Thursday, November 19, 2009

Williams Sonoma -- Labour Costs?

Williams Sonoma (WSM) announced results and told investors they are pleased despite the current economic circumstances. Howard Lester, Chairman and Chief Executive Officer even played to the gallery by saying that they delivered another consecutive quarter of better than expected results. That starts to beg the question about guidance but that’s another story.

Williams Sonoma is reducing costs by closing stores and exiting leases. But look at the balance sheet and you will see accrued benefits and salaries have not really moved in the same proportion as revenues and the bottom line. What does that mean? Staffing and service levels are important for a chain such as Williams Sonoma. But are they banking specialized labour to avoid costs in the future or are we just waiting for the other show to drop.