Business

Williams-Sonoma will be the new trend of holiday entertainment

Shoppers walk in front of the Williams Sonoma store at The Mall at Short Hills in Short Hills, New Jersey.

Gabby Jones | Bloomberg | Getty Images

As big holiday gatherings return, a wave of party hosts are dusting their champagne glasses, showcasing new skills like baking bread and showcasing recipes they learned during the pandemic.

For Williams-Sonoma and other retailers, this is an opportunity to sell plates, kitchen appliances and more – and encourage people to include these items on their wishlists.

Williams-Sonoma, in particular, has worried over the past year, as orders for housekeepers have turned many Americans into hobby chefs, inspiring them to take up cooking and baking as a hobby and buy new furniture and décor. Apart from the flagship banner, the parent company owns other brands such as Pottery Barn and West Elm.

The company’s shares have more than doubled since January. The stock hit a 52-week high of $ 223.32 on Monday, but recently traded around $ 210 on Wednesday, giving it a market cap of around $ 15.6 billion. However, the home improvement seller said Americans still have a strong appetite for cooking, having fun, and decorating their homes. These trends are expected to give him an opportunity that will continue beyond the holidays.

Williams-Sonoma expects its annual revenues to grow at one-digit moderate to high rates in the coming years. The company is expected to have $ 10 billion in revenue by 2024 as it benefits from in-house design and digital investments. Macro trends such as a strong housing cycle will provide additional support.

Growth will be even more robust this year. On Thursday, the retailer raised its fiscal 2021 forecast, forecasting revenue to grow from 22% to 23% over the prior year.

Impress your friends with your culinary skills

According to Ryan Ross, president of Williams Sonoma, sales in recent weeks indicate that Americans are planning more flashy Thanksgiving and larger holiday parties.

Customers are buying larger tablecloths, cutlery and glasses than a year ago, he said. Food orders have also grown in size, with large turkeys selling faster than small ones, and people getting more ready-made meals or side dishes to serve. Plus, he says, as people get more confident in the kitchen, they are updating their tools – from more expensive knife blocks to more sophisticated bakeware.

“While the world is opening up, people still love to cook,” he said in an interview. “When they learn how to cook, they love to cook and want to surprise their friends with their culinary skills.”

Williams-Sonoma CEO Laura Albert said people want to see family and friends again.

Home furnishing piece by piece

Cristina Fernandez, senior analyst at Telsey Advisory Group, said the company has opportunities, in particular, for furniture sales. Many Americans are still decorating large homes or second homes they bought during the pandemic.

“When people move, they usually furnish houses in parts,” she said. “They will move from room to room. They will clean the kitchen and then they say, “I have a good kitchen, let me make the next room.”

It raised its target price for Williams-Sonoma after it posted earnings last week from $ 220 to $ 250, about 19% higher than it is now. The firm measures the company’s performance better.

Fernandez said the company has an advantage because the demand for home goods is very high. He was able to refuse promotions.

The flagship brand will face tougher comparisons in the future and could suffer in the next year if consumers switch to cheaper furniture and kitchenware due to inflation or other spending priorities, she said. The Williams Sonoma Home line of furniture generally has a higher price tag than Pottery Barn and West Elm.

Its furniture brands posted the fastest growth in the last quarter. West Elm’s third-quarter sales of West Elm rose 22.5% year-over-year, while Pottery Barn Kids and Teen jumped 16.9% and Pottery Barn jumped 15.9%. Williams Sonoma stores have been open for at least 12 months and e-commerce sales grew 7.6% year over year. But that was at the top of a 30.4% rise last year.

Overall, the parent company posted a nearly 17% increase in sales in the same store over a three-month period, beating Wall Street estimates.

Fernandez expects flagship Williams Sonoma to be able to drive sales by expanding its own label products and exclusives such as Meat Puffs and Seasonings from Traeger Grill Company or premium cookware endorsed by celebrity chefs such as Bobby Flay.

Earlier this month, Williams Sonoma launched a membership program called Williams Sonoma Reserve to keep customers interested. Members receive free shipping on many items, access to the recipe app, and virtual cooking classes and events with celebrity chefs like Ina Garten. The subscription price is $ 99 per year. Customers can also subscribe to the recipe-only app, which costs $ 39.99 and includes instructional videos.

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

David Paul Morris | Bloomberg | Getty Images

Preparing for guests

“Homeware retailers will have several ways to make money during the holidays,” said Joe Derochowski, home appliance industry advisor to The NPD Group. The initial wave will come from consumers on the hunt for new coffee makers, cookie cutters and more as they prepare for the arrival of guests.

Increased sales can occur if people request these items as gifts or buy them for others. And at parties, people may discover an attractive gadget or kitchen tool after hearing friends or family admire it and then decide to buy it, he said.

Sales of hosting-related items such as glassware, plates and leftover storage tend to skyrocket in early December, he said. However, retailers will have to find ways to maintain sales as consumers spend more time traveling, dining and other activities outside the home next year.

According to NPD forecasts, in 2022, household spending per unit of output will fall by 5% compared to 2021. However, it will still be around 14% above the 2019 level. The NPD category includes household items, kitchen electronics, home tools like vacuum cleaners and air purifiers, and personal care products like electric toothbrushes. It does not include furniture or home decor items.

NPD’s Derokhovski said convenience goods could be a potential growth area. He said people can buy automatic espresso machines, robotic vacuum cleaners or multicooker like deep fat fryers, multicooker and toasters when they get more loaded again.

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

The more people have fun this holiday season, the more they can give away homemade cookies and jams. Chris Malkosky, general manager of home solutions for Newell Brands, said she expects to see sales of Rubbermaid’s Brilliance storage line and Ball stone cans.

Newell brands

Moving to higher quality

Other retailers also pointed to America’s pent-up desire to host family and friends during the holiday season and beyond. Lowe’s and Home Depot have expanded their home décor selection and have showcased them on websites and in advertisements.

Even consumer electronics retailer Best Buy has said it wants more home furnishings. Earlier this month, it acquired Yardbird, a brand that sells outdoor furniture such as garden furniture, fireplace tables and wicker chairs, Yardbird.

These retailers compete in a highly fragmented market. Williams-Sonoma made money when one of its competitors, luxury kitchen retailer Sur La Table, filed for bankruptcy during the pandemic and closed many of its stores.

Real estate trends are also working in favor of retailers, especially as more millennials become homeowners. Albert said hybrid work procedures are also boosting the company’s sales.

“If you’re at home just one day a week or half a day, you work less, and you come home and do something early in the morning, you’ll be more concerned with how your home looks,” she said. on Mad Money.

Newell Brands, the company that owns Calphalon, Ball and Rubbermaid, said consumers are gravitating towards higher-quality kitchen utensils. Its products are sold in stores such as Bed Bath and Beyond, Walmart, Costco and Williams Sonoma.

“What I’ve seen all over the place is a craving for more mid-range and premium pricing or higher quality functional products,” said Chris Malkoski, CEO of Home Solutions.

This even applies to food storage, she says, with more consumers buying sleeker glass containers from Rubbermaid or hi-tech vacuum sealers from FoodSaver.

And she said she expects Ball mason cans and other storage containers to be on sale this holiday season. Many of the same customers who buy utensils missed out on rhubarb jam, cookies, or other homemade foods for family and friends during the pandemic.

“Foodies love to give what they have done,” she said.

She expects more sophisticated and innovative cookware to drive sales in 2022. Plus, she said, inflation could really inspire more Americans to keep cooking to save money.

Entertainment space ownership

Ross said food and furniture are two areas that flagship brand Williams Sonoma plans to expand in. Its stores and website have numerous products that can be purchased on the shelf, from cake mixes to Williams Sonoma-branded pasta sauces. He also delivers ready meals to people’s doorsteps. It sells delicacies, sometimes under a well-known brand such as the Casamigos tequila company.

Consumers can expect to see an even wider variety of food choices in the coming year, such as more international flavors and cocktails, Ross said.

The flagship brand has also improved the aesthetics of its Williams Sonoma Home furniture brand, making it “more sophisticated and sophisticated” and making it “an online luxury furniture store,” Ross said.

He said this is natural as people prepare to show their homes during the holidays and beyond.

“If you’re having fun, you need a living room. If you’re having fun, you need a guest room, ”he said. “If you’re having fun, you need a dining table. If you cook, you need to equip the kitchen – so bar stools, you need lighting, you need utensils, you need a countertop that sits on top of the dining table. So our perspective is actually cooking and entertainment. “


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