WSM
#Thanks, <UNK>.
We're obviously focused on both top line performance and earnings growth.
And so certainly, long term could we have op margin expansion.
Potentially.
But to your point, what we think is the most important thing to do is to drive the top line growth, and so we are reinvesting a lot of those savings right back into it, with digital advertising investments this year.
We also have the annualization of our Southeast DC, which is very competitive from an advantage perspective.
And so that is definitely what we're focused on.
You can be penny wise and pound foolish and take all the savings and be a hero for a day and have op margin expansion, but that's not going to drive you in the long term.
So yes, at the high end of our op margin guidance, we're flat to last year.
We have slight deleverage.
But we think with our investments offset by our supply chain efficiencies, that's the right spot to be.
We're always looking at M&A.
We're always looking at ideas and seeing what's the right choice for the Company.
If we think there's a good opportunity to pursue, we will.
So it's not a matter of having an opinion right now as to whether we're doing M&A or not, it's a matter what the opportunity is.
We've obviously done a very good job of growing our own brands internally and we've had incredible success now with Rejuvenation that we think can grow to be a very large brand for us.
So as you can imagine, there's lots of opportunities that come our way and we evaluate all of them, and if it's a good idea, we'll do it.
No, we're not losing money delivering to people at this point.
You're saying geography on the P&L.
It's still within the advertising line within SG&A.
Is that what you're asking.
Let's let <UNK>.
<UNK>'s here.
<UNK>, do you want to answer that question for us.
Sure.
It's <UNK>.
We're really pleased with the growth in West Elm.
Growth in Q4 was almost11%.
Full year was over 18%.
And as I said, including revenue from our franchise partners, the brand's now reached a $1 billion threshold.
And the good news is that when we measure the brand awareness, it's really low.
So that tells us there's a lot more room for growth.
And the new stores have been successful.
We have a lot of growth plans in place for the brand, including hospitality and workspace, and you're going to see those growth opportunities become even more meaningful next year, as well as relentless focus on our store business and our direct channel.
And West Elm in the fourth quarter, like the other brands, was also impacted by the retail environment, specifically in the first month of the quarters, like everybody spoke to.
So you saw that impact probably more the comp business than the non-comp.
So that's why there's a delta between the non-comp and the comp.
The non-comp from the newer stores, they're doing phenomenally well.
I wouldn't read anything into that.
We continue to read them.
We don't want to get ahead of ourselves.
We've always had a really high hurdle rate for profitability in our real estate.
And there's a lot changing there now.
So you do a couple, you do some more.
You make sure it works in multiple markets.
And we have some great landlord partnerships going on and long-term relationships that are going to help us continue to evolve our stores, but also not get ourselves in a situation where our retail profitability declines because of the investment.
There's several different things that we're investing in.
We do think it's a transformative year with the amount of, it is our prioritization for the year to invest in e-commerce and digital leadership.
That's why it was the first thing that I mentioned from an investment perspective.
We're looking at everything to give the customer experience the best thing possible.
So whether it's the next generation product page, whether it's 3-D product visualization, whether it's more investment in mobile, whether it's better on site search experience.
We're also looking at buy online, pick up in store.
We're testing it in the Williams-Sonoma brand.
It's across the gamut of all the things that we are investing in.
And we do think this is incredibly important.
Obviously, we have 52%.
We're different than other retailers where we're already at the 52% hurdle rate from e-commerce perspective, but we do think the growth is going to continue to grow there.
And so it's important, with our level of profitability, what this past was 23.7%, the more we grow that channel, the better returns we get.
And so it's going to be a very strong focus for us.
Yes.
Absolutely.
There's a lot of questions in there.
Let me see if I can tackle it.
I think the first and foremost thing you have to realize is that we're giving guidance today and we're coming out of Q4 where, quite honestly, we had a negative 1, and we still see softness across the Pottery Barn Brands, and the environment is a little bit choppy, the current retail environment.
With that said, as you move through the year, we have absolutely factored in the Pottery Barn Brands returning to growth.
We've also factored in the fact that all of our growth initiatives under the covers are still growing double digits.
So whether it's West Elm, whether it is our newer businesses, whether it's the global company-owned businesses, all of that is going to continue.
And so I think when you look at those growth initiatives combined with the fact that Pottery Barn returning to growth, that is what gives us the confidence in our top line guidance.
I think you need to remember that if you look back in time with the Pottery Barn brand from the time we've owned them, they've only been negative one other time, was during the recessionary period in 2008 and 2009.
It's the first time they've been negative.
And if you look back the last six years or so, they had an average 6% comp.
So it's a matter of when they turn around, but they well.
And so that plus these other growth initiatives gives us confidence in our guidance.
I think also you asked the question about customer acquisition.
And we're happy to report that we saw very solid growth in DDC new to corp customers in Q4 with our investment in digital marketing paying off.
And this is, I think, what you're referring to in terms of a nice positive as we go into the new year.
Revenue growth, they grew 10.8% in Q4.
So they're still double digits.
On the year, they're still double digits.
So I still count them as double digit.
Thank you all for joining us.
We appreciate your support and we look forward to talking to you next time.
