Williams-Sonoma Says Supply Chain Efforts Drive Profit

Retailer Williams-Sonoma says improved supply chain management, including cuts in transportation costs, were a major reason the company swung to a profit in its recent fiscal third quarter despite slipping store sales.

The home furnishings specialist removed $150 million in merchandise inventories from its holdings, cutting the inventory count 21.5 percent, while adding $200 million in cash to its balance sheet over that time.

The result was a $7.3 million net profit in the quarter ending Nov. 1 for a company that lost $11 million in the same quarter a year ago even as net retail sales fell 3 percent.

“We continue to see both customer service and financial benefits from our ongoing transportation and quality returns initiative,” Chairman and CEO W. Howard Lester said in a recent conference call with investment analysts.

That included, he said, “the coastal consolidation of our large-cube inventory, and we are now shipping together orders that historically were delivered in multiple shipments. We are also consolidating six third-party furniture delivery hubs into one company-operated hub in Columbus, Ohio,” Lester said.

Despite soft sales in the third quarter at brands including Williams-Sonoma, Pottery Barn and West Elm, Lester said early signs on holiday sales “are encouraging.”