Williams-Sonoma rides the holiday entertainment trend

Shoppers pass by the Williams Sonoma store in The Mall, Short Hills Shopping Center in Short Hills, New Jersey.

Gabi Jones | Bloomberg | Getty Images

As the larger holiday parties return, a wave of party hosts are dusting champagne glasses, demonstrating new skills such as bread making, and showcasing recipes they learned during the pandemic.

for Williams-Sonoma And other retailers, this is an opportunity to sell platters, kitchen utensils, etc., and prompt people to include these items on their wish lists.

In particular, Williams-Sonoma (Williams-Sonoma) has been doing well in the past year, because the home order has turned many Americans into amateur chefs, inspiring them to take cooking and baking as hobbies and buy new furniture and Decorations. In addition to the flagship brands, the parent company also owns other brands such as Pottery Barn and West Elm.

Since January, the value of the company’s stock has more than doubled. The stock hit a 52-week high of US$223.32 on Monday, but recently traded at about US$210 on Wednesday, with a market value of approximately US$15.6 billion. However, the home furnishing retailer said that Americans still have a great appetite for cooking, entertainment and decorating homes. It expects that these trends will give it a chance to continue after the holidays.

In the next few years, Williams-Sonoma predicts that its annual income will grow at a mid-to-high single-digit rate. It expects to reach $10 billion in revenue by 2024 as it benefits from its internal design and digital investment. Macro trends such as a strong housing cycle will provide further support.

This year, the growth will be even stronger. On Thursday, the retailer raised its outlook for the 2021 fiscal year and expects revenue to increase by 22% to 23% over the previous year.

Impress friends with cooking

Ryan Ross, president of the Williams Sonoma brand, said that sales in recent weeks reflect that Americans are planning to host a more compelling Thanksgiving and larger holiday parties.

He said that compared with a year ago, shoppers are buying larger tablecloths, more tableware and larger wine glasses. Food orders are getting larger and larger. Large turkeys sell faster than small turkeys, and people can get more prepared meals or side dishes. In addition, he said that as people become more confident in the kitchen, they are upgrading their tools from more expensive knife blocks to more high-end bakeware.

“Although the world is opening up, people still like to cook,” he said in an interview. “Once they know how to cook, they will like to cook, and they want to impress their friends with their cooking skills.”

Williams-Sonoma CEO Laura Alber (Laura Alber) said that people are eager to see family and friends again.

“Last year was almost a forgotten year for the holidays,” she said in an interview with CNBC on Friday. Jim Cramer exist”I am crazy about money“Do you have two turkeys? This is a somewhat frustrating season. This year, people are eager to get together again to celebrate and decorate their homes, give gifts and all those great things that we did not do last year. “

Ross said that cooking has become a way for people to relax and unwind.

“It becomes a release,” he said. “People have a sense of calm and love for cooking. Although things are opening up and people are traveling, the appreciation of the food and the transparency of the ingredients in the food will not change.”

“Fragmented” renovation houses

According to Cristina Fernandez, a senior research analyst at Telsey Advisory Group, the company has particular room for development in furniture sales. Many Americans are still renovating the large or second homes they bought during the pandemic.

“When people move, they usually decorate the house piecemeal,” she said. “They will go room by room. They will make the kitchen and say,’I have a nice kitchen. Let me make the next room.'”

After Williams-Sonoma announced earnings last week, she raised its target price from $220 to $250, which is about 19% higher than the current transaction price. The company rated the company as outperforming the market.

Fernandez said the company has an advantage because the demand for household products is so hot. It has been able to withdraw promotional activities.

She said that looking ahead, if consumers switch to lower-priced furniture and cookware due to inflation or other spending priorities, flagship brands will face tougher comparisons and may be hurt in the coming year. The price of its furniture series Williams Sonoma Home is often higher than Pottery Barn and West Elm.

In the most recent quarter, its furniture-focused brands grew the fastest. West Elm’s third-quarter same-store sales increased 22.5% year-on-year, Pottery Barn Kids and Teen increased 16.9%, and Pottery Barn increased 15.9%. Sales of Williams Sonoma stores have been open for at least 12 months, and its e-commerce business increased by 7.6% year-on-year over the same period. But this is based on a 30.4% increase last year.

In short, the parent company’s same-store sales increased by nearly 17% during the three-month period, exceeding Wall Street’s expectations.

Fernandez expects that Williams Sonoma’s flagship brand can boost sales by expanding its own-brand products and exclusive merchandise, such as meat products and seasonings from the barbecue company Traeger, or premium cookware endorsed by famous chefs such as Bobby Flay .

Earlier this month, Williams Sonoma launched a membership program called Williams Sonoma Reserve to maintain customer engagement. Members can enjoy free delivery of many products, access to recipe apps, and virtual cooking classes and activities with celebrity chefs such as Ina Garten. The subscription fee for one year is US$99. Customers can also just subscribe to the recipe app, which costs $39.99, including operating videos.

The cookware is on display at the Willams-Sonoma retail store in Corte Madera, California.

David Paul Morris | Bloomberg | Getty Images

Prepare for the guests

According to Joe Derochowski, home furnishing industry consultant at The NPD Group, retailers that sell home furnishings will have multiple ways to profit during the holidays. The initial wave will come from consumers, who will buy new coffee machines, biscuit cutters, etc. when they are ready for the arrival of guests.

When people ask for these items as gifts or buy for others, there may be more sales. He said that at a party, people may find an attractive gadget or kitchen tool after hearing friends or family members praise it, and then decide to buy it.

He said that the sale of custody-related items, such as glassware, plates, and leftover storage containers, tends to become popular in early December. However, as consumers will have more time to spend on travel, meals and other activities next year, retailers will have to find ways to maintain continued sales growth.

According to NPD’s forecast, compared with 2021, by 2022, household industry expenditure per unit is expected to fall by 5%. However, it will still be about 14% higher than 2019 levels. The categories of NPD include household products, kitchen electronics, household environmental tools (such as vacuum cleaners and air purifiers), and personal care products (such as electric toothbrushes). It does not include furniture or home furnishings.

According to Derochowski of NPD, convenience-related items may be a potential growth area. He said that as people get busy again, people may buy automatic espresso machines, robotic vacuum cleaners or multi-function cookers such as air fryer, slow cooker and oven.

“The convenience in our lives has improved,” he said.

As more and more people enjoy this holiday, they may also give out more homemade biscuits and jam gifts. Kris Malkoski, Chief Executive Officer of Newell Brands Home Solutions, said that she expects Rubbermaid’s Brilliance food storage series and Ball’s Mason jars to increase sales.

Newell Brand

Shift to higher quality

Other retailers also pointed out that Americans’ desire to host family and friends during the holidays and beyond has been suppressed. Lowe with The Home Depot Expanded their choice of home decoration and displayed it on the website and advertisements.

Even consumer electronics retailers Best Buy Said that I want to do more home furnishing. Earlier this month, it acquired Yardbird, a direct-to-consumer brand that sells outdoor furniture such as patio sets, fireplace tables and rattan chairs.

These retailers are competing in a very fragmented market. When one of its competitors, luxury kitchen retailer Sur La Table, filed for bankruptcy and closed many of its stores during the pandemic, Williams-Sonoma made a profit.

Real estate trends also benefit retailers—especially as more millennials become homeowners. Albert said the mixed work process has also boosted the company’s sales.

“If you are at home one day or half a day a week, your working hours are shorter, go home and do something early in the morning, you will be more concerned about what your house looks like,” she said. exist”I am crazy about money.”

Newell BrandCompanies that own Calphalon, Ball, and Rubbermaid say consumers have been attracted to higher-end kitchen products.Its products are sold in stores, including Bed bath and other, Walmart, Costco And Williams Sonoma.

Kris Malkoski, CEO of the company’s Home Solutions, said: “What I see is that this trend tends towards mid-priced and high-priced or higher-quality functional products.”

She said the same is true for food storage. More and more consumers buy more elegant glass containers from Rubbermaid or high-tech vacuum sealers from FoodSaver.

She said she expects Ball mason jars and other storage containers to be sold this holiday season. During the pandemic, many customers who bought cooking utensils missed making rhubarb jam, biscuits or other homemade food gifts for family and friends.

“Foodies really like to give away what they make as gifts,” she said.

She expects the introduction of more complex and innovative kitchenware to drive sales in 2022. In addition, she said, inflation may actually inspire more Americans to continue preparing meals to save money.

Have entertainment space

Ross said that food and furniture are two areas where Williams Sonoma’s flagship brand hopes to expand. Its store and website sell a wide range of shelf-stable foods under the Williams Sonoma brand, from cake mixes to pasta sauces. It also delivers prepared food to people’s doorsteps. It offers gourmet products and sometimes well-known brands like tequila company Casamigos.

Ross said consumers can expect to see more types of food in the coming year, such as more international flavors and mixed cocktails.

Ross said the flagship brand has also enhanced the aesthetics of its furniture brand Williams Sonoma Home, making it “more refined and well-planned” and becoming an “online luxury furniture destination.”

He said that when people are going to show off their homes during the holidays and beyond, this is a natural choice.

“If you want to entertain, you need a living room. If you want to entertain, you need a guest room,” he said. “If you are entertaining, you need a dining table. If you are cooking, you need kitchen equipment-so bar stools, you need lighting, you need cooking utensils, you need a table top on top of the dining table. So our point of view is true It’s to have cooking and entertainment.”

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