brands and channels, for digital, email and catalog marketing purposes, augmented by models developed by our in-house analytics team. Our retail stores serve as billboards for our brands, which we believe inspires new and existing customers to also shop online.
Depending on position and location, associates may be eligible for: 401(k) plan and other investment opportunities; paid vacations, holidays and other time-off programs; health, dental and vision insurance; health and dependent care tax-free spending accounts; medical, family and bereavement leave; paid maternity/primary 6 Table of Contents caregiver benefits; tax-free commuter benefits; wellness programs including telehealth visits; time off to volunteer; and matching donations to qualifying nonprofit organizations.
Depending on position and location, associates may be eligible for: 401(k) plan, with company matching, and other investment opportunities; paid time-off (vacations, holidays and sick leave); health, dental and vision insurance; health and dependent care tax-free spending accounts; medical, family and bereavement leave; paid maternity/primary caregiver benefits; tax-free commuter benefits; wellness programs including telehealth visits; associate merchandise discount; access to free mental health services; an annual short-term incentive program; long-term equity awards; time off to volunteer; and matching donations to qualifying nonprofit organizations.
Most importantly, all our designs are rigorously tested to meet the highest child safety standards and expertly crafted from the best materials to last beyond their childhood years. 3 Table of Contents West Elm Born in Brooklyn in 2002, West Elm is dedicated to transforming people’s spaces through creativity, style and purpose.
Kids are, and have always been, the inspiration behind Pottery Barn Kids. Pottery Barn Kids’ designs are rigorously tested to meet the highest child safety standards and are expertly crafted from the best materials to last beyond their childhood years. West Elm Born in Brooklyn in 2002, West Elm is dedicated to transforming people’s spaces through creativity and style.
Additionally, we are subject to risks that may disrupt our supply chain operations or regionalization efforts, such as increasing labor costs and union organizing activity.
The current macroeconomic environment is uncertain, and we are subject to risks that may disrupt our supply chain operations or regionalization efforts, such as tariffs, foreign currency exchange rate fluctuations, increasing labor costs and union organizing activity.
We offer development opportunities for our associates including in-person and online learning, as well as professional development courses, such as goal setting, and leadership training. We have a company-wide Advisor Program, which matches associates in a manager-and-above role with an associate to form advisor/advisee relationships to provide career guidance and receive support in working through career aspirations and development areas.
We offer in-person and online learning, as well as professional development courses, such as goal setting and leadership training. Our Advisor Program matches associates and leaders from across the Company to form advisor/advisee relationships, providing associates with career guidance and support in working through career aspirations and development goals.
Pottery Barn Teen Launched in 2003, Pottery Barn Teen is the first home concept to focus exclusively on the teen market. Our purpose is to make safe and sustainable designs that inspire teens to create the world they want to live in. We’re designing everything from organic bedding to multi-purpose furniture that adapts and lasts.
Pottery Barn Teen’s purpose is to make safe and sustainable designs that inspire teens to create the world they want to live in. Pottery Barn Teen designs everything from organic bedding to multi-purpose furniture that adapts and lasts, with a mission to create for the future.
Investors and others should note that we announce material financial and operational information to our investors on our Investor Relations website (http://ir.williams-sonomainc.com), press releases, SEC filings and public conference calls and webcasts.
Our annual reports, Forms 10-K, Forms 10-Q, Forms 8-K and proxy and information statements, and any amendments thereto, are also available, free of charge, on our website at www.williams-sonomainc.com. 8 Table of Contents Investors and others should note that we announce material financial and operational information to our investors on our Investor Relations website (http://ir.williams-sonomainc.com), press releases, SEC filings and public conference calls and webcasts.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding Williams-Sonoma, Inc. and other companies that file materials electronically with the SEC. Our annual reports, Forms 10-K, Forms 10-Q, Forms 8-K and proxy and information statements, and any amendments thereto, are also available, free of charge, on our website at www.williams-sonomainc.com.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding Williams-Sonoma, Inc. and other companies that file materials electronically with the SEC.
In the decades that followed, the quality of our products, our ability to identify new opportunities in the market and our people-first approach to business have facilitated our expansion beyond the kitchen into nearly every area of the home. We are focused on three key priorities — returning to growth, elevating our world-class customer service and driving earnings.
In the decades that followed, the quality of our products, our ability to identify new opportunities in the market and our people-first approach to business have facilitated our expansion beyond the kitchen into nearly every area of the home, as well as the places where our customers work, stay and play.
With design, manufacturing and distribution facilities in Portland, Oregon, Rejuvenation offers a wide assortment of made-to-order lighting, hardware, furniture and home décor inspired by history, designed for today and made to last for years to come. Mark and Graham Established in 2012, Mark and Graham is a leading monogrammed lifestyle brand that offers thoughtfully designed personalized products and custom gifts.
Rejuvenation Rejuvenation, founded in 1977 with a passion for timeless design and quality craftsmanship, was acquired by Williams-Sonoma, Inc. in 2011. With design, manufacturing and distribution facilities in Portland, Oregon, Rejuvenation offers a wide assortment of made-to-order lighting, hardware, furniture and home décor inspired by history, designed for today and made to last for years to come.
West Elm creates unique, modern and affordable home décor and curates a selection of goods that are crafted by makers from the across the world, with a focus on ethically-sourced and Fair Trade Certified products. The West Elm collection is available online and in our stores worldwide.
West Elm creates unique, modern and affordable home décor and curates a selection of goods that are crafted by makers from across the world. Pottery Barn Teen Launched in 2003, Pottery Barn Teen is the first home concept to focus exclusively on the teen market.
Headquartered in San Jose, California, Outward’s technology enables scalable applications in product visualization, digital room design and augmented and virtual reality.
Outward In 2017, we acquired Outward, Inc., a 3-D imaging and augmented reality platform for the home furnishings and décor industry. Headquartered in San Jose, California, Outward’s technology enables scalable applications in product visualization, digital room design and augmented and virtual reality.
Our growth will be driven by our business strategies in each of our core businesses, our business-to-business program, our emerging brands and our global business. We will continue to improve our world-class customer service by driving supply chain improvements from reduced out-of-market and multiple shipments, fewer customer accommodations, lower returns and damages, and reduced replacements.
We will continue to improve our world-class customer service by driving supply chain improvements from reduced out-of-market and multiple shipments, fewer customer accommodations, lower returns and damages, and reduced replacements. Additionally, we see opportunity to drive margin by focusing on full-price selling and cost negotiations.
In preparation for and during our fiscal 2023 holiday selling season, we hired a substantial number of part-time and seasonal associates, primarily in our retail stores, customer care centers, and distribution facilities. None of our associates are represented by a collective bargaining agreement. We have three key Environmental, Social and Governance "ESG" pillars as areas of focus for our Company.
To support peak selling season, we hire part-time and seasonal associates, primarily in our retail stores, customer care centers and distribution facilities. None of our associates are represented by a collective bargaining agreement.
One of those three pillars is “People” in keeping with our long-held “People First” culture. This includes the following areas of focus: Associate Engagement We directly engage with associates throughout the year to collect feedback with surveys and in-person, facilitated round tables, which we use to celebrate our culture and improve the experience of our teams.
Associate Engagement We engage with associates throughout the year to collect feedback with surveys and in-person, facilitated roundtable discussions, which we use to improve the experience of our teams.
As of January 28, 2024, we own or have applied to register approximately 420 patents in connection with certain product designs, inventions and proprietary technology. Patents in the U.S. are generally valid for 15 to 20 years as long as their registrations are properly maintained.
Trademarks are generally valid as long as they are in use and/or their registrations are properly maintained, and they have not been found to have become generic. As of February 2, 2025, we also own approximately 370 patents in connection with certain product designs, inventions and proprietary technology.
We strive to deliver a workplace experience where the quality of our engagement with fellow associates, business partners and customers matches the quality of the products and services we bring to the marketplace. 5 Table of Contents Talent Development and Career Mobility We invest in our associates through accessible resources and structured training programs that help our associates to navigate and foster meaningful careers.
We strive to deliver a workplace experience in which the quality of our engagement with fellow associates, business partners and customers matches the quality of the products and services we bring to the market.
Our retail stores serve as billboards for our brands, which we believe inspires new and existing customers to also shop online. We operate 518 stores, which include 480 stores in 40 states, Washington, D.C. and Puerto Rico, 19 stores in Canada, 17 stores in Australia and 2 stores in the United Kingdom.
We operate 512 stores, which include 477 stores in 40 states, Washington, D.C. and Puerto Rico, 19 stores in Canada, 14 stores in Australia and 2 stores in the United Kingdom.
We conduct annual talent reviews to identify talent development actions as well as strength and opportunities within our succession plans. Together, these actions enable us to maintain a strong talent pipeline internally. Diversity, Equity and Inclusion Associate engagement and retention require an understanding of the needs of a diverse, creative and purpose-driven workforce.
We conduct annual reviews to identify talent development actions as well as areas of strength and opportunities within our succession plans. Together, these actions enable us to maintain a strong talent pipeline internally. Safety/Health and Wellness Our vision is to provide a safe and healthy work environment for our associates and customers.
Our efforts include: • Incident and hazard reporting; • Standard operating procedures aimed at reducing risk of injury; • Associate and management training; • Promotion of best practices; and • Measurement of key safety metrics. Compensation and Benefits We offer a benefits package designed to put our associates’ health and well-being, and that of their families, at the forefront.
Aligned with our values, we strive to continuously improve our work environments to keep our associates and customers as safe as possible. Our efforts include: • Incident and hazard reporting; • Standard operating procedures aimed at reducing risk of injury; • Associate and management training; • Promotion of best practices; and • Measurement of key safety metrics.
America’s most meaningful, beautiful design source, Pottery Barn brings together good products, people and values — seeking inspiration, quality, sustainability and service in everything we do. Thoughtfully designed and crafted to last, Pottery Barn’s furniture, bedding, lighting, rugs, table essentials, decorative accessories and more can be loved for a lifetime.
America’s most meaningful, beautiful design source, Pottery Barn brings together good products, people and values — seeking inspiration, quality and world-class customer service in everything we do.
INTELLECTUAL PROPERTY As of January 28, 2024, we own and/or have applied to register approximately 200 unique trademarks or service marks. We own and/or have applied to register our key brand names in the U.S. as well as in 95 additional jurisdictions.
Generally, exclusive rights to our intellectual property assets are held by Williams-Sonoma, Inc. and are used by our subsidiaries and franchisees under licenses. As of February 2, 2025, we own and/or have applied to register approximately 210 unique trademarks or service marks in the U.S. as well as in 97 additional jurisdictions.
Our work continued to earn recognition across our industry. We were included in Barron’s 100 Most Sustainable U.S. Companies for 2024 for the 7th year running, recognized as Sustainable Furnishings Council Top Scoring global company for sustainable wood furniture for the past 6 years, and were included in the Dow Jones Sustainability North America Index for the second time.
We were included in Barron’s 100 Most Sustainable U.S. Companies for 2025 for the 8th year running and were included in the Dow Jones Sustainability North America Index for the third time.
In preparation for and during our holiday selling season, we hire a substantial number of additional temporary associates, primarily in our retail stores, customer care centers, and distribution facilities. HUMAN CAPITAL MANAGEMENT As of January 28, 2024, we had approximately 19,300 employees, who we refer to as associates, of whom approximately 10,700 were full-time.
In preparation for and during our peak selling season, we hire a substantial number of additional temporary associates, primarily in our retail stores, customer care centers and distribution facilities. OUR VALUES Our values create our culture and drive us to foster an engaging workplace.
Our core brand names, including “Williams Sonoma,” “Pottery Barn,” “pottery barn kids,” “Pottery Barn Teen,” “west elm,” “Williams Sonoma Home,” “Rejuvenation”, “Mark and Graham” and “GreenRow” are of material importance to us. Trademarks are generally valid as long as they are in use and/or their registrations are properly maintained, and they have not been found to have become generic.
These marks include our brand names as well as the names and branding of certain key products and services. Our brand names including “Williams Sonoma,” “Pottery Barn,” “pottery barn kids,” “Pottery Barn Teen,” “west elm,” “Williams Sonoma Home,” “Rejuvenation,” “Mark and Graham” and “GreenRow” are of material importance to us.
In addition, we have registered and maintain numerous Internet domain names, including “williams-sonoma.com,” “potterybarn.com,” “potterybarnkids.com,” “potterybarnteen.com,” “westelm.com,” “wshome.com,” “williams-sonomainc.com,” “rejuvenation.com,” “markandgraham.com” and “greenrow.com.” Collectively, the trademarks, patents, copyrights, trade dress rights, 7 Table of Contents domain names, trade secrets and other intellectual property and proprietary technology that we hold are of material importance to us.
Copyright Office and numerous Internet domain names, including “williams-sonoma.com,” “potterybarn.com,” “potterybarnkids.com,” “potterybarnteen.com,” “westelm.com,” “wshome.com,” “williams-sonomainc.com,” “rejuvenation.com,” “markandgraham.com” and “greenrow.com.” We also own numerous trade dress rights, trade secrets and other legal rights to our proprietary designs, product packaging, catalogs, website designs, e-commerce technologies and store designs, among other things.
Community Involvement We also support our communities through our associates’ time and leadership, and we provide 8 hours of paid Community Involvement Time each year to our eligible associates. Additionally, we provided opportunities for associates to volunteer their time and talents with curated in-person events that support our local and national nonprofit partners.
Additionally, we provide opportunities for associates to volunteer their time and talents with curated in-person events that support our local and national nonprofit partners. We believe volunteering deepens our presence in the community, enhances our relationships with customers and strengthens associate engagement. Product Sustainability Our focus on sustainable products adds value to our business and is a competitive advantage.
Every product in the digitally-native brand's assortment supports at least one of our social or environmental initiatives and prioritizes utilizing innovative, sustainable manufacturing practices with low-impact materials wherever possible — including responsibly sourced linen, cotton, wood and recycled materials. Outward In 2017, we acquired Outward, Inc., a 3-D imaging and augmented reality platform for the home furnishings and décor industry.
GreenRow GreenRow, established in 2023, is an internally designed and developed brand specializing in the use of sustainable materials and manufacturing practices to create colorful, vintage-inspired heirloom quality products. Every product in the digitally-native brand's assortment prioritizes utilizing innovative, sustainable manufacturing practices with low-impact materials wherever possible — including responsibly sourced linen, cotton, wood and recycled materials.
Approximately 81% of our merchandise purchases in fiscal 2023 were sourced from foreign suppliers, predominantly in Asia and Europe, with 25% of our merchandise purchases sourced from China. Substantially all of these purchases were negotiated and paid for in U.S. dollars.
Substantially all of these purchases were negotiated and paid for in U.S. dollars. We manufacture merchandise, primarily upholstered furniture and lighting, at our facilities located in North Carolina, Oregon and Mississippi.
Pottery Barn Kids Kids are, and have always been, the inspiration behind what we do at Pottery Barn Kids. Since 1999, it’s been our mission to bring the utmost in quality, sustainability, safety and style into every family’s home.
Thoughtfully designed and crafted to last, Pottery Barn’s furniture, bedding, lighting, rugs, table essentials, decorative accessories and more can be loved for a lifetime. 4 Table of Contents Pottery Barn Kids Since 1999, Pottery Barn Kids’ mission has been to bring the utmost in quality, safety and style into every family’s home.
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Additionally, we see opportunity to drive margin by focusing on full-price selling and cost negotiations. As it relates to other cost efficiencies, we expect to maintain our employment cost savings that we achieved this year, following our comprehensive review of our organization structure. We are the world's largest digital-first, design-led and sustainable home retailer.
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Our in-house design capabilities and vertically integrated sourcing organization allow us to deliver high-quality, sustainable products at competitive prices. Through our e-commerce platform, our in-house customer relationship management and data analytic teams optimize our digital spend and customer connections.
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We are also proud to be a leader in our industry with our values-based culture and commitment to achieving our sustainability goals. Williams Sonoma From the beginning, our namesake brand, Williams Sonoma, has been bringing people together around food.
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We have expanded our in-store services to not only provide an exceptional customer service experience but to also serve as design centers and omni-fulfillment hubs. Our vision is to own the home, and the places where our customers work, stay and play.
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Our mission is to create for the future. Rejuvenation Rejuvenation, founded in 1977 with a passion for timeless design and quality craftsmanship, was acquired by Williams-Sonoma, Inc. in 2011.
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We are focused on three key priorities — returning to growth, elevating our world-class customer service and driving earnings. We believe our growth will be driven by our business strategies in each of our core businesses, our business-to-business division and our emerging brands.
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In addition, we manufacture merchandise, primarily upholstered furniture and lighting, at our facilities located in North Carolina, Oregon and Mississippi. The current macroeconomic environment is uncertain and we continued to incur increased costs across our global supply chain in the first half of fiscal 2023.
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We have a powerful portfolio of brands, serving a range of categories, aesthetics, and life stages and we have built a strong omni-channel platform and infrastructure, which will position us well for the next stage of growth. Williams Sonoma From the beginning, our namesake brand, Williams Sonoma, has been bringing people together around food.
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We firmly believe that working in a culture focused on diversity, equity and inclusion spurs innovation, creates healthy and high-performing teams, and delivers superior customer experiences. We aim to provide equal opportunity for all associates. We have several systems under which associates can report incidents or discrimination confidentially or anonymously and without fear of reprisal.
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Approximately 18% of our products were produced in the U.S. in fiscal 2024. The remaining 82% of our merchandise purchases were sourced from foreign suppliers, with approximately 23% from China, 16% from India, 14% from Vietnam and 29% from the rest of the world. Merchandise purchases in fiscal 2024 from Mexico and Canada were not significant.
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As of the end of fiscal 2023, approximately 68.1% of our total workforce identified as female and approximately 41.1% identified as an ethnic minority group. Additionally, approximately 56.6% of our Vice Presidents and above identified as female.
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Our foundational values are: • People First: We are committed to an environment that attracts, motivates, and recognizes high performance. • Integrity : We operate with integrity and ethics as we enhance the lives of our stakeholders, communities, and the environment. • Customers : We are here to serve our customers—without them, nothing else matters. • Quality : We take pride in everything we do.
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We were also ranked on Forbes' List of Best Employers for Diversity in 2023 and were included in the 2023 Bloomberg Gender-Equality Index, which tracks public companies’ commitment to gender equality. We are focused on increasing under-represented talent at the Company through expanding our candidate pool and career development.
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From our products to the experience and service we provide— quality is our signature. • Profit : We are committed to providing a superior return to our stockholders. It’s everyone’s job. People First As part of our People First value, we believe investing in and taking care of our people is vital to our success.
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We maintain an Equity Action Plan and an Equity Action Committee, including a diverse group of executives and associates, and in 2023 we continued our commitment to equity through our partnership and donation support with our non-profit partners such as the NAACP, the Jackie Robinson Foundation, the National Urban League and Asian Americans Advancing Justice—Asian Law Caucus.
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We are merit-based, and we prioritize offering competitive rewards, fostering an engaging workplace and supporting the growth and well-being of our associates. 6 Table of Contents As of February 2, 2025, we had approximately 19,600 employees, who we refer to as associates, who are a mix of full-time, part-time and seasonal team members.
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We continue to foster relationships with over 180 organizations, universities, colleges and networks to expand our reach to potential candidates. We continue to strive to bring forward a diverse slate of candidates for our corporate roles posted externally, which has resulted in improvement in both overall representation and hire rate since the inception of our Equity Action Plan.
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Talent Development and Career Mobility We invest in our associates through accessible resources and structured training programs that help our associates to navigate and foster meaningful careers. We offer the opportunity to do meaningful work and learn on the job, supplemented by programs designed to build individual, team and leadership skills.
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We are also a member of CEO Action for Diversity & Inclusion, in which we pledged a goal to “identify and establish associate networks for underrepresented communities to promote diversity and inclusion throughout the Company.” In furtherance of our stated goal, we have developed affinity group networks including an LGBTQIA+ Network, Black Associate Network, Veterans Appreciation Network, Hispanic/LatinX Associate Network, Asian WSI Network and a Disability, Education & Advocacy Network.
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Additionally, we have several systems under which associates can report incidents or discrimination confidentially or anonymously and without fear of reprisal. Compensation and Benefits We offer a competitive total rewards package designed to put our associates’ health and well-being, and that of their families, at the forefront.
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Safety/Health and Wellness Our vision is to provide a safe and healthy work environment for our associates and customers. Aligned with our values, we strive to continuously improve our work environments to keep our associates and customers as safe as possible.
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As we strive to keep health care affordable, we are looking to minimize cost increases to associates while adding high-value offerings that take care of our associates' physical, mental and financial well-being. 7 Table of Contents Community Involvement We support our communities through our associates’ time and leadership, and we provide eight hours of paid Community Involvement Time each year to eligible associates.
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In addition, consistent with our commitment to diversity and inclusion, we have expanded our benefit offerings to include coverage for transgender-inclusive services, including gender affirming care and therapy. As we strive to keep health care affordable and inclusive, we minimize cost increases to associates while adding offerings to support mental health and well-being.
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We know that customers prefer high quality, sustainable products that last, based on product sales and customer surveys. As a multinational retailer with a global supply chain, we are committed to energy efficiency, supplier engagement and preferred raw materials. In 2024, our work in this regard continued to earn recognition across our industry.
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We believe volunteering deepens our presence in the community, enhances our relationships with customers and strengthens associate engagement. ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS We believe that strategies that support the health of our planet, the well-being of our people and a shared sense of purpose foster long-term, sustainable growth for the Company.
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INTELLECTUAL PROPERTY We regard our intellectual property assets and proprietary rights as key factors to our success, and we rely on trademark, copyright and patent laws, trade secret protection, and confidentiality and/or license agreements to protect our valuable rights.
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As a multinational retailer with a global supply chain, we are committed to responsible practices across our business—from designing and sourcing responsible products, to reducing waste, to working with suppliers to lower emissions and adopt sustainable business practices. These practices are relevant to our business, critical to our associates, and important to our customers.
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Patents in the U.S. are generally valid for 15 to 20 years as long as their registrations are properly maintained. In addition, as of February 2, 2025, we own over 1,100 copyright registrations at the U.S.
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Our three pillars of Planet, People, and Purpose are the cornerstones of our ESG work. Within these pillars, we identified impact areas and set goals that our family of brands plays an active role in achieving. We continue to implement efforts to advance our Science-Based Target for emissions reduction across our operations and value chain.
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Our strategies for energy efficiency and renewable energy, vendor engagement, and preferred materials guide our reduction efforts. In 2023, we drove progress towards our landfill diversion goal, implementing waste reduction initiatives, such as recycling and product donation, across our operations.
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In addition to our environmental work, we offer programming to support and enhance the well-being of the workers in our supply chain. Our ambitious goals encourage us to scale our impact. More information about our sustainability efforts can be found on our website: sustainability.williams-sonomainc.com.
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Generally, exclusive rights to the trademarks and service marks are held by Williams-Sonoma, Inc. and are used by our subsidiaries and franchisees under license. These marks include our core brand names as well as brand names for selected products and services.
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Trademark registrations can generally be renewed indefinitely so long as the marks are in use. We also own numerous patents, copyrights and trade dress rights for our products, proprietary designs, product packaging, catalogs, website designs and store designs, among other things, which are used by our subsidiaries and franchisees under license.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTariffs or retaliatory trade restrictions implemented by other countries, could adversely affect customer sales, cause potential delays in product received from our suppliers, and negatively impact our cost of goods sold and results of operations. Additionally, changes in tariff and duty regimes abroad could have a material impact on our business and financial results.
Biggest changeThe current tariffs, along with any additional tariffs, changes in duty regimes or retaliatory trade restrictions implemented by the U.S. or by other countries, as well as any fluctuation in foreign exchange rates as a result of such activity, could adversely affect customer sales, including potential delays in products received from our vendors and our cost of goods sold, which could materially impact our business and financial results.
Further, we cannot control all of the various factors that might affect our e-commerce fulfillment rates and timely and effective merchandise delivery to our stores and customers. We rely upon third-party carriers for our merchandise shipments and reliable data regarding the timing of those shipments, including shipments to our customers and to and from our stores.
Further, we cannot control all the various factors that might affect our e-commerce fulfillment rates and timely and effective merchandise delivery to our stores and customers. We rely upon third-party carriers for our merchandise shipments and reliable data regarding the timing of those shipments, including shipments to our customers and to and from our stores.
Protection of our intellectual property and maintenance of our distinct branding are particularly important as they distinguish our products and services from our competitors. The actions we take to protect our intellectual property rights may not be adequate to prevent imitation of our brands and products by others, particularly in jurisdictions that do not have strong intellectual property protection.
Protection of our intellectual property rights and maintenance of our distinct branding are particularly important as they distinguish our products and services from our competitors. The actions we take to protect our intellectual property rights may not be adequate to prevent imitation of our brands and products by others, particularly in jurisdictions that do not have strong intellectual property protection.
Various factors affect comparable brand revenues, including the number, size and location of stores we open, close, remodel or expand in any period, the overall economic and general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, our ability to efficiently source and distribute products, changes in our merchandise mix, competition (including competitive promotional activity and discount retailers), current local and global economic conditions, the timing of our releases of new merchandise and promotional events, the success of marketing programs, the cannibalization of existing store sales by our new stores, changes in catalog circulation and in our e-commerce business and fluctuations in foreign exchange rates.
Various factors affect comparable brand revenues, including: our e-commerce business; the sales mix among our distribution channels; the number, size and location of stores we open, close, remodel or expand in any period; the overall economic and general retail sales environment; consumer preferences and buying trends; our ability to efficiently source and distribute products; changes in our merchandise mix; competition (including competitive promotional activity and discount retailers); current local and global economic conditions; the timing of our releases of new merchandise and promotional events; the success of our marketing programs; the cannibalization of existing store sales by our new stores; shifts in catalog circulation; and fluctuations in foreign exchange rates.
We are also vulnerable to certain additional risks and uncertainties associated with our e-commerce and mobile websites, apps, and digital marketing efforts, including: changes in required technology interfaces; website downtime and other technical failures; internet connectivity issues; costs and technical issues as we upgrade our website software; computer viruses; human error; supplier reliability; changes in applicable international, federal and state regulations, such as the European Union's General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”), and the California Privacy Rights Act (“CPRA”), and related compliance costs; security breaches; and consumer privacy concerns.
We are also vulnerable to certain additional risks and uncertainties associated with our e-commerce and mobile websites, apps and digital marketing efforts, including: changes in required technology interfaces; website downtime and other technical failures; internet connectivity issues; costs and technical issues as we upgrade our website software; computer viruses; cyberattacks; human error; supplier reliability; changes in applicable international, federal and state regulations, such as the European Union's General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”), and related compliance costs; security breaches; and consumer privacy concerns.
Historically, a significant portion of our net revenues and net earnings have typically been realized during the period from October through January each year, our peak selling season. In preparation for and during our peak holiday selling season, we hire a substantial number of part-time and seasonal associates, primarily in our retail stores, distribution facilities and customer care centers.
Historically, a significant portion of our net revenues and net earnings have typically been realized during the period from October through January each year, our peak selling season. In preparation for and during our peak selling season, we hire a substantial number of part-time and seasonal associates, primarily in our retail stores, distribution facilities and customer care centers.
Risks Related to Our Suppliers and Our Global Operations • Our dependence on foreign suppliers and our increased global operations subject us to a variety of risks and uncertainties that could impact our operations and financial results. • We depend on foreign suppliers and third-party agents for timely and effective sourcing of our merchandise, and we may not be able to acquire products in appropriate quantities and at acceptable prices to meet our needs. • If our suppliers fail to adhere to our quality control standards and test protocols, we may delay a product launch or recall a product, which could damage our reputation and negatively affect our operations and financial results. • Our efforts to expand globally may not be successful and could negatively impact the value of our brands. • Our global operations present unique risks, and our failure to effectively manage the risks and challenges inherent in a global business could adversely affect our business, operating results and financial condition and growth prospects.
Risks Related to Our Suppliers and Our Global Operations • Our dependence on foreign suppliers and our increased global operations subject us to a variety of risks and uncertainties that could impact our operations and financial results. • We depend on foreign suppliers and third-party agents for timely and effective sourcing of our merchandise, and we may not be able to acquire products in appropriate quantities and at acceptable prices to meet our needs. • If our suppliers fail to adhere to our quality control standards and test protocols, we may delay a product launch or recall a product, which could damage our reputation and negatively affect our operations and financial results. • Our efforts to expand globally may not be successful and could negatively impact the value of our brands. • Our global operations present unique risks, and our inability to effectively manage the risks and challenges inherent in a global business could adversely affect our business, operating results and financial condition and growth prospects.
We have relatively limited experience with global sales, understanding foreign consumer preferences, anticipating buying trends in different countries, marketing to non-U.S. customers, or managing shipping logistics to these customers. Moreover, global awareness of our brands and our products may not be high.
We have relatively limited experience with global sales, understanding foreign consumer preferences, anticipating buying trends in different countries, marketing to non-U.S. customers and managing shipping logistics to these customers. Moreover, global awareness of our brands and our products may not be high.
In addition, the seasonal nature of the specialty home products business requires us to carry a significant amount of inventory prior to peak selling season. As a result, we are vulnerable to demand and pricing shifts and to misjudgments in the selection and timing of merchandise purchases.
In addition, the seasonal nature of the specialty home products business requires us to carry a significant amount of inventory prior to our peak selling season. As a result, we are vulnerable to demand and pricing shifts and to misjudgments in the selection and timing of merchandise purchases.
Our inability to effectively prevent and/or minimize the loss of assets and inventory shrink, or to effectively reduce, or to accurately predict and accrue for the impact of those losses, could adversely affect our financial performance. Our inability or failure to adequately protect or enforce our intellectual property could negatively impact our business.
Our inability to effectively prevent and/or minimize the loss of assets and inventory shrink, or to effectively reduce, or to accurately predict and accrue for the impact of those losses, could adversely affect our financial performance. Our inability or failure to adequately protect or enforce our intellectual property rights could negatively impact our business.
In addition, we may not be able to renew our letters of credit that we use to help pay our suppliers, or our credit facility, on terms that are acceptable to us, or at all, as the availability of credit facilities may become limited.
In addition, we may not be able to renew our letters of credit that we use to help pay our suppliers or our credit facility on terms that are acceptable to us, or at all, as the availability of credit may become limited.
Collecting, measuring, and reporting ESG information and metrics can be difficult and time consuming and may require us to rely on data from third parties, such as suppliers, who may not reliably or accurately track or record such data.
Collecting, measuring and reporting such information and metrics can be difficult and time consuming and may require us to rely on data from third parties, such as suppliers, who may not reliably or accurately track or record such data.
We make assumptions, judgments and estimates that impact amounts reported in our Consolidated Financial Statements for a number of items, including merchandise inventories, long-lived assets, leases, goodwill, and income taxes, among others.
We make assumptions, judgments and estimates that impact amounts reported in our Consolidated Financial Statements for a number of items, including merchandise inventories, long-lived assets, leases and income taxes, among others.
If these estimates or projections change or prove incorrect, we may be, and have been, required to record impairment charges on certain store locations and other property and equipment, including information technology systems, and goodwill.
If these estimates or projections change or prove incorrect, we may be, and have been, required to record impairment charges on certain store locations and other property and equipment, including information technology systems.
We may not be successful in recruiting, retaining and motivating skilled personnel domestically or globally who have the requisite experience to achieve our global business goals, and failure to do so may harm our business.
We may not be successful in recruiting, retaining and motivating skilled personnel domestically or globally who have the requisite experience to achieve our business goals, and failure to do so may harm our business.
Risks Related to Our Business • We are unable to control many of the factors affecting consumer spending, and declines in consumer spending on home furnishings and kitchen products in general could reduce demand for our products. • If we are unable to identify and analyze factors affecting our business, anticipate changing consumer preferences and buying trends, and manage our inventory and marketing spend commensurate with customer demand, our sales levels and operating results may decline. • Our business and operating results may be harmed if we are unable to timely and effectively deliver merchandise to our stores and customers. • Our failure to successfully manage our order-taking and fulfillment operations could have a negative impact on our business and operating results . • We must protect and maintain our brand image and reputation. • Our sales may be negatively impacted by increasing competition from companies with brands or products similar to ours. • Our facilities and systems, as well as those of our suppliers, are vulnerable to natural disasters, adverse weather, climate change, technology issues and other unexpected events, any of which could result in an interruption in our business and harm our operating results. • Our aspirations, goals and disclosures related to ESG matters expose us to numerous risks, including risks to our reputation and stock price. • Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks. • If we are unable to effectively manage our e-commerce business and digital marketing efforts, our reputation and operating results may be harmed. • Declines in our comparable brand revenues may harm our operating results and cause a decline in the market price of our common stock. • Our failure to successfully manage the costs and performance of our digital advertising might have a negative impact on our business. • If we are unable to successfully manage the complexities associated with an omni-channel and multi-brand business, we may suffer declines in our existing business and our ability to attract new business. • A number of factors that affect our ability to successfully open new stores or close existing stores are beyond our control. • If we are unable to protect against inventory shrink, loss of other assets and fraud, our results of operations and financial condition could be adversely affected. • Our inability or failure to adequately protect or enforce our intellectual property could negatively impact our business. • We outsource certain aspects of our business to third-party suppliers and are in the process of insourcing certain business functions from third-party suppliers. • If we fail to attract and retain key personnel, our business and operating results may be harmed. • If we are unable to introduce new brands and brand extensions successfully, or to reposition or close existing brands, our business and operating results may be negatively impacted. • We may be subject to legal proceedings that could result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. 9 Table of Contents Risks Related to Technology • We are exposed to cybersecurity risks and costs associated with credit card fraud, identity theft and business interruption that could cause us to incur unexpected expenses and loss of revenue. • We receive, process, store, use and share data, some of which contains personal information, which subjects us to complex and evolving governmental regulation and other legal obligations. • We are undertaking certain systems changes that might disrupt our business operations.
Risks Related to Our Business • We are unable to control many of the factors affecting consumer spending, and declines in consumer spending on home furnishings and kitchen products in general could reduce demand for our products. • If we are unable to identify and analyze factors affecting our business, anticipate changing consumer preferences and buying trends, and manage our inventory and marketing spend commensurate with customer demand, our sales levels and operating results may decline. • Our business and operating results may be harmed if we are unable to timely and effectively deliver merchandise to our stores and customers. • Our inability to successfully manage our order-taking and fulfillment operations could have a negative impact on our business and operating results . • We must protect and maintain our brand image and reputation. • Our sales may be negatively impacted by increasing competition from companies with brands or products similar to ours. • Our facilities and systems, as well as those of our suppliers, are vulnerable to natural disasters, adverse weather, climate change, technology issues and other unexpected events, any of which have resulted and could result in an interruption in our business and harm our operating results. • Our aspirations, goals and disclosures related to our sustainability initiatives expose us to numerous risks, including risks to our reputation and stock price. • Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks. • If we are unable to effectively manage our e-commerce business and digital marketing efforts, our reputation and operating results may be harmed. • Declines in our comparable brand revenues may harm our operating results and cause a decline in the market price of our common stock. • Our failure to successfully manage the costs and performance of our digital advertising might have a negative impact on our business. • If we are unable to successfully manage the complexities associated with an omni-channel and multi-brand business, we may suffer declines in our existing business and our ability to attract new business. • A number of factors that affect our ability to successfully open new stores or close existing stores are beyond our control. • If we are unable to protect against inventory shrink, loss of other assets and fraud, our results of operations and financial condition could be adversely affected. • Our inability or failure to adequately protect or enforce our intellectual property rights could negatively impact our business. • We outsource certain aspects of our business to third-party suppliers and are in the process of insourcing certain business functions from third-party suppliers. • If we fail to attract and retain key personnel, our business and operating results may be harmed. • If we are unable to introduce new brands and brand extensions successfully, or to reposition or close existing brands, our business and operating results may be negatively impacted. • We may be subject to legal proceedings that could result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. 10 Table of Contents Risks Related to Technology • We are exposed to cybersecurity risks and costs associated with credit card fraud, identity theft and business interruption that could cause us to incur unexpected expenses and loss of revenue. • We receive, process, store, use and share data, some of which contains personal information, which subjects us to complex and evolving governmental regulation and other legal obligations. • We are undertaking certain systems changes that might disrupt our business operations.
General Risk Factors • Our inability to obtain commercial insurance at acceptable rates or our failure to adequately reserve for self-insured exposures might increase our expenses and have a negative impact on our business. • If our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our stock price may decline. • A variety of factors may cause our quarterly operating results to fluctuate, leading to volatility in our stock price. • If we are unable to pay quarterly dividends or repurchase our stock at intended levels, our reputation and stock price may be harmed. • If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and our investors’ views of us could be harmed. • Changes to accounting rules or regulations may adversely affect our operating results. • In preparing our financial statements we make certain assumptions, judgments and estimates that affect the amounts reported, which, if not accurate, may impact our financial results. • Changes to estimates related to our cash flow projections may cause us to incur impairment charges related to our long-lived assets for our retail store locations and other property and equipment, including information technology systems, as well as goodwill. 10 Table of Contents Risks Related to our Business We are unable to control many of the factors affecting consumer spending, and declines in consumer spending on home furnishings and kitchen products in general could reduce demand for our products.
General Risk Factors • Our inability to obtain commercial insurance at acceptable rates or our failure to adequately reserve for self-insured exposures might increase our expenses and have a negative impact on our business. • If our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our stock price may decline. • A variety of factors may cause our quarterly operating results to fluctuate, leading to volatility in our stock price. • If we are unable to pay quarterly dividends or repurchase our stock at intended levels, our reputation and stock price may be harmed. • If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and our investors’ views of us could be harmed. • Changes to accounting rules or regulations may adversely affect our operating results. • In preparing our financial statements we make certain assumptions, judgments and estimates that affect the amounts reported, which, if not accurate, may impact our financial results. • Changes to estimates related to our cash flow projections may cause us to incur impairment charges related to our long-lived assets for our retail store locations and other property and equipment, including information technology systems. 11 Table of Contents Risks Related to our Business We are unable to control many of the factors affecting consumer spending, and declines in consumer spending on home furnishings and kitchen products in general could reduce demand for our products.
The competitive challenges facing us include: • anticipating and quickly responding to changing consumer demands or preferences better than our competitors; • maintaining favorable brand recognition and achieving customer perception of value; • marketing and competitively pricing our products to consumers; • controlling and managing our costs, including advertising spend; • managing increasingly competitive promotional activity; • effectively attracting new customers; • developing new innovative shopping experiences, like mobile applications and augmented reality capabilities, that effectively engage today’s digital customers; • smartly leveraging artificial intelligence ("AI") and machine learning to enhance the customer experience and streamline processes; • developing innovative, high-quality products in colors and styles that appeal to consumers of varying age groups, tastes and regions, and in ways that favorably distinguish us from our competitors; and • effectively managing our supply chain and distribution strategies in order to provide our products to our consumers on a timely basis and minimize out-of-market and multiple shipments, accommodations, returns, replacements and damaged products.
The competitive challenges facing us include: • anticipating and quickly responding to changing consumer demands or preferences and doing so better than our competitors; • maintaining favorable brand recognition and achieving customer perception of value; • marketing and competitively pricing our products to consumers; • controlling and managing our costs, including advertising spend; • managing increasingly competitive promotional activity; • effectively attracting new customers and retaining existing customers; • developing new innovative shopping experiences, like mobile applications and augmented reality capabilities, that effectively engage today’s digital customers; • smartly leveraging artificial intelligence ("AI") and machine learning to enhance the customer experience and streamline processes; • developing innovative, high-quality products in colors and styles that appeal to consumers of varying age groups, tastes and regions, and in ways that favorably distinguish us from our competitors; and • effectively managing our supply chain and distribution strategies in order to provide our products to our customers on a timely basis and minimize out-of-market and multiple shipments, accommodations, returns, replacements and damaged products.
Lastly, we may experience reputational harm should current or former associates post negative comments about us online or on social media sites, which may impact our ability to recruit or retain talent. If we are unable to introduce new brands and brand extensions successfully, or to reposition or close existing brands, our business and operating results may be negatively impacted.
Additionally, we may experience reputational harm should current or former associates post negative comments about us online or on social media sites, which may impact our ability to recruit or retain talent. If we are unable to introduce new brands and brand extensions successfully, or to reposition or close existing brands, our business and operating results may be negatively impacted.
The continued sales growth in the e-commerce industry has encouraged the entry of many new competitors, including discount retailers selling similar products at reduced prices, new business models, and an increase in competition from established companies, many of whom are willing to spend significant funds and/or reduce pricing to gain market share.
The continued sales growth in the e-commerce industry has encouraged the entry of many new competitors, including discount retailers selling similar products at reduced prices and new business models, as well as an increase in competition from established companies, many of whom are willing to spend significant funds and/or reduce pricing to gain market share.
Our quarterly results have fluctuated and may fluctuate in the future, depending upon a variety of factors, including changes in economic conditions, shifts in the timing of holiday selling seasons, including Valentine’s Day, Easter, Halloween, Thanksgiving and Christmas, as well as timing shifts due to 53-week fiscal years, which occur approximately every five years.
Our quarterly results have fluctuated and may fluctuate in the future, depending upon a variety of factors, including changes in economic conditions, shifts in the timing of holiday selling seasons, including Valentine’s Day, Easter, back-to-school, Halloween, Thanksgiving and Christmas, as well as timing shifts due to 53-week fiscal years, which occur approximately every five years.
Our failure, or perceived failure, to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also expose us to government enforcement actions and private litigation. Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks.
Our failure, or perceived failure, to pursue or fulfill our goals or to satisfy various reporting standards within the timelines we announce, or at all, could also expose us to government enforcement actions and private litigation. Our business is subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks.
We cannot predict whether any of the countries from which our raw materials or products are sourced, or in which our products are currently manufactured or may be manufactured in the future, will be subject to trade restrictions imposed by the U.S. or foreign governments, such as the tariffs levied by the U.S. against China, or the likelihood, type or effect of any such restrictions.
We cannot predict whether any of the countries from which our raw materials or products are sourced, or in which our products are currently manufactured or may be manufactured in the future, will be subject to trade restrictions imposed by the U.S. or foreign governments, such as the tariffs levied by the U.S., or the likelihood, type or effect of any such restrictions.
In addition, in connection with these franchise arrangements, we have and will continue to implement certain new processes that may subject us to additional regulations and laws, such as U.S. export regulations. Failure to comply with any applicable regulations or laws could have an adverse effect on our results of operations.
In addition, in connection with these franchise arrangements, we have and will continue to implement certain new processes that may subject us to additional regulations and laws, such as export regulations. Failure to comply with any applicable regulations or laws could have an adverse effect on our results of operations.
Further, our Board of Directors may, at its discretion, decrease or entirely discontinue the payment of dividends at any time and the stock repurchase program may be limited or terminated at any time. Our ability to pay dividends and repurchase stock will depend on our ability to generate sufficient cash flows from operations in the future.
Further, our Board of Directors may, at its discretion, decrease or entirely discontinue the payment of dividends at any time and the stock repurchase programs may be limited or terminated at any time. Our ability to pay dividends and repurchase stock will depend on our ability to generate sufficient cash flows from operations in the future.
If we or our third-party providers are the target of a cybersecurity attack, we may also be required to undertake costly notification procedures and publicly disclose details of the attack via a current report on Form 8-K filed with the SEC.
If we or our third-party providers are the target of a cyber attack, we may also be required to undertake costly notification procedures and publicly disclose details of the attack via a current report on Form 8-K filed with the SEC.
Any perception that our practices violate individual privacy, data protection rights or cybersecurity requirements, even if unfounded, subjects us to public criticism, lawsuits, investigations, claims and other proceedings by regulators, industry groups or other third parties, all of which could disrupt or adversely impact our business and reputation and expose us to increased liability, fines and other punitive measures including restrictive judicial orders and disgorgement of data.
Any perception that our practices violate individual privacy, data protection rights or cybersecurity requirements, even if unfounded, 20 Table of Contents subjects us to public criticism, lawsuits, investigations, claims and other proceedings by regulators, industry groups or other third parties, all of which could disrupt or adversely impact our business and reputation and expose us to increased liability, fines and other punitive measures including restrictive judicial orders and disgorgement of data.
Our facilities and systems, as well as those of our suppliers, are vulnerable to natural disasters, adverse weather, climate change, technology issues and other unexpected events, any of which could result in an interruption in our business and harm our operating results.
Our facilities and systems, as well as those of our suppliers, are vulnerable to natural disasters, adverse weather, climate change, technology issues and other unexpected events, any of which have resulted and could result in an interruption in our business and harm our operating results.
Our failure to successfully manage our order-taking and fulfillment operations could have a negative impact on our business and operating results. Our e-commerce business depends, in part, on our ability to maintain efficient and uninterrupted order-taking and fulfillment operations in our distribution facilities, our customer care centers and on our e-commerce websites.
Our inability to successfully manage our order-taking and fulfillment operations could have a negative impact on our business and operating results. Our e-commerce business depends, in part, on our ability to maintain efficient and uninterrupted order-taking and fulfillment operations in our distribution facilities, our customer care centers and on our e-commerce websites.
In addition, for certain types or levels of risk, such as risks associated with certain natural disasters, cybersecurity breaches, or terrorist attacks, we may determine that we cannot obtain commercial insurance at acceptable rates, if at all.
For certain types or levels of risk, such as risks associated with certain natural disasters, cybersecurity breaches or terrorist attacks, we may determine that we cannot obtain commercial insurance at acceptable rates, if at all.
Furthermore, many of our raw materials, such as cotton, are generally sourced internationally, and represent a significant part of our business. As part of our sustainability goals and preferred raw materials strategy, we aim to shift our raw materials to lower emission options, where possible.
Furthermore, many of our raw materials, such as cotton, are generally sourced internationally, and represent a significant part of our business. As part of our preferred raw materials strategy, we aim to shift our raw materials to lower emission options, where possible.
At any point in time, multiple tax years are subject to examination by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues.
At any point in time, multiple tax years are subject to examination by various taxing jurisdictions. The outcomes of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues.
Additionally, in recent years there has been an increase in the number of employment claims and, in particular, discrimination and harassment claims. Coupled with social media platforms and similar devices that allow 18 Table of Contents individuals access to a broad audience, these claims have had a significant negative impact on some businesses.
Additionally, in recent years there has been an increase in the number of employment claims and, in particular, discrimination and harassment claims. Coupled with social media platforms and similar devices that allow individuals access to a broad audience, these claims have had a significant negative impact on some businesses.
Disruptions or slowdowns in these areas could result from disruptions in telephone or network services, power outages, inadequate system capacity, system hardware or software issues, computer viruses, security breaches, human error, changes in programming, union organizing activity, insufficient or inadequate labor to fulfill the orders, disruptions in our third-party labor contracts, inefficiencies due to inventory levels and limited distribution facility space, issues with third-party order fulfillment and drop shipping, natural disasters, adverse weather, climate change, outbreaks of disease (such as the COVID-19 pandemic) and war or acts of terrorism.
Disruptions or slowdowns in these areas could result from disruptions in telephone or network services, power outages, inadequate system capacity, system hardware or software issues, computer viruses, security breaches, human error, changes in programming, union organizing activity, insufficient or inadequate labor to fulfill the orders, disruptions in our third-party labor contracts, inefficiencies due to inventory levels and limited distribution facility space, issues with third-party order fulfillment and drop shipping, natural disasters, adverse weather, climate change, outbreaks of disease and war or acts of terrorism.
If we are unable to successfully manage the complexities associated with an omni-channel and multi-brand business, we may suffer declines in our existing business and our ability to attract new business. With the expansion of our e-commerce business, the development of new brands, acquired brands, and brand extensions, our overall business has become substantially more complex.
If we are unable to successfully manage the complexities associated with an omni-channel and multi-brand business, we may suffer declines in our existing business and our ability to attract new business. With the expansion of our e-commerce business and business-to-business division, and the development and acquisition of new brands and brand extensions, our overall business has become substantially more complex.
For example, any upward valuation in the Chinese yuan, the euro, or any other foreign currency against the U.S. dollar may result in higher costs to us for those goods. Declines in foreign currencies and currency exchange rates might negatively affect the profitability and business prospects of one or more of our foreign suppliers.
For example, any upward valuation in the Chinese yuan, the euro or any other foreign currency against the U.S. dollar may result in higher costs to us for those goods. Fluctuation in foreign exchange rates might negatively affect the profitability and business prospects of one or more of our foreign suppliers.
If any of these events result in damage to our facilities or systems, or those of our suppliers, we may experience interruptions in our business until the damage is repaired, resulting in the potential loss of customers and revenues. In addition, we may incur costs in repairing any damage beyond our applicable insurance coverage.
If any of these events result 14 Table of Contents in damage to our facilities or systems, or those of our suppliers, we may experience interruptions in our business until the damage is repaired, resulting in the potential loss of customers and revenues. In addition, we may incur costs in repairing any damage beyond our applicable insurance coverage.
Our global operations present unique risks, and our failure to effectively manage the risks and challenges inherent in a global business could adversely affect our business, operating results and financial condition and growth prospects.
Our global operations present unique risks, and our inability to effectively manage the risks and challenges inherent in a global business could adversely affect our business, operating results and financial condition and growth prospects.
Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer spending, including general economic conditions, inflationary pressures, consumer disposable income, fuel prices, recession and fears of recession, unemployment, war and fears of war, outbreaks of disease (such as the COVID-19 pandemic), adverse weather, availability of consumer credit, consumer debt levels, conditions in the housing market, elevated interest rates, sales tax rates and rate increases, consumer confidence in future economic and political conditions, and consumer perceptions of personal well-being and security.
Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer spending, including general economic conditions, inflationary pressures, consumer disposable income, fuel prices, recession and fears of recession, unemployment, war and fears of war, outbreaks of disease, adverse weather, availability of consumer credit, consumer debt levels, conditions in the housing market, elevated interest rates, sales tax rates and rate increases, consumer confidence in future economic and political conditions, and consumer perceptions of personal well-being and security.
In addition, certain aspects of our franchise arrangements are not directly within our control, such as the ability of each franchisee to meet its projections regarding store openings and sales, and the impact of exchange rate fluctuations on their business.
In addition, certain aspects of our franchise arrangements are not directly within our control, 23 Table of Contents such as the ability of each franchisee to meet its projections regarding store openings and sales, and the impact of exchange rate fluctuations on their business.
Moreover, our global operations subject us to a variety of risks and challenges, including: • increased management, infrastructure and legal compliance costs, including the cost of real estate and labor in those markets; • increased financial accounting and reporting requirements and complexities; • increased operational and tax complexities, including managing our inventory globally; • the diversion of management attention away from our core business; 23 Table of Contents • general economic conditions, changes in diplomatic and trade relationships, including the imposition of new or increased tariffs, political and social instability, war and acts of terrorism, outbreaks of diseases (such as the COVID-19 pandemic) and natural disasters in each country or region; • economic uncertainty around the world; • compliance with foreign laws and regulations and the risks and costs of non-compliance with such laws and regulations; • compliance with U.S. laws and regulations for foreign operations; • reputational harm due to negative posts about our brands or products on foreign social media or online forums; • fluctuations in foreign currency exchange rates and the related effect on our financial results, and the use of foreign exchange hedging programs (if any) to mitigate such risks; • growing cash balances in foreign jurisdictions which may be subject to repatriation restrictions; and • reduced or varied protection for intellectual property rights in some countries and practical difficulties of enforcing such rights abroad.
Moreover, our global operations subject us to a variety of risks and challenges, including: • increased management, infrastructure and legal compliance costs, including the cost of real estate and labor in those markets; • increased financial accounting and reporting requirements and complexities; • increased operational and tax complexities, including managing our inventory globally; • the diversion of management attention away from our core business; • general economic conditions, changes in diplomatic and trade relationships, including the imposition of new or increased tariffs, political and social instability, war and acts of terrorism, outbreaks of diseases and natural disasters in each country or region; • economic uncertainty around the world; • geopolitical disruptions affecting global trade; • compliance with U.S. laws and regulations for foreign operations; • reputational harm due to negative posts about our brands or products on foreign social media or online forums; • fluctuations in foreign currency exchange rates and the related effect on our financial results, and the use of foreign exchange hedging programs (if any) to mitigate such risks; • growing cash balances in foreign jurisdictions which may be subject to repatriation restrictions; and • reduced or varied protection for intellectual property rights in some countries and practical difficulties of enforcing such rights abroad.
If we do not accurately predict our customers’ preferences and acceptance levels of our products, our inventory levels will not be appropriate, and our business and operating results may be negatively impacted. Our business and operating results may be harmed if we are unable to timely and effectively deliver merchandise to our stores and customers.
If we do not accurately predict our customers’ preferences and acceptance levels of our products, our inventory levels will not be appropriate, and our business and operating results may be negatively impacted. 12 Table of Contents Our business and operating results may be harmed if we are unable to timely and effectively deliver merchandise to our stores and customers.
We make estimates and projections in connection with impairment analyses of our long-lived assets for our retail store locations and other property and equipment, including information technology systems, as well as goodwill. These analyses require us to make a number of estimates and projections of future results.
We make estimates and projections in connection with impairment analyses of our long-lived assets for our retail store locations and other property and equipment, including information technology systems. These analyses require us to make a number of estimates and projections of future results.
In addition, we face the risk that we cannot hire enough qualified associates to support our e-commerce operations, or that there will be a disruption in the workforce we engage from our third-party providers, especially during our peak season. The need to operate with fewer associates could negatively impact our customer service levels and our operations.
In addition, we face the risk that we cannot hire enough qualified associates to support our e-commerce operations, or that there will be a disruption in the workforce we engage from our third-party providers, especially during our 13 Table of Contents peak season. The need to operate with fewer associates could negatively impact our customer service levels and our operations.
Industries that are 12 Table of Contents particularly seasonal, such as the home furnishings business, face a higher risk of harm from operational disruptions during peak sales seasons. These problems could result in a reduction in sales as well as increased expenses.
Industries that are particularly seasonal, such as the home furnishings business, face a higher risk of harm from operational disruptions during peak sales seasons. These problems could result in a reduction in sales as well as increased expenses.
Factors such as labor disputes, union organizing activity, geopolitical instability, acts of terrorism, war, outbreaks of disease (such as the COVID-19 pandemic), adverse weather, natural disasters, and climate change can affect the global supply chain and disrupt our business.
Factors such as labor disputes, union organizing activity, geopolitical instability, acts of terrorism, war, outbreaks of disease, adverse weather, natural disasters, and climate change can affect the global supply chain and disrupt our business.
If any one of our key associates leaves, is seriously injured or unable to work, or fails to perform and we are unable to find a qualified replacement either internally or externally, we may be unable to execute our business strategy.
If any one of our key associates leaves, is 18 Table of Contents seriously injured or unable to work, or fails to perform and we are unable to find a qualified replacement either internally or externally, we may be unable to execute our business strategy.
We may not be able to develop relationships with new suppliers or third-party agents, and products from alternative sources, if any, may not be of a suitable quality and/or may be more expensive than those we currently purchase.
We may not be able to develop relationships with new suppliers or third-party agents, and products from alternative sources, 22 Table of Contents if any, may not be of a suitable quality and/or may be more expensive than those we currently purchase.
A change in accounting rules or regulations may even affect our reporting of transactions completed before the change is effective. The 27 Table of Contents introduction of new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future.
A change in accounting rules or regulations may even affect our reporting of transactions completed before the change is effective. The introduction of new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future.
Changes to estimates related to our cash flow projections may cause us to incur impairment charges related to our long-lived assets for our retail store locations and other property and equipment, including information technology systems, as well as goodwill.
Changes to estimates related to our cash flow projections may cause us to incur impairment charges related to our long-lived assets for our retail store locations and other property and equipment, including information technology systems.
Furthermore, some or all of our foreign suppliers’ operations may be adversely affected by political and financial instability resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds and/or increased tariffs or quotas, war, political unrest, acts of terrorism, natural disasters, adverse weather, climate change, outbreaks of disease (such as the COVID-19 pandemic) or other trade disruptions.
Furthermore, some or all of our foreign suppliers’ operations may be adversely affected by political and financial instability resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds and/or increased tariffs or quotas, war, political unrest, acts of terrorism, natural disasters, adverse weather, climate change, outbreaks of disease or other trade disruptions.
Our retail stores, corporate offices, distribution and manufacturing facilities, infrastructure and e-commerce operations, as well as the operations of our suppliers from which we receive goods and services, are vulnerable to damage from earthquakes, tornadoes, hurricanes, fires, floods or other volatile weather, climate change, power 13 Table of Contents losses, government-mandated shutdowns, telecommunications failures, hardware and software failures, computer hacking, cybersecurity breaches, computer viruses and similar events.
Our retail stores, corporate offices, distribution and manufacturing facilities, customer care centers, infrastructure and e-commerce operations, as well as the operations of our suppliers from which we receive goods and services, are vulnerable to damage from earthquakes, tornadoes, hurricanes, fires, floods or other volatile weather, climate change, power losses, government-mandated shutdowns, telecommunications failures, hardware and software failures, computer hacking, cybersecurity breaches, computer viruses and similar events.
Our ability to open additional stores or close existing stores successfully will depend upon a number of factors, including: • general economic conditions; • our identification of, and the availability of, suitable store locations; • our success in negotiating new leases and amending, subleasing or terminating existing leases on acceptable terms; • the success of other retail stores in and around our retail locations; • our ability to secure required governmental permits and approvals; • the availability and cost of building materials needed for store construction and maintenance; • our hiring and training of skilled store operating personnel, especially management; • the unionization, or potential for unionization, of store personnel; • the availability of financing on acceptable terms, if at all; and • the financial stability of our landlords and potential landlords. 16 Table of Contents Many of these factors are beyond our control.
Our ability to open additional stores or close existing stores successfully will depend upon a number of factors, including: • general economic conditions; • our identification of, and the availability of, suitable store locations; • our success in negotiating new leases and amending, subleasing or terminating existing leases on acceptable terms; • the success of other retail stores in and around our retail locations; • our ability to secure required governmental permits and approvals; • the availability and cost of building materials needed for store construction and maintenance; • our hiring and training of skilled store operating personnel, especially management; • the unionization, or potential for unionization, of store personnel; • the availability of financing on acceptable terms, if at all; and • the financial stability of our landlords and potential landlords.
Such increases in inventory levels may also lead to slower delivery times to customers, as capacity constraints at distribution facilities could 25 Table of Contents cause delays in locating and shipping products, and increases in costs associated with inventory that is lost, damaged or aged.
Such increases in inventory levels may also lead to slower delivery times to customers, as capacity constraints at distribution facilities could cause delays in locating and shipping products, and increases in costs associated with inventory that is lost, damaged or aged.
We also utilize digital advertising to target internet and app users whose behavior indicates they might be interested in our products. Current or future legislation or changes to other corporations' policies may reduce or restrict our ability to use these techniques, which could reduce the effectiveness of our marketing efforts.
We also utilize digital advertising to reach internet and app users 15 Table of Contents whose behavior indicates they might be interested in our products. Current or future legislation or changes to other corporations' policies may reduce or restrict our ability to use these techniques, which could reduce the effectiveness of our marketing efforts.
In addition, we are subject to certain risks that could limit our suppliers’ ability to provide us with quality merchandise on a timely basis and at prices that are commercially acceptable to us, including risks related to the availability of raw materials, labor disputes, work disruptions or stoppages, union organizing activities, supplier financial liquidity, adverse weather, natural disasters, climate change, political unrest, war, acts of terrorism, outbreaks of disease (such as the COVID-19 pandemic), general economic and political conditions and regulations to address climate change.
In addition, we are subject to certain risks that could limit our suppliers’ ability to provide us with quality merchandise on a timely basis and at prices that are commercially acceptable to us, including risks related to the availability of raw materials, labor disputes, work disruptions or stoppages, union organizing activities, supplier financial liquidity, changes in tariff regimes, adverse weather, natural disasters, climate change, political unrest, war, acts of terrorism, outbreaks of disease, general economic and political conditions and regulations to address climate change.
Insurance costs have increased substantially and may continue to increase in the future and may be affected by natural disasters, outbreaks of disease (such as the COVID-19 pandemic), climate change, fear of terrorism, war, financial irregularities, cybersecurity breaches and fraud at publicly-traded companies, intervention by the government or political crises and instability, an increase in the number of claims received by the carriers, and a decrease in the number of insurance carriers.
Insurance costs have increased substantially and may continue to increase in the future and may be affected by natural disasters, outbreaks of disease, climate change, fear of terrorism, war, financial irregularities, cybersecurity breaches and fraud at publicly-traded companies, intervention by the government or political crises and instability, an increase in the number and severity of claims received by the carriers, or a decrease in the number of insurance carriers.
We recognize that we may need to increase the number of our associates, especially during holiday selling seasons, and incur other expenses to support new brands and brand extensions and the growth of our existing brands, including the opening of new stores.
We recognize that we may need to increase the number of our associates, especially during our peak selling season, and incur other expenses to support new brands and brand extensions and the growth of our existing brands, including the opening of new stores.
Customer response to our advertisements is substantially dependent on merchandise assortment, availability and creative presentation, as well as the general retail sales environment, current domestic and global economic conditions and competition.
Customer 16 Table of Contents response to our advertisements is substantially dependent on merchandise assortment, availability and creative presentation, as well as the general retail sales environment, current domestic and global economic conditions and competition.
Our ability to achieve any ESG-related goal or objective is subject to numerous risks, many of which are outside of our control, including: (i) the availability and cost of renewable energy sources, environmental credits and technologies, (ii) evolving regulatory requirements affecting ESG standards or disclosures, (iii) the availability of suppliers that can meet our sustainability, diversity and other standards, and (iv) the availability and cost of raw materials that meet and further our sustainability goals.
Our ability to achieve any sustainability goal is subject to numerous risks, many of which are outside of our control, including: (i) the availability and cost of renewable energy sources and technologies, (ii) evolving regulatory requirements affecting sustainability standards or disclosures, (iii) the availability of suppliers that can meet our standards, and (iv) the availability and cost of raw materials that meet and further our goals.
Consequently, we may not 22 Table of Contents be able to successfully compete with established brands in these markets and our global sales may not result in the revenues we anticipate.
Consequently, we may not be able to successfully compete with established brands in these markets and our global sales may not result in the revenues we anticipate.
Therefore, we may choose to forego or limit our purchase of relevant commercial insurance, choosing instead to self-insure one or more types or levels of risks. We are primarily self-insured and we purchase insurance only for catastrophic types of events for such risks as workers’ compensation, employment practices liability, associate health benefits, product recall and reputational risk, among others.
Therefore, we may choose to forego or limit our purchase of relevant commercial insurance, choosing instead to self-insure one or more types or levels of risks. We are self-insured or primarily self-insured for employment practices liability, associate health benefits, product recall and reputational risk, among others.
Significant changes in tax, trade or other polices either in the U.S. or other countries could materially increase our tax burden or costs of goods sold. These changes in policies may also require us to increase our prices, which could adversely affect our sales.
A significant portion of our products are manufactured outside of the U.S. Significant changes in tax, trade or other polices either in the U.S. or other countries could materially increase our tax burden or costs of goods sold. These changes in policies may also require us to increase our prices, which could adversely affect our sales.
In addition, our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of earnings or losses in countries with differing statutory tax rates or by changes to existing laws or regulations.
In addition, our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of earnings or losses in countries with differing statutory tax rates or by changes to existing laws, including the U.S. Tax Cuts and Jobs Act, or regulations.
As a result of our dependence on all of these third-party providers, we are subject to risks, including labor disputes, union organizing activity, adverse weather, natural disasters, climate change, the closure of such carriers’ offices or a reduction in operational hours due to an economic slowdown or the inability to sufficiently ramp up operational hours during an economic recovery or upturn, availability of adequate trucking or railway providers, the potential for railway and port worker strikes, possible acts of terrorism, war, outbreaks of disease (such as the COVID-19 pandemic) or other factors affecting such carriers’ ability to provide delivery services to meet our shipping needs, disruptions or increased fuel costs and costs associated with any regulations to address climate change.
As a result of our dependence on all of these third-party providers, we are subject to risks, including labor disputes, union organizing activity, fluctuations in fuel costs, increases in regulatory burden, adverse weather, natural disasters, climate change, the closure of such carriers’ offices or a reduction in operational hours due to an economic slowdown or the inability to sufficiently ramp up operational hours during an economic recovery or upturn, availability of adequate trucking or railway providers, the potential for railway and port worker strikes, possible acts of terrorism, war, outbreaks of disease or other factors affecting such carriers’ ability to provide delivery services to meet our shipping needs.
These risks and uncertainties include import duties and quotas, compliance with anti-dumping regulations, work stoppages, economic uncertainties and adverse economic conditions (including inflation and recession), government regulations, trade restrictions, regulations to address climate change, employment and labor matters, wars and fears of war, political unrest, acts of terrorism, natural disasters, adverse weather, climate change, outbreaks of disease (such as the COVID-19 pandemic), and other unexpected events.
These risks and 21 Table of Contents uncertainties include tariffs, import duties and quotas, compliance with anti-dumping regulations, work stoppages, economic uncertainties and adverse economic conditions (including inflation and recession), government regulations, trade restrictions, regulations to address climate change, employment and labor matters, wars and fears of war, political unrest, acts of terrorism, natural disasters, adverse weather, climate change, outbreaks of disease and other unexpected events.
In addition, public health conditions 15 Table of Contents (such as the COVID-19 pandemic), or other unforeseen events, could affect our ability to deliver our products to our customers and stores, alter consumer behavior, or require us to close certain stores temporarily or reduce customer capacity within certain stores temporarily, thus reducing store traffic and materially impacting our comparable brand revenues.
In addition, public health conditions or other unforeseen events, could affect our ability to deliver our products to our customers and stores, alter consumer behavior, or require us to close certain stores temporarily or reduce customer capacity within certain stores temporarily, thus reducing store traffic and materially impacting our comparable brand revenues.
We could also incur additional costs and require additional resources to implement various ESG practices to make progress against our public goals and to monitor and track our performance with respect to such goals. The standards for tracking and reporting on ESG matters are relatively new and continue to evolve.
We could also incur additional costs and require additional resources to make progress, monitor and track our performance with respect to our goals. The standards for tracking and reporting on sustainability matters are relatively new and continue to evolve.
For example, for the purpose of identifying suitable store locations, we rely, in part, on demographic data regarding the location of consumers in our target market segments.
Many of these factors are beyond our control. For example, for the purpose of identifying suitable store locations, we rely, in part, on demographic data regarding the location of consumers in our target market segments.
Third parties may have or develop the technology or knowledge to breach, disable, disrupt or interfere with our systems or processes or those of our suppliers.
Third parties may have or develop the technology or knowledge to breach, disable, disrupt, gain unauthorized access to or interfere with our 19 Table of Contents systems or processes or those of our suppliers.
Furthermore, as more companies increase their use of organic, recycled, lower emission or related materials in their product assortments, the availability of raw materials that meet 21 Table of Contents and further our sustainability goals may be a risk. As a result of these developments, our business and operating results could be negatively impacted.
As more companies increase their use of organic, recycled, lower emission or related materials in their product assortments, the availability of raw materials that meet and further our initiatives may be reduced. As a result, our business and operating results could be negatively impacted.
We have historically experienced loss of assets and inventory shrink due to damage, errors or misconduct by associates or third parties, theft, fraud, organized retail crime, and other causes, which may be further impacted by macroeconomic factors, including the enforcement environment.
We have historically experienced loss of assets and inventory shrink due to damage, errors or misconduct by associates or third parties, theft, fraud, organized retail crime, transaction processing errors, changes in our technology systems, our use of estimates in preparing financial statements and other causes, which may be further impacted by macroeconomic factors, including the enforcement environment.
Risks Related to Taxes and Tariffs • Any significant changes in tax, trade or other policies in the U.S. or other countries, including policies that restrict imports or increase import tariffs, could have a material adverse effect on our results of operations. • Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results. • Our business may be subject to evolving sales and other tax regimes in various jurisdictions, which may harm our business.
Risks Related to Taxes and Tariffs • Any significant changes in tax, trade or other policies in the U.S. or other countries could have a material adverse effect on our results of operations. • Changes to tariffs could result in increased prices and/or costs of goods or delays in products received from our vendors and could adversely affect our results of operations. • Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results. • Our business may be subject to evolving sales and other tax regimes in various jurisdictions, which may harm our business.
In addition, exposures exist for which no insurance may be available and for which we have not reserved. 26 Table of Contents If our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our stock price may decline.
If our operating and 27 Table of Contents financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our stock price may decline.
These laws and regulations may also impact our ability to expand advertising on our platform internationally, as they may impede our ability to deliver targeted advertising and accurately measure our ad performance.
These laws and regulations may also impact our ability to expand advertising on our platform, particularly in international markets, which may impede our ability to deliver targeted advertising and accurately measure our ad performance.
If we are unable to effectively manage our inventory levels and supply chain, including by predicting the appropriate levels and type of inventory to stock within each of our distribution facilities, our business and operating results may be harmed.
If we are unable to effectively manage our inventory levels and supply chain, including by predicting the appropriate levels and type of inventory to stock within each of our distribution facilities, our business and operating results may be harmed. A critical component of managing inventory levels is predictability of transit times from our global suppliers to our distribution centers.
If we encounter implementation or usage problems with these new systems or other related systems and infrastructure, or if the systems do not operate as intended, do not give rise to anticipated benefits, or fail to integrate properly with our other systems or software platforms, then our business, results of operations, and internal controls over financial reporting may be adversely affected. 20 Table of Contents Risks Related to our Suppliers and Global Operations Our dependence on foreign suppliers and our increased global operations subject us to a variety of risks and uncertainties that could impact our operations and financial results.
If we encounter implementation or usage problems with these new systems or other related systems and infrastructure, or if the systems do not operate as intended, do not give rise to anticipated benefits, or fail to integrate properly with our other systems or software platforms, then our business, results of operations, and internal controls over financial reporting may be adversely affected.
If our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our stock price may decline. If we are unable to pay quarterly dividends or repurchase our stock at intended levels, our reputation and stock price may be harmed.
If our operating and financial performance in any given period does not meet the guidance that we have provided to the public or the expectations of our investors and analysts, our stock price may decline.
These impairment charges have been significant in the past and may be significant in the future and, as a result of these charges, our operating results have been and may, in the future, be adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
These impairment charges have been significant 28 Table of Contents in the past and may be significant in the future and, as a result of these charges, our operating results have been and may, in the future, be adversely affected.
State, federal and global laws and regulations regarding employment change frequently and the ultimate cost of compliance cannot be precisely estimated. Further, there have been and may continue to be increases in minimum wage and health care requirements.
In addition, there continues to be a growing number of wage-and-hour lawsuits and other employment-related lawsuits against retail companies, especially in California. State, federal and global laws and regulations regarding employment change frequently and the ultimate cost of compliance cannot be precisely estimated. Further, there have been and may continue to be increases in minimum wage and health care requirements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+0 added−1 removed4 unchanged
Biggest changeSee 28 Table of Contents “Risks Related to Technology” included as part of our risk factor disclosures in Item 1A of this Annual Report on Form 10-K, which are incorporated by reference herein. In the last three fiscal years, we have not experienced any material cybersecurity incidents, and the expenses we have incurred from cybersecurity incidents were immaterial.
Biggest changeTo date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the company, including our business strategy, results of operations, or financial condition. See “Risks Related to Technology” included as part of our risk factor disclosures in Item 1A of this Annual Report on Form 10-K, which are incorporated by reference herein.
As part of this process, appropriate personnel will consult with subject matter specialists as necessary to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential mitigations.
As part of this process, appropriate personnel consult with subject matter specialists as necessary to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential mitigations.
These members of management are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan. 29 Table of Contents
These members of management are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan. 30 Table of Contents
Further, we conduct periodic tabletop exercises to test our cyber incident response plan. As part of our cybersecurity risk management strategy, we periodically engage with assessors, consultants, auditors, and other third-parties to evaluate and test our systems. We also engage an independent Qualified Security Assessor to review our Payment Card Industry, or PCI, compliance.
Further, we conduct periodic tabletop exercises to test our cyber incident response plan. As part of our cybersecurity risk management strategy, we periodically engage with assessors, consultants and other third-parties to evaluate and test our systems. We also engage an independent Qualified Security Assessor to review our Payment Card Industry compliance.
At least quarterly, the Audit and Finance Committee receives an overview covering current and emerging cybersecurity threat risks and the Company’s ability to mitigate those risks, and discusses these topics with our Chief Information Security Officer and Chief Technology and Digital Officer. Cybersecurity risk management is also considered at least annually during separate Board meeting discussions with management.
Our Audit and Finance Committee is responsible for the oversight of risks from cybersecurity threats. At least quarterly, the Audit and Finance Committee receives an overview covering current and emerging cybersecurity threat risks and the Company’s ability to mitigate those risks, and discusses these topics with our Chief Information Security Officer and Chief Technology and Digital Officer.
Our Chief Information Security Officer and Chief Technology and Digital Officer have extensive prior work experience in roles involving managing information security, developing cybersecurity strategy, and implementing effective information and cybersecurity programs as well as several relevant degrees and certifications, including Certified Information Security Manager, Certified Information Systems Auditor, Certified Information Systems Security Professional, Global Information Assurance Certification, and Certified Ethical Hacker.
Our Chief Information Security Officer and Chief Technology and Digital Officer have extensive prior work experience in roles involving managing information security, developing cybersecurity strategy, managing incident and breach response and implementing effective information and cybersecurity programs as well as several relevant degrees and certifications.
Our cybersecurity risk management strategy process is led by our Chief Information Security Officer, and Chief Technology and Digital Officer, and leverages the expertise of our Chief Financial Officer, General Counsel, and Chief Accounting Officer.
Cybersecurity risk management is also considered at least annually during separate Board of Directors meeting discussions with management. Our cybersecurity risk management strategy process is led by our Chief Information Security Officer, and Chief Technology and Digital Officer, and leverages the expertise of our Chief Financial Officer, General Counsel and Chief Accounting Officer.
Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board of Directors and management. Our Audit and Finance Committee is responsible for the oversight of risks from cybersecurity threats.
In the last three fiscal years, we have not experienced any material cybersecurity incidents, and the expenses we have incurred from cybersecurity incidents have been immaterial. Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board of Directors and management.
Removed
To date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the company, including our business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−0 removed1 unchanged
Biggest changeOperations New Jersey 3,269,000 California 3,150,000 Mississippi 2,271,000 Georgia 1,537,000 Arizona 1,200,000 Texas 1,056,000 Tennessee 603,000 Florida 515,000 North Carolina 412,000 Ohio 265,000 Massachusetts 140,000 Oregon 93,000 Colorado 80,000 Foreign Operations Australia 187,000 Corporate Facilities New York 238,000 California 124,000 Oregon 63,000 Customer Care Centers Nevada 36,000 Other 24,000 In addition to the above leased properties, we enter into agreements for other offsite storage needs for our distribution facilities and our retail store locations, as necessary.
Biggest changeOperations New Jersey 3,269,000 California 3,150,000 Mississippi 2,271,000 Georgia 1,537,000 Arizona 1,200,000 Texas 1,056,000 North Carolina 412,000 Florida 347,000 Ohio 193,000 Massachusetts 140,000 Oregon 93,000 Colorado 80,000 Foreign Operations Australia 187,000 Corporate Facilities New York 238,000 California 111,000 Oregon 63,000 Customer Care Centers Nevada 37,000 Other 24,000 In addition to the above leased properties, we enter into agreements for other offsite storage needs for our distribution facilities and our retail store locations, as necessary.
We believe that all of our facilities are adequate for our current needs and that suitable additional or substitute space will be available in the future to replace our existing facilities, or to accommodate the expansion of our operations, if necessary. 30 Table of Contents
We believe that all of our facilities are adequate for our current needs and that suitable additional or substitute space will be available in the future to replace our existing facilities, or to accommodate the expansion of our operations, if necessary. 31 Table of Contents
As of January 28, 2024, the total leased space related to these properties was not material to us and is not included in the occupied square footage reported above. Owned Properties As of January 28, 2024, we owned 471,000 square feet of space, primarily in California, for our corporate headquarters and certain data center operations.
As of February 2, 2025, the total leased space related to these properties was not material to us and is not included in the occupied square footage reported above. Owned Properties As of February 2, 2025, we owned 471,000 square feet of space, primarily in California, for our corporate headquarters and certain data center operations.
Leased Properties The following table summarizes the location and size of our leased facilities occupied by us as of January 28, 2024: Location Occupied Square Footage (Approximate) Distribution and Manufacturing Facilities U.S.
Leased Properties The following table summarizes the location and size of our leased facilities occupied by us as of February 2, 2025: Location Occupied Square Footage (Approximate) Distribution and Manufacturing Facilities U.S.
For our store locations, our gross leased store space as of January 28, 2024 totaled approximately 5,890,000 square feet for 518 stores compared to approximately 5,962,000 square feet for 530 stores as of January 29, 2023.
For our store locations, our gross leased store space as of February 2, 2025 totaled approximately 5,833,000 square feet for 512 stores compared to approximately 5,890,000 square feet for 518 stores as of January 28, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+4 added−1 removed1 unchanged
Biggest changeThe following table summarizes our repurchases of shares of our common stock during the fourth quarter of fiscal 2023 under our stock repurchase program: Fiscal period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program 1 Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program October 30, 2023 - November 26, 2023 — — — $ 686,999,000 November 27, 2023 - December 24, 2023 — — — $ 686,999,000 December 25, 2023 - January 28, 2024 — — — $ 686,999,000 Total — — — $ 686,999,000 1 Excludes shares withheld for associate taxes upon vesting of stock-based awards.
Biggest changeFiscal period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program 1 Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program October 28, 2024 - November 24, 2024 776,184 $ 128.84 776,184 $ 192,523,000 November 25, 2024 - December 29, 2024 — $ — — $ 192,523,000 December 30, 2024 - February 2, 2025 — $ — — $ 192,523,000 Total 776,184 $ 128.84 776,184 $ 192,523,000 1 Excludes shares withheld for associate taxes upon vesting of stock-based awards.
Stock repurchases under our program may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions.
Stock repurchases under our programs may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* Among Williams-Sonoma, Inc., the NYSE Composite Index, and S&P 500 Consumer Discretionary Distribution and Retail * $100 invested on February 3, 2019 in stock or index, including reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* Among Williams-Sonoma, Inc., the NYSE Composite Index, the S&P 500 Consumer Discretionary Distribution and Retail Index and the S&P 500 Index * $100 invested on February 2, 2020 in stock or index, including reinvestment of dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol WSM. The closing price of our common stock on the NYSE on March 17, 2024 was $283.77.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is traded on the New York Stock Exchange, or the NYSE, under the symbol WSM. The closing price of our common stock on the NYSE on March 23, 2025 was $163.65.
STOCKHOLDERS The number of stockholders of record of our common stock as of March 17, 2024 was 273. This number excludes stockholders whose stock is held in nominee or street name by brokers.
STOCKHOLDERS The number of stockholders of record of our common stock as of March 23, 2025 was 260. This number excludes stockholders whose stock is held in nominee or street name by brokers.
The indices are re-weighted daily, using the market capitalization on the previous trading day. C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
The lines represent monthly index levels derived from compounded daily returns that include all dividends. B. The indices are re-weighted daily, using the market capitalization on the previous trading day. C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
The cumulative total return listed below assumed an initial investment of $100 and reinvestment of dividends. The graph shows historical stock price performance, including reinvestment of dividends, and is not necessarily indicative of future performance.
The graph shows historical stock price performance, including reinvestment of dividends, and is not necessarily indicative of future performance.
STOCK REPURCHASE PROGRAM During fiscal 2023, we repurchased 2,621,861 shares of our common stock at an average cost of $119.38 per share and a total cost of $313.0 million under our $1.0 billion stock repurchase program approved in March 2023. As of January 28, 2024, there was $687.0 million remaining under our current stock repurchase program.
During fiscal 2024, we repurchased 5,940,939 shares of our common stock at an average cost of $135.92 per share and a total cost of $807.5 million under our programs. As of February 2, 2025, we had a total of $1.2 billion in stock repurchase authorization remaining under our programs.
In March 2024, our Board of Directors authorized a new stock repurchase program for $1.0 billion, which replaced our existing program.
Additionally, in September 2024, our Board of Directors authorized a new $1.0 billion stock repurchase program (together with the March 2024 program, “our programs”), which will become effective once our March 2024 program is fully utilized.
The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice. 32 Table of Contents PERFORMANCE GRAPH This graph compares the cumulative total stockholder return for our common stock with those of the NYSE Composite Index and S&P 500 Consumer Discretionary Distribution and Retail, our peer group index.
This graph compares the cumulative total stockholder return for our common stock with those of the S&P 500, NYSE Composite Index and S&P 500 Consumer Discretionary Distribution and Retail, our peer group index. The cumulative total return listed below assumed an initial investment of $100 and reinvestment of dividends.
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Fiscal year ended January 28, 2024. 2/3/19 2/2/20 1/31/21 1/30/22 1/29/23 1/28/24 Williams-Sonoma, Inc. $100.00 $133.59 $251.70 $307.13 $257.52 $434.39 NYSE Composite Index $100.00 $113.57 $123.05 $145.40 $143.43 $155.04 S&P 500 Consumer Discretionary Distribution and Retail $100.00 $117.54 $166.19 $180.56 $147.66 $190.67 Notes: A. The lines represent monthly index levels derived from compounded daily returns that include all dividends. B.
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STOCK REPURCHASE PROGRAMS The following table summarizes our repurchases of shares of our common stock during the fourth quarter of fiscal 2024 under the $1.0 billion stock repurchase program announced in March 2024 (the “March 2024 program”).
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The stock repurchase programs do not have an expiration date and may be limited or terminated at any time without prior notice. 33 Table of Contents PERFORMANCE GRAPH On March 24, 2025, we were added to the S&P 500.
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We have replaced the NYSE Composite with the S&P 500 for the purposes of our stock performance graph, as we believe the S&P 500 is a more relevant benchmark to measure our performance. We have continued to present the NYSE Composite here as a transitional measure.
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Fiscal year ended February 2, 2025. 2/2/20 1/31/21 1/30/22 1/29/23 1/28/24 2/2/25 Williams-Sonoma, Inc. $100.00 $188.41 $229.91 $192.77 $325.16 $668.86 S&P 500 $100.00 $117.25 $144.56 $132.68 $160.30 $202.59 NYSE Composite Index $100.00 $108.35 $128.03 $126.30 $136.52 $158.54 S&P 500 Consumer Discretionary Distribution and Retail $100.00 $141.39 $153.61 $125.62 $162.21 $227.91 Notes: A.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+28 added−33 removed22 unchanged
Biggest changeSELLING, GENERAL AND ADMINISTRATIVE EXPENSES (In thousands) Fiscal 2023 % Net Revenues Fiscal 2022 % Net Revenues Selling, general and administrative expenses $ 2,059,408 26.6 % $ 2,179,311 25.1 % SG&A consists of non-occupancy-related costs associated with our retail stores and e-commerce websites, distribution and manufacturing facilities, customer care centers, supply chain operations (buying, receiving and inspection) and corporate administrative functions.
Biggest changeThis increase in gross margin of 390 basis points was driven by (i) higher merchandise margins of 170 basis points, (ii) supply chain efficiencies of 130 basis points, including reductions in returns and damages, reduced out-of-market and multiple shipments, reduced replacements, as well as fewer customer accommodations, (iii) an out-of-period freight adjustment of 70 basis points in the first quarter of fiscal 2024 and (iv) the leverage of occupancy costs of 20 basis points. 39 Table of Contents SELLING, GENERAL AND ADMINISTRATIVE EXPENSES SG&A consists of non-occupancy-related costs associated with our retail stores and e-commerce websites, distribution and manufacturing facilities, customer care centers, supply chain operations (buying, receiving and inspection) and corporate administrative functions.
The estimates of future profitability and economic conditions require estimating such factors as sales growth, gross margin, employment costs, lease escalations, inflation and the overall economics of the retail industry, and are therefore subject to variability and difficult to predict. For right-of-use assets, we determine the fair value of the assets by using estimated market rental rates.
The estimates of future profitability and economic conditions require estimating such factors as sales growth, gross margin, employment costs, lease escalations, inflation and the overall economics of the retail industry, and are therefore subject to variability and difficult to predict. For operating lease right-of-use assets, we determine the fair value of the assets by using estimated market rental rates.
We are currently not aware of any other trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.
We are currently not aware of any other trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that would impact our capital needs during or beyond the next 12 months.
Global trends, including inflationary pressures, are weakening consumer sentiment, negatively impacting consumer spending behavior and slowing down consumer demand for our products. However, our unique operating model and pricing power helped mitigate these increased costs during fiscal 2023. We cannot be assured that our results of operations and financial condition will not be materially impacted by inflation in the future.
Global trends, including inflationary pressures, are weakening consumer sentiment, negatively impacting consumer spending behavior and slowing down consumer demand for our products. However, our unique operating model and pricing power helped mitigate these increased costs during fiscal 2024. We cannot be assured that our results of operations and financial condition will not be materially impacted by inflation in the future.
For information on risks, please see “Risk Factors” in Part I, Item 1A . 36 Table of Contents Results of Operations NET REVENUES Net revenues consist of sales of merchandise to our customers through our e-commerce websites, retail stores and direct-mail catalogs, and include shipping fees received from customers for delivery of merchandise to their homes.
For information on risks, please see “Risk Factors” in Part I, Item 1A . 37 Table of Contents Results of Operations NET REVENUES Net revenues consist of sales of merchandise to our customers through our e-commerce websites, retail stores and direct-mail catalogs, and include shipping fees received from customers for delivery of merchandise to their homes.
In fiscal 2024, we plan to use our cash resources to fund our inventory and inventory-related purchases, employment related-costs, advertising and marketing initiatives, rental payments on our leases, stock repurchases and dividend payments, the payment of income taxes and property and equipment purchases.
In fiscal 2025, we plan to use our cash resources to fund inventory purchases and inventory-related costs, employment-related costs, advertising and marketing initiatives, rental payments on our leases, stock repurchases and dividend payments, the payment of income taxes and property and equipment purchases.
In addition to our cash balances on hand, we have a credit facility (the "Credit Facility") which provides for a $500 million unsecured revolving line of credit (the “Revolver”). Our Revolver may be used to borrow revolving loans or to request the issuance of letters of credit.
In addition to our cash balances on hand, we have a credit facility (the "Credit Facility") which provides for a $500 million unsecured revolving line of credit. Our Credit Facility may be used to borrow revolving loans or to request the issuance of letters of credit.
Cash Flows from Financing Activities For fiscal 2023, net cash used in financing activities was $0.6 billion compared to $1.2 billion in fiscal 2022 and was primarily attributable to the repurchases of common stock and payment of dividends.
Cash Flows from Financing Activities For fiscal 2024, net cash used in financing activities was $1.2 billion compared to $0.6 billion in fiscal 2023 and was primarily attributable to the repurchases of common stock and payment of dividends.
Two of the letter of credit facilities totaling $30 million mature on August 18, 2024, and the latest expiration date possible for future letters of credit issued under these facilities is January 15, 2025.
Two of the letter of credit facilities totaling $30 million mature on August 18, 2025, and the latest expiration date possible for future letters of credit issued under these facilities is January 15, 2026.
Actual shrinkage is recorded at year-end based on the results of our cycle counts and year-end physical inventory counts, and can vary from our estimates recorded throughout the year due to such factors as changes in operations, the mix of our inventory (which ranges from large furniture to small tabletop items) and execution against loss prevention initiatives in our stores, distribution facilities and off-site storage locations, and with our third-party warehouse and transportation providers.
Actual shrinkage is recorded at year-end based on the results of our cycle counts and year-end physical inventory counts, and can vary from our estimates recorded throughout the year due to such factors as changes in operations, the mix of our inventory (which ranges from large furniture to small tabletop items), transaction processing errors, changes in our technology systems, and execution against loss prevention initiatives in our stores, distribution facilities and off-site storage locations, and with our third-party warehouse and transportation providers.
A discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for the 52 weeks ended January 29, 2023 (“fiscal 2022”), compared to the 52 weeks ended January 30, 2022 (“fiscal 2021”), can be found under Item 7 in our Annual Report on Form 10-K for fiscal 2022, filed with the SEC on March 24, 2023, which is available on the SEC’s website at www.sec.gov and under the Financial Reports section of our Investor Relations website.
A discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for fiscal 2023 compared to the 52 weeks ended January 29, 2023 (“fiscal 2022”), can be found under Item 7 in our Annual Report on Form 10-K for fiscal 2023, filed with the SEC on March 20, 2024, which is available on the SEC’s website at www.sec.gov and under the Financial Reports section of our Investor Relations website.
As is consistent within our industry, our cash balances are seasonal in nature, with the fourth quarter historically representing a significantly higher level of cash than other periods. Throughout the fiscal year, we utilize our cash resources to build our inventory levels in preparation for our fourth quarter holiday sales.
As is consistent within our industry, our cash balances are seasonal in nature, with the fourth quarter historically representing a significantly higher level of cash than other periods. Throughout the fiscal year, we utilize our cash resources to build our inventory levels in preparation for our peak selling season.
We ended the year with a cash balance of $1.3 billion and generated positive operating cash flow of $1.7 billion. In addition to our cash balance, we also ended the year with no outstanding borrowings under our revolving line of credit.
We ended the year with a cash balance of $1.2 billion and generated positive operating cash flow of $1.4 billion. In addition to our cash balance, we also ended the year with no outstanding borrowings under our revolving line of credit.
We may, upon notice to the administrative agent, request existing 40 Table of Contents or new lenders, at such lenders’ option, to increase the Revolver by up to $250 million to provide for a total of $750 million of unsecured revolving credit. During fiscal 2023, we had no borrowings under our Revolver.
We may, upon notice to the administrative agent, request existing or new lenders, at such lenders’ option, to increase the Credit Facility by up to $250 million to provide for a total of $750 million of unsecured revolving credit. 41 Table of Contents During fiscal 2024, we had no borrowings under our Credit Facility.
Additionally, comparable brand revenue for newer concepts is not separately disclosed until such time that we believe those sales are meaningful to evaluating the performance of the brand.
Additionally, comparable brand revenue for new and emerging concepts is not separately disclosed until such time that we believe those sales are meaningful to evaluating the performance of the brand.
As of January 28, 2024, we were in compliance with our financial covenants under our credit facility and, based on our current projections, we expect to remain in compliance throughout the next 12 months. Letter of Credit Facilities We have three unsecured letter of credit facilities for a total of $35 million.
As of February 2, 2025, we were in compliance with our financial covenants under our Credit Facility and, based on our current projections, we expect to remain in compliance throughout the next 12 months. Letter of Credit Facilities We have three unsecured letter of credit facilities for a total of $35 million.
See Note E to our Consolidated Financial Statements for amount outstanding as of January 28, 2024 related to operating leases. • Our purchase obligations consist primarily of open purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business.
See Note E to our Consolidated Financial Statements for amount outstanding as of February 2, 2025 related to operating leases. • Our purchase obligations consist primarily of open purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business.
Comparable stores are defined as permanent stores where gross square footage did not change by more than 20% in the previous 12 months, and which have been open for at least 12 consecutive months without closure for more than seven days within the same fiscal month.
Comparable stores are defined as permanent stores where gross square footage did not change by more than 20% in the previous 12 months, and which have been open for at least 12 consecutive months without closure for more than seven days within the same fiscal month. Outlet comparable store revenues are included in their respective brands.
Sales to our international franchisees are excluded from comparable brand revenue as their stores and e-commerce websites are not operated by us. Sales from certain operations are also excluded until such time that we believe those sales are meaningful to evaluating their performance.
Business-to-business revenues are included in comparable brand revenue for each of our brands. Sales to our international franchisees are excluded from comparable brand revenue as their stores and e-commerce websites are not operated by us. Sales from certain operations are also excluded until such time that we believe those sales are meaningful to evaluating their performance.
As of January 28, 2024 and January 29, 2023, our inventory obsolescence reserves were $23.6 million and $24.7 million, respectively. Long-lived Assets Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
As of February 2, 2025 and January 28, 2024, our inventory obsolescence reserves were $19.6 million and $23.6 million, respectively. Long-lived Assets Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for the 52 weeks ended January 28, 2024 (“fiscal 2023”), and the 52 weeks ended January 29, 2023 (“fiscal 2022”) should be read in conjunction with our Consolidated Financial Statements and notes thereto.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for the 53 weeks ended February 2, 2025 (“fiscal 2024”), and the 52 weeks ended January 28, 2024 (“fiscal 2023”) should be read in conjunction with our Consolidated Financial Statements and notes thereto.
Due to the potential resolution of tax issues, it is reasonably possible that the balance of our gross unrecognized tax benefits could decrease within the next twelve months by a range of $0 to $5.8 million.
Due to the potential resolution 43 Table of Contents of tax issues, it is reasonably possible that the balance of our gross unrecognized tax benefits could decrease within the next twelve months by a range of $0 to $3.4 million.
As of January 28, 2024, the aggregate amount outstanding under our letter of credit facilities was $0.1 million, which represents only a future commitment to fund inventory purchases to which we had not taken legal title. On August 18, 2023, we renewed two of our letter of credit facilities on substantially similar terms.
As of February 2, 2025, the aggregate amount outstanding under our letter of credit facilities was $0.6 million, which represents only a future commitment to fund inventory purchases to which we had not taken legal title. On August 16, 2024, we renewed two of our letter of credit facilities on substantially similar terms.
Additionally, as of January 28, 2024, issued but undrawn standby letters of credit of $11.2 million were outstanding under our Revolver. The standby letters of credit were primarily issued to secure the liabilities associated with workers’ compensation and other insurance programs.
Additionally, as of February 2, 2025, issued but undrawn standby letters of credit of $11.9 million were outstanding under our Credit Facility. The standby letters of credit were primarily issued to secure the liabilities associated with workers’ compensation and other insurance programs.
Cash Flows from Investing Activities For fiscal 2023, net cash used in investing activities was $188.3 million compared to $354.0 million in fiscal 2022 and was primarily attributable to purchases of property and equipment related to technology and supply chain enhancements.
Cash Flows from Investing Activities For fiscal 2024, net cash used in investing activities was $221.2 million compared to $188.3 million in fiscal 2023 and was primarily attributable to purchases of property and equipment related to technology, store construction and supply chain enhancements.
Our material cash requirements as of January 28, 2024 include the following contractual obligations and commitments arising in the normal course of business: 39 Table of Contents • Our operating leases had fixed lease payment obligations, including imputed interest, of $1.6 billion, with $320.1 million payable within 12 months.
Our material cash requirements as of February 2, 2025 include the following contractual obligations and commitments arising in the normal course of business: • Our operating leases had fixed lease payment obligations, including imputed interest, of $1.6 billion, with $308.7 million payable within 12 months.
Sources of Liquidity As of January 28, 2024, we held $1.3 billion in cash and cash equivalents, the majority of which was held in interest-bearing demand deposit accounts and money market funds, and of which $86.0 million was held by our international subsidiaries.
Sources of Liquidity As of February 2, 2025, we held $1.2 billion in cash and cash equivalents, the majority of which was held in money market funds and interest-bearing demand deposit accounts, and of which $141.1 million was held by our international subsidiaries.
OVERVIEW Williams-Sonoma, Inc. is an omni-channel specialty retailer of high-quality, sustainable products for the home. Our products in our portfolio of nine brands — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — are marketed through e-commerce websites, direct-mail catalogs and our retail stores.
OVERVIEW Our products in our portfolio of nine brands — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — are marketed through e-commerce websites, our retail stores and direct-mail catalogs.
As of January 28, 2024 and January 29, 2023, our accruals for the payment of interest and penalties totaled $5.3 million and $6.1 million, respectively.
As of February 2, 2025 and January 28, 2024, our accruals for the payment of interest and penalties totaled $6.7 million and $5.3 million, respectively.
Our effective tax rates for fiscal 2023 and fiscal 2022 were 25.4% and 24.8%, respectively. 43 Table of Contents
Our effective tax rates for fiscal 2024 and fiscal 2023 were 24.3% and 25.4%, respectively. 44 Table of Contents
Our revenues also include sales to our business-to-business customers and franchisees, incentives received from credit card issuers in connection with our private label and co-branded credit cards, and breakage income related to our stored-value cards. Net revenues in fiscal 2023 decreased $923.8 million or 10.6%, with company comp decline of 9.9%.
Our revenues also include sales to our business-to-business customers and to our franchisees, incentives received from credit card issuers in connection with our private label and co-branded credit cards, and breakage income related to our stored-value cards. Net revenues in fiscal 2024, including the impact of the additional week, decreased $39.1 million or 0.5%, with company comp decline of 1.6%.
Comparable brand revenue growth (decline) Fiscal 2023 1 Fiscal 2022 1 Pottery Barn (9.7 %) 14.9 % West Elm (18.8) 2.5 Williams Sonoma (0.7) (1.7) Pottery Barn Kids and Teen (5.5) 0.4 Total 2 (9.9 %) 6.5 % 1 Comparable brand revenue includes business-to-business revenues within each brand. 2 Total comparable brand revenue growth includes the results of Rejuvenation and Mark and Graham. 37 Table of Contents RETAIL STORE DATA Fiscal 2023 Fiscal 2022 Store count – beginning of year 530 544 Store openings 13 15 Store closings (25) (29) Store count – end of year 518 530 Store selling square footage at year-end 3,805,000 3,813,000 Store leased square footage (“LSF”) at year-end 5,890,000 5,962,000 Fiscal 2023 Fiscal 2022 Store Count Avg.
Comparable brand revenue growth (decline) Fiscal 2024 1 Fiscal 2023 1 Pottery Barn (6.2) % (9.7) % West Elm (2.0) (18.8) Williams Sonoma 2.4 (0.7) Pottery Barn Kids and Teen 3.0 (5.5) Total 2 (1.6) % (9.9) % 1 Comparable brand revenue is calculated on a 53-week to 53-week basis for fiscal 2024 and on a 52-week to 52-week basis for fiscal 2023, and includes business-to-business revenues within each brand. 2 Total comparable brand revenue growth includes the results of Rejuvenation, Mark and Graham, and GreenRow. 38 Table of Contents RETAIL STORE DATA Fiscal 2024 Fiscal 2023 Store count – beginning of year 518 530 Store openings 16 13 Store closings (22) (25) Store count – end of year 512 518 Store selling square footage at year-end 3,794,000 3,805,000 Store leased square footage (“LSF”) at year-end 5,833,000 5,890,000 Fiscal 2024 Fiscal 2023 Store Count Avg.
The following table summarizes our net revenues by brand for fiscal 2023 and fiscal 2022: (In thousands) Fiscal 2023 1 Fiscal 2022 1 Pottery Barn $ 3,206,167 $ 3,555,521 West Elm 1,854,811 2,278,131 Williams Sonoma 1,260,045 1,286,651 Pottery Barn Kids and Teen 1,060,470 1,132,937 Other 2 369,159 421,177 Total $ 7,750,652 $ 8,674,417 1 Includes business-to-business net revenues within each brand. 2 Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham, and GreenRow.
The following table summarizes our net revenues by brand for fiscal 2024 and fiscal 2023: (In thousands) Fiscal 2024 1 Fiscal 2023 1 Pottery Barn $ 3,039,939 $ 3,206,167 West Elm 1,840,582 1,854,811 Williams Sonoma 1,302,821 1,260,045 Pottery Barn Kids and Teen 1,107,057 1,060,470 Other 2 421,142 369,159 Total $ 7,711,541 $ 7,750,652 1 Includes business-to-business net revenues within each brand. 2 Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham, and GreenRow.
As of January 28, 2024, we had $31.6 million of gross unrecognized tax benefits, of which $25.8 million would, if recognized, affect the effective tax rate. Additionally, we accrue interest and penalties related to these unrecognized tax benefits in the provision for income taxes.
As of February 2, 2025, we had $32.4 million of gross unrecognized tax benefits, of which $26.3 million would, if recognized, affect the effective tax rate. Additionally, we accrue interest and penalties related to these unrecognized tax benefits in the provision for income taxes.
Net cash provided by operating activities compared to fiscal 2022 increased primarily due to (i) lower spending on merchandise inventories, (ii) an increase in accounts payable, (iii) an increase in accrued expenses and other liabilities due to higher performance-based incentive compensation and (iv) an increase in gift card and other deferred revenue, partially offset by (v) a decrease in net earnings adjusted for non-cash items.
Net cash provided by operating activities compared to fiscal 2023 decreased primarily due to (i) higher spending on merchandise inventories, (ii) a decrease in accounts payable (as a result of supplier payment timing) and (iii) a decrease in gift card and other deferred revenue, partially offset by (iv) an increase in net earnings adjusted for non-cash items.
However, the current uncertain macroeconomic environment with the weak housing market, elevated interest rates, layoffs, inflationary pressure, political uncertainty and global geopolitical tension may continue to impact our results.
However, the current uncertain macroeconomic environment with the weak housing market, elevated interest rates, layoffs, inflationary pressure, political uncertainty, global geopolitical instability and new tariffs could negatively impact our business.
Net cash used in financing activities for fiscal 2023 decreased compared to fiscal 2022, primarily due to a decrease in repurchases of common stock. 41 Table of Contents IMPACT OF INFLATION While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have experienced varying levels of inflation, resulting in part from various supply chain disruptions, increased shipping and transportation costs, increased product costs, increased labor costs in the supply chain and other disruptions caused by the pandemic and the uncertain economic environment.
IMPACT OF INFLATION While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have experienced varying levels of inflation, resulting in part from various supply chain disruptions, increased shipping and transportation costs, increased product costs, increased labor costs in the supply chain and other disruptions caused by the uncertain economic environment.
These disruptions improved in the fourth quarter of fiscal 2022. However, the costs from these supply chain challenges impacted our Consolidated Statement of Earnings in the first half of fiscal 2023. Fiscal 2023 Financial Results Net revenues in fiscal 2023 decreased $923.8 million, or 10.6%, with company comparable brand revenue ("company comp") decline of 9.9%.
However, the costs from these operational supply chain challenges impacted our Consolidated Statement of Earnings in the first half of fiscal 2023. Fiscal 2024 Financial Results Net revenues in fiscal 2024, including the impact of the additional week, decreased $39.1 million, or 0.5%, with company comparable brand revenue ("company comp") decline of 1.6%.
Selling margin is our gross profit before occupancy costs. Our classification of expenses in gross profit may not be comparable to other public companies, as we do not include non-occupancy-related costs associated with our distribution network in cost of goods sold.
Our classification of expenses in gross profit may not be comparable to other public companies, as we do not include non-occupancy-related costs associated with our distribution network in cost of goods sold. These costs, which include distribution network employment, third-party warehouse management and other distribution-related administrative expenses, are recorded in SG&A.
See Note D to our Consolidated Financial Statements for information related to income taxes. We are party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters. These contracts primarily relate to commercial matters, operating leases, trademarks, intellectual property and financial matters.
We are party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters. These contracts primarily relate to commercial matters, operating leases, trademarks, intellectual property and financial matters. Under these contracts, we may provide certain routine indemnifications relating to representations and warranties or personal injury matters.
One of the letter of credit facilities totaling $5 million matures on September 30, 2026, which is also the latest expiration date possible for future letters of credit issued under the facility. Cash Flows from Operating Activities For fiscal 2023, net cash provided by operating activities was $1.7 billion compared to $1.1 billion in fiscal 2022.
One of the letter of credit facilities totaling $5 million matures on September 30, 2026, which is also the latest expiration date possible for future letters of credit issued under the facility.
We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our financial condition or results of operations. See Note I to our Consolidated Financial Statements for further information related to our commitments and contingencies.
The terms of these indemnifications range in duration and may not be explicitly defined. Historically, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our financial condition or results of operations.
These costs include employment, advertising, third-party credit card processing, impairment and other general expenses. Fiscal 2023 vs. Fiscal 2022 SG&A decreased $119.9 million or 5.5%, compared to fiscal 2022. SG&A as a percentage of net revenues increased to 26.6% from 25.1% for fiscal 2022.
These costs include employment, advertising, third-party credit card processing, impairment and other general expenses. (In thousands) Fiscal 2024 % Net Revenues Fiscal 2023 % Net Revenues Selling, general and administrative expenses $ 2,152,115 27.9 % $ 2,059,408 26.6 % Fiscal 2024 vs. Fiscal 2023 SG&A increased $92.7 million or 4.5%, compared to fiscal 2023.
The fiscal 2023 decline was driven by West Elm continuing to be the brand most affected by the customer pull back in furniture as a result of the brand's high percentage of its assortment in the furniture category and our strategy to reduce promotional activity, partially offset by relative strength from new designs across all categories including furniture, textiles and decorative accessories.
West Elm saw brand comp decline of 2.0% in fiscal 2024 driven by the impacts of the customer pull back in furniture during the first half of the year as a result of the brand's high percentage of its assortment in the furniture category, partially offset by strength from new product introductions across categories including furniture, decorative accessories and seasonal textiles.
In addition to U.S. tax law changes, a number of countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development (“OECD”) international tax framework, including the Pillar Two minimum tax regime.
Since the Organization for Economic Co-operation and Development ("OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting ("Framework") in 2021, a number of countries have begun to enact legislation to implement the OECD international tax framework, including the Pillar Two minimum tax regime.
As we look forward to the year ahead, we believe these key priorities will set us apart from our competition and allow us to drive long-term growth and profitability.
Our pricing power, high e-commerce sales mix, retail optimization and highly efficient advertising are expected to drive earnings as we continue to control costs from our overall financial discipline. As we look forward to the year ahead, we believe these key priorities will set us apart from our competition and allow us to drive long-term growth and profitability.
If a long-lived asset is found to be 42 Table of Contents impaired, the amount recognized for impairment is equal to the excess of the asset or asset group’s net carrying value over its estimated fair value.
If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the excess of the asset or asset group’s net carrying value over its estimated fair value. During fiscal 2024, fiscal 2023 and fiscal 2022, we recognized impairment charges, as a component of SG&A, of $3.9 million, $14.5 million and $15.6 million, respectively.
Our quarterly cash dividend may be limited or terminated at any time. Stock Repurchase Program See section titled “Stock Repurchase Program” within Part II, Item 5 of this Annual Report on Form 10-K for further information.
See “ Risk Factor - If we are unable to pay quarterly dividends or repurchase our stock at intended levels, our reputation and stock price may be harmed. ” Stock Repurchase Programs See section titled “Stock Repurchase Programs” within Part II, Item 5 of this Annual Report on Form 10-K for further information.
We are also proud to be a leader in our industry with our values-based culture and commitment to achieving our sustainability goals. Beginning in fiscal 2021 and continuing through fiscal 2022, global supply chain disruptions caused delays in inventory receipts and backorder delays, increased raw material costs, and higher shipping-related charges.
Beginning in fiscal 2021 and continuing through fiscal 2022, global supply chain disruptions caused delays in inventory receipts and backorder delays, increased raw material costs, and higher shipping-related charges. These disruptions improved in the fourth quarter of fiscal 2022.
For information on risks, please see “Risk Factors” in Part I, Item 1A . CRITICAL ACCOUNTING ESTIMATES Our Consolidated Financial Statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
CRITICAL ACCOUNTING ESTIMATES The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires us to make estimates that affect the reported amounts of assets, liabilities, 42 Table of Contents revenues and expenses as well as the related disclosures of contingent assets and liabilities.
The fiscal 2023 decline resulted from our home business, partially offset by strength in the kitchen business driven by electrics, seasonal, cookware and bakeware categories as well as new product collaborations. 34 Table of Contents Finally, our emerging brands, Rejuvenation and Mark and Graham, combined, delivered low single-digit brand comp growth.
The Williams Sonoma brand saw brand comp growth of 2.4% in fiscal 2024 resulting from strength in the brand's kitchen business driven by cookware, cutlery and electrics as well as our seasonal and decorative offerings. Finally, our emerging brands, Rejuvenation, Mark and Graham, and GreenRow, combined, delivered double-digit brand comp growth.
Additionally, we are focused on continued optimization and automation in our distribution centers and logistics networks to improve our service times. Driving Earnings The supply chain improvements contributing to elevating our world-class customer service are expected to continue to contribute meaningfully to our profitability.
Driving Earnings The supply chain improvements contributing to elevating our world-class customer service are expected to continue to contribute meaningfully to our profitability. Additionally, we will be disciplined on selling, general and administrative expenses ("SG&A"), including employment and advertising costs.
Comparable brand revenue ("brand comp") for Pottery Barn, our largest brand, decreased 9.7%, increased 5.2% on a two-year basis and increased 44.3% on a four-year basis. The fiscal 2023 decline was driven by reduced furniture demand and our strategy to reduce promotional activity, partially offset by relative strength from our seasonal decorating, entertaining and home textiles categories.
In fiscal 2023, comparable brand revenue decline was materially consistent across both channels. In fiscal 2024, Pottery Barn, our largest brand, saw comparable brand revenue ("brand comp") decline of 6.2% driven by reduced furniture demand and our strategy to reduce promotional activity, partially offset by relative strength in our non-furniture and seasonal categories.
Compared to fiscal 2022, the increase in the tax rate is primarily due to less excess tax benefit from stock-based compensation and the tax effect of the earnings mix change between the two fiscal years, partially offset by the expiration of the statutes of limitation related to uncertain tax positions in fiscal 2023.
INCOME TAXES The effective income tax rate was 24.3% for fiscal 2024, compared to 25.4% for fiscal 2023. This decrease was primarily driven by (i) higher excess tax benefit from stock-based compensation and (ii) the tax effect of earnings mix change, partially offset by (iii) fewer expirations of statutes of limitations related to uncertain tax positions in fiscal 2024.
These commitments are reflected in the high quality, durable, sustainable products that we offer our customers, and continues to distinguish our company and our brands. Looking Ahead to 2024 Looking ahead to 2024, we are focused on three key priorities, which include (i) returning to growth, (ii) elevating our world-class customer service and (iii) driving earnings.
Looking Ahead to 2025 Looking ahead to 2025, our focus will remain on our three key priorities of (i) returning to growth, (ii) elevating our world-class customer service and (iii) driving earnings. Despite continued macroeconomic and geopolitical uncertainties, we are focused on these priorities to deliver in 2025 and beyond.
We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, and monitoring legislative developments by other countries, especially in the regions that we operate. LIQUIDITY AND CAPITAL RESOURCES Material Cash Requirements We are party to contractual obligations involving commitments to make payments to third parties in the future.
Pillar Two minimum tax will be treated as a period cost in future periods when it is applicable. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, and monitoring legislative developments by other countries, especially in the regions in which we operate.
As of January 28, 2024, our purchase obligations were approximately $911.9 million, with $854.5 million expected to be settled within 12 months. In addition, we had $31.6 million of unrecognized tax benefits recorded in our accompanying Consolidated Balance Sheet as of January 28, 2024, for which we cannot make a reasonably reliable estimate of the amount and period of payment.
In addition, we had $32.4 million of unrecognized tax benefits recorded in our Consolidated Balance Sheet as of February 2, 2025, for which we cannot make a reasonably reliable estimate of the amount and period of payment. See Note D to our Consolidated Financial Statements for information related to income taxes.
In fiscal 2023, diluted earnings per share was $14.55 (which included (i) a $0.20 impact related to exit costs associated with the closure of our West Coast manufacturing facility and the exiting of Aperture, a division of our Outward subsidiary, and (ii) a $0.09 impact related to reduction-in-force initiatives, primarily in our corporate functions) versus $16.32 in fiscal 2022 (which included a $0.21 impact from the impairment of Aperture).
This strong liquidity position allowed us to fund the operations of our business, invest $221.6 million in capital expenditures and return $1.1 billion through stock repurchases and dividends to stockholders. 35 Table of Contents In fiscal 2024, diluted earnings per share was $8.79 (which included the benefit of an out-of-period freight adjustment in the first quarter of fiscal 2024 of $0.29) versus $7.28 (which included (i) an impact of $0.10 related to exit costs associated with the closure of our West Coast manufacturing facility and the exiting of Aperture, a division of our Outward subsidiary, and (ii) an impact of $0.05 related to reduction-in-force initiatives, primarily in our corporate functions) in fiscal 2023.
In Canada, our digital initiatives continue to gain new customers and drive results for our brands, and we are pleased with the recent launches of Rejuvenation, Mark and Graham and Williams Sonoma Home. 35 Table of Contents Elevating our World-Class Customer Service We are continuing to improve our world-class customer service by driving supply chain improvements from reduced out-of-market and multiple shipments, fewer customer accommodations, lower returns and damages, and reduced replacements.
We continued to improve our world-class customer service by driving supply chain improvements from lower returns and damages, reduced out-of-market and multiple shipments, reduced replacements and fewer customer accommodations. These supply chain improvements continued to contribute meaningfully to our profitability in fiscal 2024.
For fiscal 2023, net cash provided by operating activities was primarily attributable to (i) net earnings adjusted for non-cash items, (ii) merchandise inventories as a result of decreasing customer demand, and (iii) accounts payable and gift card and other deferred revenue as a result of ongoing working capital enhancements.
Cash Flows from Operating Activities For fiscal 2024, net cash provided by operating activities was $1.4 billion compared to $1.7 billion in fiscal 2023, and was primarily attributable to net earnings adjusted for non-cash items, partially offset by higher spending on merchandise inventories as a result of timing of receipts.
LSF Per Store Pottery Barn 184 15,000 188 14,800 Williams Sonoma 156 6,900 165 6,800 West Elm 121 13,200 122 13,200 Pottery Barn Kids 46 7,800 46 7,700 Rejuvenation 11 8,100 9 8,000 Total 518 11,400 530 11,200 GROSS PROFIT (In thousands) Fiscal 2023 % Net Revenues Fiscal 2022 % Net Revenues Fiscal 2021 % Net Revenues Gross profit 1 $ 3,303,601 42.6 % $ 3,677,733 42.4 % $ 3,631,963 44.0 % 1 Includes occupancy expenses of $814.3 million, $785.4 million and $728.0 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.
LSF Per Store Store Count Avg. LSF Per Store Pottery Barn 181 15,100 184 15,000 Williams Sonoma 154 6,900 156 6,900 West Elm 121 13,300 121 13,200 Pottery Barn Kids 45 7,800 46 7,800 Rejuvenation 11 8,100 11 8,100 Total 512 11,400 518 11,400 GROSS PROFIT Gross profit is equal to our net revenues less costs of goods sold.
Dividends In fiscal 2023 and fiscal 2022, total cash dividends declared were approximately $236.8 million, or $3.60 per common share, and $216.3 million, or $3.12 per common share, respectively. In March 2024, our Board of Directors authorized a 26% increase in our quarterly cash dividend, from $0.90 to $1.13 per common share, subject to capital availability.
In March 2025, we announced that our Board of Directors authorized a 16% increase in our quarterly cash dividend, from $0.57 to $0.66 per common share, subject to capital availability. Our quarterly cash dividend may be limited or terminated at any time.
This increase in rate was primarily driven by (i) the deleverage of employment costs from higher performance-based incentive compensation in fiscal 2023 compared to fiscal 2022 commensurate with business performance, partially offset by (ii) managed variable employment costs in line with top-line trends, (iii) the cost savings from reduction-in-force actions taken in the first half of fiscal 2023 and (iv) the leverage of advertising expenses.
This increase of 130 basis points was primarily driven by (i) an increase in employment expense of 80 basis points due to higher performance-based incentive compensation and employee benefits costs and (ii) an increase in advertising expenses of 90 basis points; partially offset by (iii) lower general expenses of 40 basis points from the resolution of an indirect tax matter and a favorable insurance settlement.
Certain contractual obligations are reflected on our Consolidated Balance Sheet as of January 28, 2024, while others are considered future obligations.
LIQUIDITY AND CAPITAL RESOURCES Material Cash Requirements We are party to contractual obligations involving commitments to make payments to third parties in the future. Certain contractual obligations are reflected on our Consolidated Balance Sheet as of February 2, 2025, while others are not recorded on the Consolidated Balance Sheet.
All explanations of changes in operational results are discussed in order of magnitude.
Fiscal 2024 results included a 53rd week, which we estimate contributed 150 basis points to revenue growth and 20 basis points to operating margin in fiscal 2024. All explanations of changes in operational results are discussed in order of magnitude.
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Our full year revenues reflect a challenging environment for home furnishings. This decrease was driven by continuing customer hesitancy towards furniture purchases and our strategy to reduce promotional activity, partially offset by strength in certain non-furniture categories. Company comp decreased 3.4% on a two-year basis and increased 35.6% on a four-year basis.
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This decrease was driven by customer hesitancy towards furniture purchases, partially offset by strength in our non-furniture and seasonal assortments. From a channel perspective, the company comp decline of 1.6% was driven by a negative 2.5% comp in our e-commerce channel, partially offset by a positive 0.2% comp in our retail channel.
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Brand comp for the Pottery Barn Kids and Teen businesses decreased 5.5%, decreased 5.1% on a two-year basis and increased 23.1% on a four-year basis. The fiscal 2023 decline resulted from pressure in certain of our children's furniture categories, but saw relative strength from our baby and seasonal offerings and new product collaborations.
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The Pottery Barn Kids and Teen brands saw brand comp growth of 3.0% in fiscal 2024, driven by strength in collaborations, our dorm and baby offerings and seasonal decor.
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Brand comp for West Elm decreased 18.8%, decreased 16.3% on a two-year basis and increased 32.0% on a four-year basis.
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Despite a challenging environment for home furnishings, we delivered a record operating margin with double-digit diluted earnings per share growth. Our results this year demonstrate the flexibility, strength and durability of our operating model to drive market share gains and deliver profitability.
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Brand comp for the Williams Sonoma brand decreased 0.7%, decreased 2.4% brand on a two-year basis and increased 31.9% on a four-year basis.
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Our performance was due to the strong execution of our teams as well as our continued focus on full-price selling and cost control from our Company-wide financial discipline. Common Stock Split On July 9, 2024, we effected a 2-for-1 stock split of our common stock through a stock dividend.
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This strong liquidity position allowed us to provide stockholder returns of $545.5 million through stock repurchases and dividends, and to fund the operations of the business by investing $188.5 million in capital expenditures.
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All historical share and per share amounts, excluding treasury share amounts, in this Annual Report on Form 10-K have been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share.
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Our three key differentiators - our in-house design, our digital-first channel strategy, and our values - continue to distinguish us as the world’s largest digital-first, design-led and sustainable home retailer. Our in-house design capabilities and vertically integrated sourcing organization allow us to deliver high-quality, sustainable products at competitive prices.
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Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from additional paid-in capital to common stock.
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As a digital-first company, we are in continuous pursuit of incremental improvement to our customers’ shopping journey online. Our ongoing investment in our proprietary e-commerce technology continues to improve our online experience. We are focused on offering customers inspiring content and dynamic tools to assist with design projects.
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Out-of-Period Freight Adjustment Subsequent to the filing of our fiscal 2023 Form 10-K, in April 2024, we determined that we over-recognized freight expense in fiscal 2021, 2022 and 2023 for a cumulative amount of $49.0 million. We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated.
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Our internal teams, including creative and customer service, are already benefiting from the speed and cost efficiencies this technology provides. Through our e-commerce platform, our in-house customer relationship management and data analytic teams optimize our digital spend and customer connections. We remain passionate about our best-in-class retail business. Our stores are beautifully designed and curated with inspirational assortments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn addition, we have fixed and variable income investments consisting of short-term investments classified as cash and cash equivalents, which are also affected by changes in market interest rates. As of January 28, 2024, our investments, made primarily in interest bearing demand deposit accounts and money market funds, are stated at cost and approximate their fair values.
Biggest changeIn addition, we have fixed and variable income investments consisting of short-term investments classified as cash and cash equivalents, which are also affected by changes in market interest rates. As of February 2, 2025, our investments, made primarily in money market funds and interest bearing demand deposit accounts, are stated at cost and approximate their fair values.
Inflation While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have experienced varying levels of inflation, resulting in part from various supply chain disruptions, increased shipping and transportation costs, increased product costs, increased labor costs in the supply chain and other disruptions caused by the pandemic and the uncertain economic environment.
Inflation While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have experienced varying levels of inflation, resulting in part from various supply chain disruptions, increased shipping and transportation costs, increased product costs, increased labor costs in the supply chain and other disruptions caused by the uncertain economic environment.
We believe the effects of inflation, if any, on our financial statements and results of operations have been immaterial to date. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future, including by the heightened levels of inflation experienced globally during fiscal 2023 and fiscal 2022.
We believe the effects of inflation, if any, on our financial statements and results of operations have been immaterial to date. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future, including by the heightened levels of inflation experienced globally during fiscal 2024 and fiscal 2023.
Foreign Currency Risks We purchase the majority of our inventory from suppliers outside of the U.S. in transactions that are primarily denominated in U.S. dollars and, as such, any foreign currency impact related to these international purchase transactions was not significant to us during fiscal 2023 or fiscal 2022.
Foreign Currency Risks We purchase the majority of our inventory from suppliers outside of the U.S. in transactions that are primarily denominated in U.S. dollars and, as such, any foreign currency impact related to these international purchase transactions was not significant to us during fiscal 2024 or fiscal 2023.
Global trends, including inflationary pressures, are weakening customer sentiment, negatively impacting consumer spending behavior and slowing down consumer demand for our products. However, our unique operating model and pricing power helped mitigate these increased costs during fiscal 2023 and fiscal 2022.
Global trends, including inflationary pressures, are weakening customer sentiment, negatively impacting consumer spending behavior and slowing down consumer demand for our products. However, our unique operating model and pricing power helped mitigate these increased costs during fiscal 2024 and fiscal 2023.
While the impact of foreign currency exchange rate fluctuations was not material to us in fiscal 2023, we have continued to see volatility in the exchange rates in the countries in which we do business.
While the impact of foreign currency exchange rate fluctuations was not material to us in fiscal 2024, we have continued to see volatility in the exchange rates in the countries in which we do business.
Our inability or failure to offset the impact of inflation could harm our business, financial condition and results of operations. 44 Table of Contents
Our inability or failure to offset the impact of inflation could harm our business, financial condition and results of operations. 45 Table of Contents
We do not engage in financial transactions for trading or speculative purposes. Interest Rate Risk Our Revolver has a variable interest rate which, when drawn upon, subjects us to risks associated with changes in that interest rate. During fiscal 2023, we had no borrowings under the Revolver.
We do not engage in financial transactions for trading or speculative purposes. Interest Rate Risk Our Credit Facility has a variable interest rate which, when drawn upon, subjects us to risks associated with changes in that interest rate. During fiscal 2024, we had no borrowings under our Credit Facility.
To mitigate this risk, we may hedge a portion of our foreign currency exposure with foreign currency forward contracts in accordance with our risk management policies (see Note L to our Consolidated Financial Statements).
To mitigate this risk, we may hedge a portion of our foreign currency exposure with foreign currency forward contracts in accordance with our risk management policies.

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