Key Takeaways
- William-Sonoma executives are staying away from promotional pricing at a time when some other retailers are cutting prices to attract deal-minded shoppers.
- The parent of Pottery Barn and West Elm has been backing off discounts for several years.
- CEO Laura Alber says Williams-Sonoma consumers may be “better off” than others.
Williams-Sonoma (WSM) wants to keep promotions in the past.
The parent of Pottery Barn, West Elm, and the luxury kitchen retailer Williams-Sonoma is sticking to its years-old strategy of easing off promotional pricing, executives said on the company’s earnings call Wednesday. “We’re absolutely committed to the stance of running the business without promotional pricing,” said Williams-Sonoma CEO Laura Alber.
“We made the decision, as you know, to stop this up-down pricing and this constant promotion,” Alber said on the call, a transcript of which was made availabe by AlphaSense. “Once you’re in that loop, you can’t stop it.”
The company said customers are responding well to “consistent pricing” and may even appreciate that there is no longer an incentive to spend weeks checking whether the price of an item drops. The decision stands out at a time when some other retailers, including Walmart (WMT) and Target (TGT), are discounting items for customers who are seeking out sales.
Williams-Sonoma is catering to those with bigger budgets. The cheapest king beds available on Pottery Barn (about $750) and West Elm ($500), for example, cost hundreds more than the $72 frame on Walmart’s website or the $76 deal offered online at Target Wednesday.
Alber said Williams-Sonoma customers may be weathering the economy better than others. Shoppers are “probably a little better off than everybody thinks, especially our consumer,” said Alber.
Results varied across Williams-Sonoma’s portfolio last quarter. Pottery Barn revenue fell 7.5% year-over-year; West Elm dropped 3.5%; Williams Sonoma’s was nearly flat, and Pottery Barn Kids and Teen rose 3.8%.
The company’s stock jumped today after it beat analyst forecasts, reporting adjusted earnings per share of $1.96, as opposed to the $1.77 expected.
