August 30, 2013, 1:34 PM

E-commerce becomes more dominant at Williams-Sonoma

The online channel accounted for close to half of second quarter net revenue.

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Net revenue in the web-dominated direct-to-consumer channel at Williams-Sonoma Inc. increased 15.3% to $477.66 million in its fiscal second quarter ended Aug. 4, accounting for nearly half of total net revenue, which rose 12.3% to $982.21 million, the retailer of kitchenware and other home furnishings says.

Executives at the retailer, No. 22 in Internet Retailer’s 2013 Top 500 Guide, said in a recent conference call with stock analysts that e-commerce sales grew by more than 20% in Q2 and accounted for more than 90% of direct-to-consumer sales, which also include telephone sales placed through paper catalogs.

Indeed, the retailer is banking on e-commerce and a multichannel retailing strategy to continuing growing worldwide sales through its multiple brands, including Pottery Barn, West Elm and Williams-Sonoma, executives said, according to a transcript of the conference call provided by Seeking Alpha. “Our second quarter results demonstrate the continuing strong demand for our brands and the profitability of our multichannel, multi-brand platform,” president and CEO Laura Alber said. She credited such factors as merchandising and e-mail marketing for the online growth.

Williams-Sonoma says it is also working to improve direct-to-consumer sales by using shopping data on customers to better target the delivery of paper catalogs to the most receptive consumers, a strategy it embarked on earlier this year. This fall, it will launch a web site personalization technology application that it says will increase by fivefold the number of online visitors for whom it will serve up personalized web content. “This is a big deal,” chief marketing officer and executive vice president Patrick Connolly said on the conference call. He noted that about half of site visitors are anonymous newcomers, but that the retailer expects its new personalization system will be able to “deliver relevant content even to people who have never been to our site before.” The retailer didn’t further describe its personalization technology, including whether it was built in-house or acquired from a commercial vendor.

Williams-Sonoma is also relying on e-commerce to help grow international revenue, which rose about 56% in the second quarter to approximately $50 million from about $32 million, chief financial officer Julie Whalen said. She noted, for example, that the retailer recently entered the Australian market with a store in Sydney along with an e-commerce site and a locally based fulfillment center.

The retailer also reported for the thirteen weeks ended Aug. 4:

● Direct-to-consumer net revenue rose 15.3% to $477.66 million from $414.36 a year earlier;

●  Direct-to-consumer net revenue accounted for 48.6% of total revenue of $982.21 million, up from 47.4% a year earlier;

● Net revenue at the retailer’s 590 stores grew 9.7% to $504.55 million from $459.92 million;

● Net earnings rose 12.8% to $48.92 million from $43.38 million.

For the 26 weeks ended Aug. 4:

● Direct-to-consumer net revenue rose 13.7% to $896.74 million from $788.77 million a year earlier;

● Direct-to-consumer net revenue accounted for 48% of total revenue of $1.87 billion, up from 46.6% a year earlier;

● Retail store sales rose 7.8% to $973.28 million from $903.13 million;

● Net earnings rose 19.3% to $88.39 million from $74.10 million.

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