Home improvement retailers are reaping the rewards of a healthier housing market and so is Williams-Sonoma. The company reported strong third quarter results and raised its fourth quarter outlook as a result.
Comparable brand revenue growth in the quarter increased 8.2% on top of 8.5% in the year-ago quarter. The company saw revenue growth across all its brands, but results were primarily driven by West Elm, which saw revenue jump 22.2% compared to 13% last year, and PBteen, which saw revenue jump 16.7%, compared to 2% last year.
Meanwhile, Pottery Barn’s revenue increased 8.4% for the quarter, compared to 11.1% in the year-ago quarter. Williams-Sonoma’s revenue increased 1.4%, compared to 0.8% last year. Pottery Barn Kids increased 3.9%, compared to 10.1% last year.
“Our strong third quarter and our performance year-to-date illustrate the power of our business model and the relevancy of our brands. We delivered an 11% increase in revenue and EPS growth in excess of 18%,” said Laura Alber, president and CEO. “Importantly, we delivered this revenue growth and accompanying operating margin expansion while simultaneously investing in our multifaceted growth initiatives.”
Direct-to-customer net revenues for the quarter increased 14.5% to $512 million from $447 million in the year-ago quarter, with growth across all brands, primarily driven by Pottery Barn and West Elm. DTC net revenues generated 49% of total company net revenues in the quarter, compared to 47% in Q3 12.
Retail net revenues for the quarter increased 8.5% to $540 million from $497 million in Q3 12, once again primarily driven by Pottery Barn and West Elm. Including five net new stores within the third quarter, retail leased square footage increased 1.6% from the end of the year-ago quarter.
As a result of its third-quarter performance, the company is raising its EPS guidance to a range of $2.76 to $2.83 and expresses confidence in its position as it heads into the holiday season.