- Williams-Sonoma is one of those retailers that has gotten a lift from cooking and decorating trends, with its stock price more than doubling this year.
- As big holiday celebrations make a comeback, the company’s flagship brand has launched a membership program and a recipe app to keep its customers engaged.
- Newell Brands, the company that owns Calphalon, Ball and Rubbermaid, said consumers have turned to premium items — such as pricier pots and pans and high-end vacuum sealers.
As big holiday gatherings return, a wave of party hosts are dusting off champagne glasses, flexing new skills like breadmaking and showing off the recipes they learned during the pandemic.
For Williams-Sonoma and other retailers, it’s an opportunity to sell platters, kitchen appliances and more — and inspire people to put those items on their wish lists.
Williams-Sonoma, in particular, has been in tears over the past year as stay-at-home orders have turned many Americans into amateur chefs, forcing them to take up cooking and baking as a hobby and buy new furniture and decorations. inspired to. Along with its flagship banner, the parent company owns other brands such as Pottery Barn and West Elm.
The company’s shares have more than doubled in value since January. The stock hit a 52-week high of $223.32 on Monday, but was recently trading at around $210 on Wednesday, giving it a market cap of about $15.6 billion. Yet the home retailer said Americans still have a huge appetite for cooking, entertaining, and decorating their homes. It hopes those trends will give it an opportunity that will last long after the holidays are over.
In the coming years, Williams-Sonoma expects its annual revenue to grow at a mid to high single-digit pace. It expects to reach $10 billion in revenue by 2024, as it benefits from its in-house design and investments in digital. 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 fiscal 2021 outlook, forecasting revenue to rise 22% from the prior year to 23%.
Ryan Ross, president of Williams Sonoma Brands, said sales in recent weeks show Americans are planning a great Thanksgiving and big holiday parties.
He said buyers are buying larger tablecloths, more flatware and larger sets of wine glasses than they were a year ago. Food orders have also increased in size, with larger turkeys selling out faster than smaller ones and people getting more prepared meals or side dishes to serve. Plus, he said, as people become more confident in the kitchen, they’re upgrading their tools from expensive knife blocks to fancier bakeware.
“When the world is opening up, people are still choosing to cook,” he said in an interview. “Once they know how to cook, they love to cook, and they want to impress their friends with their culinary skills.”
Williams-Sonoma CEO Laura Elber said people are looking forward to seeing family and friends again.
“Last year, was the year the holidays were forgotten, pretty much,” she said Friday in an interview with CNBC’s Jim Cramer on “Mad Money.” “Did you have a turkey for two? It was a depressing season. This year, people are dying to get back together and celebrate and decorate their homes and gift giving and all the great things we don’t have to do Got it. Last year.”
Ross said that cooking has become a way for people to relax and calm down.
“It becomes a release,” he said. “There’s a sense of calm and fondness to cooking that when things are opening up and people are traveling, an appreciation for food and transparency for what’s in your food isn’t going to change that.”
Christina Fernandez, a senior research analyst at Telsey Advisory Group, said the company has space exclusively for furniture sales. Many Americans are still decorating the larger homes or second homes they bought during the pandemic.
“When people move in, they usually present houses in pieces,” she said. “They’ll go into the room. They’ll do the kitchen and then say ‘I have a nice kitchen, let me do the next room.'”
It raised Williams-Sonoma’s price target last week to $220 from $250 after reporting earnings, which is about 19% higher than it is currently trading. The firm evaluates the better performance of the company.
Fernandez said the company has benefited because the demand for home goods is so hot. It is capable of pulling back on promotion.
Going forward, the flagship brand faces tougher comparisons and could hurt in the coming year if consumers trade in for lower-priced furniture and cookware due to inflation or other spending preferences, she said. Its furniture line, Williams Sonoma Home, carries a higher price point than Pottery Barn and West Elm.
In the latest quarter, its furniture-focused brands saw the fastest growth. West Elm’s fiscal third-quarter same-store sales rose 22.5% compared to a year ago, while Pottery Barn Kids & Teen grew 16.9% and Pottery Barn 15.9%. Williams Sonoma stores’ sales opened at least 12 months and its e-commerce business grew 7.6% year over year in the same period. But it was on top of a jump of 30.4% last year.
Overall, the parent company posted nearly 17% growth in same-store sales for the three-month period, and topped Wall Street’s estimates.
Fernandez hopes Williams Sonoma’s flagship brand can increase sales by expanding its private label products and specialty merchandise, such as meat rubs and seasonings from grilling company Traeger or premium cookware backed by celebrity chefs like Bobby Flay.
Earlier this month, Williams Sonoma launched a membership program called Williams Sonoma Reserve to keep customers engaged. Members also receive free shipping for many items, access to a recipe app, and virtual cooking classes and events with celebrity chefs such as Ina Garten. The subscription service costs $99 for one year. Customers can also subscribe to the only recipe app, which costs $39.99 and includes how-to videos.
Joe Derochowski, home industry consultant for The NPD Group, said retailers selling home goods will have many ways to cash in on the holidays. The initial wave will come from consumers who spring for new coffeemakers, cookie cutters and more as they prepare for the arrival of guests.
More sales can come because people request those items as gifts or buy them for others. And at parties, people may discover an attractive gadget or kitchen appliance after friends or family hear about it — and later decide to buy it, he said.
Sales of hosting-related items, such as glassware, platters and leftover food storage, tend to pop up in early December, he said. However, retailers will have to find ways to continue selling as consumers spend more time traveling, dining and other activities outside the home next year.
As per NPD estimates, home industry spending by the unit is expected to decline by 5% in 2022 as compared to 2021. However, it will still be around 14% above 2019 levels. The range of NPD includes household items, kitchen electronics, appliances for the home environment such as vacuums and air purifiers and personal care products such as electric toothbrushes. This does not include furniture or home decor.
NPD’s Derochowski said items related to the facility could be potential growth areas. People can buy automatic espresso machines, robotic vacuums or multi-cookers such as air fryers, slow cookers and toaster ovens as they get busy again, he said.
“The convenience level in our lives is dialed in,” he said.
Other retailers have also pointed to the desire for Americans to host family and friends during the holiday season and beyond. Lowes and Home Depot have expanded their selection of home decor and featured it on websites and commercials.
Even consumer electronics retailer Best Buy said it wants to add more to home furnishings. Earlier this month, it acquired direct-to-consumer brand Yardbird, which sells outdoor furniture such as patio sets, fire tables and wicker chairs.
These retailers are competing in a very fragmented market. Williams-Sonoma was able to capitalize on when one of its rivals, luxury kitchen retailer Sur La Table, filed for bankruptcy during the pandemic and closed many of its stores.
Real estate trends have also worked in favor of retailers – especially as more millennials become homeowners. Albert said hybrid work routines also drive the company’s sales.
“If you’re at home even a day or a half a week, working fewer hours and coming home and doing something early in the morning, you’re going to care more about how your home is. Looks,” she said on “Mad Money.”
Newell Brands, owner of Calphalon, Ball and Rubbermaid, said consumers have turned to more high-end kitchen supplies. Its products are sold by stores including Bed Bath & Beyond, Walmart, Costco and Williams Sonoma.
“What I’ve seen across the board is towards a more moderate price point and premium price point or higher quality feature products,” said Chris Malkowski, the company’s CEO of Home Solutions.
She said that even in terms of food storage, more consumers buy the more elegant-looking glass containers from Rubbermaid or the high-tech vacuum sealers from FoodSaver.
And she said she expects Ball Mason jars and other storage containers to go on sale this holiday season. Many of the same customers who buy cookware have missed out on making rhubarb jam, cookies or other homemade food gifts for family and friends during the pandemic.
“Foods really like to give something they’ve made as a gift,” she said.
He expects sales of more sophisticated, innovative kitchenware to increase in 2022. Plus, he said, inflation may actually prompt more Americans to prepare their own meals to save money.
Ross said food and furniture are two areas where Williams Sonoma’s flagship brand is expected to expand. Along with the Williams Sonoma brand in its stores and website, there are many shelf-stable foods, from cake mixes to pasta sauces. It also sends ready meals at the doorsteps of the people. And it carries gourmet products, sometimes with a well-known brand like the tequila company Casamigos.
Ross said consumers can expect to see more international flavors and a wider variety of food, such as cocktail mixes, in the coming year.
Ross said the flagship brand has accelerated the aesthetic of its furniture brand Williams Sonoma Home to “more refined and curate” and become “an online luxury furniture destination.”
He said it’s a natural fit as people get ready to show off their homes for the holidays and beyond.
“If you’re entertaining, you need a living room. If you’re entertaining, you need a guest room,” he said. “If you’re entertaining, you need a dining table. If you’re cooking, you need to get out of your kitchen—so barstools, you need light, you need cookware, You need a tabletop that goes over the dining table. So that’s really our approach to cooking and entertaining.”