Williams-Sonoma Inc. (NYSE:WSM)

Current Income Tax Expense

The current income tax expense demonstrates a generally rising trend from 2019 to 2023, increasing from approximately 71.9 million USD in 2019 to nearly 396.6 million USD in 2023. This represents a substantial growth in current tax liabilities over the five-year span. However, there is a noticeable decline in 2024 to about 352.7 million USD, which might suggest either improved tax planning, lower taxable income, or changes in tax rates or regulations affecting the current tax expense.

Deferred Income Tax Expense

The deferred income tax expense reveals greater volatility compared to the current tax expense. Starting positively at around 23.6 million USD in 2019, it then drops to negative values in 2020 and 2021, reaching as low as approximately -13.1 million USD in 2021. This shift indicates a decreasing deferred tax liability or an increasing deferred tax asset during this period. In 2022, it swings back to a positive value of 2.5 million USD but again declines sharply to negative figures in 2023 and 2024, at roughly -23.8 million USD and -29.1 million USD respectively. This pattern reflects fluctuations in timing differences and temporary differences recognized in deferred tax accounting, potentially linked to changes in tax laws, asset depreciation schedules, or valuation allowances.

Provision for Income Taxes

The overall provision for income taxes, encompassing both current and deferred components, generally follows the upward trajectory observed in current taxes, increasing considerably from about 95.6 million USD in 2019 to a peak of around 372.8 million USD in 2023. Similar to the current tax expense, there is a decrease in 2024 to approximately 323.6 million USD. The provision closely tracks the dynamics of current tax expenses, with deferred tax expense movements moderating the total provision marginally at times. The fluctuations in the deferred tax component, while significant, are less impactful on the total provision compared to the magnitude of current tax expenses.

Overall Insights

The data indicates significant growth in tax liability over the analyzed period, likely corresponding to increased profitability or taxable events. The notable volatility in deferred tax expense suggests adjustments related to timing differences and tax strategy changes. The peak in overall tax provision in 2023 followed by a decline in 2024 may warrant further examination to understand underlying causes such as changes in earnings, tax legislation, or accounting estimates. The increasing tax burden until 2023 indicates higher taxable income or reductions in tax credits or incentives, while the partial reversal in 2024 could indicate stabilization or a strategic shift in tax management.

Federal income taxes at the statutory rate

The statutory federal income tax rate remained constant at 21% throughout the reported periods, showing no variation over time.

Re-measurement of deferred tax assets and liabilities

This item was present only in the earliest year reported (2019) with a negative impact of -2.2%, and no subsequent data was reported in later years, indicating no significant adjustments in deferred tax assets and liabilities re-measurement after 2019.

Transition tax

Similar to the previous item, transition tax appears only in 2019 with a minor negative effect of -0.6%, without any reported activity in subsequent years.

State income tax rate

The state income tax rate demonstrates a gradual increase from 3.8% in 2019 to 4.4% in 2024, indicating a steady upward trend that contributes progressively more to the overall effective tax rate.

Officer’s compensation under Sec.162(m)

This component shows variability over time: beginning at 1% in 2020, rising to a peak of 2% in 2022, then decreasing to 0.9% by 2024. The fluctuation suggests changes in the compensation-related tax adjustments within the reported periods.

Deferred true up

The deferred true up component decreased from -1.3% in 2020 to near neutral (-0.1%) in 2022, followed by a slight positive trend to 0.2% in 2024. This indicates a diminishing impact over time, moving from a negative adjustment towards a small positive effect.

Change in uncertain tax positions

This item fluctuates around zero with positive values in most years (4.1% in 2019, 0.5% in 2020, 0.2% in 2021, 0.3% in 2023) and negative values in 2022 (-0.5%) and 2024 (-0.5%). This reflects variability in uncertain tax positions, with occasional reversals impacting the effective tax rate.

Rate differential

Rate differential exhibits a clear declining trend in absolute value, moving from -2.3% in 2019 to -0.3% in 2024. This trend suggests a reducing negative impact from differences in tax rates over the time span.

Stock-based compensation

This factor begins with a small positive value (0.3%) in 2020 but then shifts to negative contributions (-0.2% in 2021, -2.9% in 2022, -1.7% in 2023, and -0.3% in 2024), with a notable dip in 2022. This pattern indicates that stock-based compensation has increasingly reduced the effective tax rate during these years.

Credits

Tax credits decrease in impact over the years, starting from -2.1% in 2019 and moving towards negligible effects (-0.2%) in 2022 and 2023, with no data reported for 2024. This decline implies a diminishing benefit from tax credits over time.

Other

The miscellaneous category fluctuates without a clear trend: 0.6% in 2019, then declining to negative values in 2021 (-0.2%) and 2022 (-0.4%), followed by a positive value again in 2023 (0.4%).

Effective tax rate

The effective tax rate shows slight volatility, starting at 22.3% in 2019, dipping somewhat to 22.1% in 2020, then rising to 23.9% and 22.4% in the following years. From 2022 onwards, it trends upward to 25.4% in 2024. Overall, this indicates a gradual increase in the company's overall tax burden, with the rate in 2024 being the highest in the assessed period.

The analyzed financial data exhibits distinctive trends and fluctuations across various liabilities, assets, and compensation categories over the six-year period.

Operating Lease Liabilities

Beginning with a value of 347,693 thousand USD in early 2020, there was a slight decline to around 319,599 thousand USD in 2021, followed by stabilization and a modest increase reaching 359,001 thousand USD in 2023. The most recent figure shows a slight decrease to 357,266 thousand USD.

Merchandise Inventories

There is a clear upward trend in inventory levels, starting at 18,703 thousand USD in 2019 and rising steadily each year, with a notable increase between 2021 and 2023, peaking at 37,828 thousand USD in 2024. This may indicate an expansion in stock holdings aligning with business growth or changes in inventory management practices.

Compensation

Compensation expenses show a general increase over the periods, rising from 11,251 thousand USD in 2019 to a peak of 27,069 thousand USD in 2022, followed by a decrease to 18,960 thousand USD in 2023, and climbing back to 25,658 thousand USD in 2024. These variations could reflect fluctuations in workforce costs or strategic compensation adjustments.

Gift Cards

There is a steady growth in gift card liabilities from 14,345 thousand USD in 2019 to a maximum of 24,632 thousand USD in 2023, with a slight reduction to 23,929 thousand USD in 2024, indicating consistent consumer engagement in this area.

Accrued Liabilities

Accrued liabilities show variability, starting at 13,470 thousand USD in 2019, dropping to 8,440 thousand USD in 2020, then rising to a high of 22,356 thousand USD in 2023 before declining slightly to 20,178 thousand USD in 2024, demonstrating fluctuating short-term obligations.

Executive Deferred Compensation

This category increased gradually from 5,739 thousand USD in 2019 to 11,061 thousand USD in 2024, with some minor dip in 2023, indicating a consistent growth in deferred compensation obligations.

Stock-Based Compensation

Stock-based compensation declined from 14,281 thousand USD in 2019 to 9,860 thousand USD in 2020, followed by quasi-stable values around 9,900 to 11,879 thousand USD before increasing to 14,308 thousand USD in 2023 and decreasing again to 10,593 thousand USD in 2024. These fluctuations suggest varying levels of stock remuneration programs usage.

State Taxes

State tax liabilities remained relatively stable throughout the period, ranging from approximately 7,362 to 8,084 thousand USD, reflecting consistent state tax obligations with minor fluctuations.

Loyalty Rewards

Loyalty rewards liabilities showed significant fluctuations: an increase to 9,609 thousand USD in 2021, followed by a decrease to 3,232 thousand USD in 2024, indicating a possible shift in loyalty program liabilities or redemption rates over the years.

State Net Operating Loss

There is a steady decline in state net operating loss carryforwards, decreasing from 4,223 thousand USD in 2019 to 1,153 thousand USD in 2024, suggesting utilization or expiration of these losses over time.

Deferred Rent

This liability was reported only in 2019 at 18,942 thousand USD and is absent in all following years, which might be due to changes in accounting standards or lease classifications.

Operating Lease Right-of-Use Assets

These assets are reported as negative values and show a decreasing trend in absolute terms from -309,801 thousand USD in 2020 to -310,299 thousand USD in 2024, with minor fluctuations in between, implying relative stability in the leased asset base.

Property and Equipment

Property and equipment net value shows negative figures which peak in absolute value at -76,643 thousand USD in 2022 but then decrease to -44,622 thousand USD in 2024, indicating possible asset disposals or depreciation effects impacting the net book value.

Deferred Lease Incentives

These liabilities demonstrate variability with a large negative balance increasing from -26,032 thousand USD in 2019 to -46,701 thousand USD in 2020, then decreasing steadily to -22,400 thousand USD in 2023 before rising again to -29,638 thousand USD in 2024, highlighting fluctuating lease incentive amortization or new agreements.

Other Liabilities

Other liabilities, recorded as negative values, exhibit a downward trend from -5,733 thousand USD in 2019 to -5,003 thousand USD in 2024, with a brief positive value in 2022 (57 thousand USD), suggesting atypical reversal or adjustments during that year.

Valuation Allowance

The valuation allowance shows improvement, moving from -3,542 thousand USD in 2019 towards a significantly reduced negative balance of -1,346 thousand USD in 2024, reflecting reduced doubtful asset valuations or increased recovery potential.

Deferred Tax Assets (Liabilities), Net

Net deferred tax assets increased consistently from 41,525 thousand USD in 2019 to 107,482 thousand USD in 2024, indicating growing deferred tax benefits, potentially driven by timing differences or operating results.

Deferred Tax Assets

The deferred tax assets show a consistent upward trend over the analyzed period. Starting from approximately 44 million US dollars in early 2019, this figure increased progressively year over year, reaching over 110 million US dollars by early 2024. Notably, the growth accelerated significantly in the last two years, indicating a substantial rise in recognized deductible temporary differences or carryforwards. This sustained increase may reflect expanding future tax benefits or changes in tax planning strategies.

Deferred Tax Liabilities

Deferred tax liabilities remained relatively stable over the same period, with only minor fluctuations. Beginning at around 2.5 million US dollars in early 2019, the liabilities showed slight increases and decreases but maintained a narrow range between approximately 1.3 million and 3.2 million US dollars by early 2024. This stability suggests limited growth in taxable temporary differences or a steady approach to tax obligations related to these items.

Overall Insight

The differential growth between deferred tax assets and liabilities highlights a growing net deferred tax asset position for the company. This may indicate an optimistic outlook regarding future profitability, allowing for the realization of these tax benefits. The data suggests improved tax planning or operational factors increasing deductible amounts without a corresponding rise in deferred tax liabilities. Monitoring these trends provides useful insight into the company’s tax strategy and future financial position.

The financial data reveals several notable trends in the company's asset base, liabilities, equity, and earnings over the six-year period.

Total Assets

Both reported and adjusted total assets demonstrate a consistent upward trend from 2019 to 2024. Reported total assets increased from approximately $2.81 billion in 2019 to $5.27 billion in 2024, nearly doubling over the period. Adjusted total assets follow a similar trajectory, rising from about $2.77 billion in 2019 to $5.16 billion in 2024. The relatively small difference between reported and adjusted figures indicates modest adjustments, likely related to tax considerations, without materially altering the asset growth pattern.

Total Liabilities

Total liabilities also rose significantly, with reported liabilities increasing from $1.66 billion in 2019 to approximately $3.15 billion in 2024. Adjusted liabilities track closely, moving from $1.65 billion to $3.14 billion over the same span. Although liabilities grew at a strong pace, the increases are proportionate to asset growth, suggesting sustained leverage without unusual spikes. The narrow gap between reported and adjusted liabilities again points to minor tax-related adjustments.

Stockholders’ Equity

Stockholders' equity showed a steady, albeit more moderate increase compared to assets and liabilities. Reported equity rose from $1.16 billion in 2019 to $2.13 billion in 2024. Adjusted equity numbers are consistently slightly lower but mirror the upward trend, growing from $1.11 billion to $2.02 billion. The growth in equity indicates retained earnings and possible capital contributions contributing to shareholder value expansion over the evaluated periods.

Net Earnings

Net earnings exhibit more variability across years, with reported net earnings growing substantially from $334 million in 2019 to a peak of approximately $1.13 billion in 2022 before declining to around $950 million in 2024. Adjusted net earnings show a similar pattern, with a peak in 2022 as well, though slightly lower than reported figures in most years. The earnings fluctuations suggest significant operational improvements leading to large profit gains through 2021 and 2022, followed by a subsequent decrease, although earnings remain notably higher than earlier years.

Overall, the company's financial position has strengthened markedly over the analyzed period, as evidenced by substantial growth in assets and equity paired with increased but manageable liabilities. Earnings growth was robust through 2021 and 2022 with a moderation in the latest year. The adjustments related to deferred income taxes appear to have limited impact on the reported figures, indicating that the core financial trends are well represented by reported data.

Net Profit Margin Trends

Both reported and adjusted net profit margins demonstrate a general upward trend from 2019 through 2022, increasing from approximately 6% to a peak near 13.7%. However, in the last two years recorded, there is a slight decline in margins, all values remaining above 11.8%. The adjusted figures closely follow the reported ones, indicating minor effects of income tax adjustments on profitability margins.

Total Asset Turnover Trends

The total asset turnover experienced a marked decrease between 2019 and 2020, dropping from around 2.0 to roughly 1.45. Following this dip, turnover ratios show moderate recovery through 2022 reaching near 1.9, before declining again in 2024 to approximately 1.5. Adjusted turnovers slightly exceed reported values, suggesting marginal positive adjustments for deferred tax impacts.

Financial Leverage Patterns

Financial leverage ratios, both reported and adjusted, surged sharply from around 2.4 in 2019 to over 3.2 in 2020. Subsequently, they gradually decreased to approximately 2.5 by 2024. Adjusted leverage consistently remains slightly higher than reported, indicating deferred tax considerations marginally increasing leverage metrics.

Return on Equity (ROE) Dynamics

ROE shows significant volatility with a rising trend from near 29% in 2019 to a peak surpassing 70% in 2022 (adjusted figure), followed by a sharp decline to the mid-40% range in 2024. The adjusted ROE values are consistently higher than the reported values, reflecting the adjustments applied to tax figures enhance perceived profitability to equity holders.

Return on Assets (ROA) Movements

ROA trends mimic those of ROE but with less volatility. From about 12.9% adjusted in 2019, ROA dips considerably in 2020 to under 9%, before increasing to above 24% in 2022. The subsequent decline to roughly 18% in 2024 is also observed. Adjusted ROA remains slightly higher than reported throughout the period, reinforcing the modest positive impact of tax adjustments on asset profitability.

Overall Insights

The financial data reflects a period of significant fluctuation, particularly between 2019 and 2022, characterized by initial declines in asset efficiency and leverage spikes, followed by strong profitability improvements especially in ROE and ROA. The years after 2022 show stabilization with some declines in profitability and efficiency metrics. Adjusted data continually present marginally more favorable outcomes than the reported figures, suggesting that deferred income tax adjustments have a modest but consistent positive impact on key financial performance indicators.

Reported net earnings

The reported net earnings exhibited a consistent increase from 2019 through 2022, starting at approximately $333.7 million and peaking at around $1.13 billion in 2022. However, in the subsequent years, a decline is observed with earnings falling to about $1.13 billion in 2023 and further decreasing to approximately $949.8 million in 2024.

Adjusted net earnings

Adjusted net earnings mirror the general trend of reported net earnings, increasing steadily from $357.3 million in 2019 to just over $1.13 billion in 2022. Post-2022, adjusted earnings also show a decline, reaching $1.10 billion in 2023 and dropping to $920.7 million in 2024, slightly lower than reported figures for the same period.

Reported net profit margin

The reported net profit margin demonstrates a positive trend from 2019 to 2022, rising from 5.88% to a peak of 13.66%. After this peak, it decreases to 13.00% in 2023 and further to 12.25% in 2024, indicating some pressure on profitability margins despite high net earnings in those years.

Adjusted net profit margin

Adjusted net profit margins follow a closely similar pattern to the reported margins. Starting at 6.3% in 2019, the margin peaks at 13.69% in 2022. Following this, it more noticeably declines to 12.73% in 2023 and further to 11.88% in 2024. This suggests that after adjusting for income tax effects, profitability margins experienced somewhat more pronounced contraction in recent years.

Overall, the data reflects a strong growth phase in net earnings and profit margins up to 2022, followed by a downward adjustment in both earnings and profitability in 2023 and 2024. While profitability margins remain relatively healthy above 11%, the decline post-2022 signals potential challenges impacting net earnings growth and profit retention after tax considerations.

The data reveals notable trends in both the asset base and efficiency metrics over the reported periods.

Total Assets

Reported total assets exhibited consistent growth from February 2019 through January 2024, starting at approximately 2.81 billion USD and reaching approximately 5.27 billion USD by the most recent period. This represents an increase of nearly 87% over the six-year span.

Adjusted total assets follow a similar upward trajectory, rising from roughly 2.77 billion USD to about 5.16 billion USD across the same periods. The adjusted figures remain slightly below the reported totals throughout, reflecting the effects of income tax adjustments.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios indicate a decline from fiscal year 2019 into 2020, dropping from approximately 2.02 and 2.05 respectively to around 1.45 to 1.47. This suggests a reduction in asset utilization efficiency early in the period.

Following the decline, turnover ratios stabilized around the 1.46 to 1.47 range for fiscal 2021, then increased to peaks near 1.78 to 1.80 in 2022 and further to approximately 1.86 to 1.89 in 2023, indicating improved efficiency in asset usage during these years.

However, in the most recent fiscal year ending January 28, 2024, ratios receded again to approximately 1.47 to 1.50, reflecting a decrease in turnover closer to the levels observed in fiscal years 2020 and 2021.

The adjusted total asset turnover ratio consistently stays marginally higher than the reported ratio, implying that adjustments for deferred income tax affect the measure of asset efficiency positively, albeit slightly.

Overall, the data suggests robust asset growth accompanied by fluctuating asset turnover ratios, with periods of both declining and improving asset efficiency. The recent downturn in turnover in the latest fiscal year warrants attention, especially given the concurrent increase in asset base size. This combination could indicate a potential reduction in how effectively assets are being employed to generate sales or revenues in the most current period.

The analysis of the reported and deferred income tax adjusted financial data reveals several noteworthy trends over the observed periods.

Total Assets

The reported total assets show a general upward trajectory from 2,812,844 thousand US dollars in early 2019 to 5,273,548 thousand US dollars by early 2024, indicating substantial growth in asset base. The adjusted total assets trend similarly, starting at 2,768,789 thousand US dollars and reaching 5,162,892 thousand US dollars over the same period. Both reported and adjusted assets peak around early 2021 before a slight dip in 2022, followed by continued growth in subsequent years.

Stockholders’ Equity

Reported stockholders’ equity exhibits an increasing pattern, rising from 1,155,714 thousand US dollars in early 2019 to 2,127,861 thousand US dollars by early 2024. The adjusted stockholders’ equity follows this trend, increasing from 1,114,189 thousand to 2,020,379 thousand US dollars. Both metrics demonstrate steady growth without any significant reversals, implying strengthening equity positions over the period evaluated.

Financial Leverage

Financial leverage ratios, both reported and adjusted, display an interesting pattern. Reported financial leverage increases from 2.43 in 2019 to a peak of 3.28 in 2020, then gradually decreases to 2.48 by 2024. Adjusted leverage follows a parallel trend, rising from 2.49 to 3.36 in 2020 and subsequently declining to 2.56 by 2024. This suggests that leverage peaked in 2020, possibly reflecting increased debt or changes in equity, with a gradual reduction thereafter, signaling more conservative financial structuring in recent years.

Overall, the data indicates robust growth in total assets and equity, accompanied by a peak and subsequent decline in financial leverage. These patterns suggest a period of expansion followed by stabilization in capital structure, with adjustments for deferred income taxes having a consistent but minor effect on the reported financial measures.

Net Earnings

Reported net earnings show a general upward trend from 2019 to 2022, peaking at approximately 1.13 billion US dollars in 2022. In 2023 and 2024, earnings exhibit a decline, descending to about 1.13 billion and then to approximately 950 million US dollars, respectively. Adjusted net earnings follow a similar pattern, with an increase from 357 million US dollars in 2019 to around 1.13 billion in 2022, then falling to roughly 1.1 billion and about 921 million in the two subsequent years. The declines in 2023 and 2024 suggest a reduction in net profitability during those periods.

Stockholders’ Equity

Reported stockholders’ equity increases steadily over the six-year period, starting at approximately 1.16 billion US dollars in 2019 and reaching over 2.12 billion by 2024. Adjusted stockholders’ equity displays a similar upward movement, rising from around 1.11 billion in 2019 to just above 2.02 billion in 2024. Although the adjusted figures remain slightly below the reported values, both measures indicate consistent growth in equity, with a noticeable acceleration after 2022.

Return on Equity (ROE)

Reported ROE rose significantly from 28.87% in 2019 to a peak of 67.68% in 2022, before declining to 66.31% in 2023 and further dropping to 44.63% in 2024. Adjusted ROE follows a comparable trend, increasing from 32.07% in 2019 to 70.16% in 2022, then decreasing to 68.07% in 2023 and to 45.57% in 2024. These trends suggest that the company achieved very high returns relative to equity in 2022, followed by a moderation but still relatively strong performance in the subsequent years.

Overall Observations

The data indicates robust financial performance with strong growth in earnings and equity up to 2022, accompanied by exceptionally high returns on equity during that year. The subsequent two years show a decline in net earnings and ROE, although equity continues to grow steadily. The adjusted metrics closely mirror the reported figures, implying that adjustments for deferred income taxes do not drastically alter the overall financial trends. These patterns suggest a peak in profitability and efficiency around 2022, with some tapering in operational results afterward while maintaining solid equity expansion.

Net Earnings

Reported net earnings demonstrated a significant upward trend from 2019 to 2022, nearly tripling from approximately $333.7 million to $1.13 billion. A peak was observed in 2022, followed by a slight decline in 2023 and a further decrease in 2024 to around $949.8 million. Adjusted net earnings followed a generally similar pattern, with a steady increase through 2022, peaking slightly lower than reported earnings, then a decrease in subsequent years.

Total Assets

Total assets, both reported and adjusted, exhibited consistent growth over the six-year period. Reported total assets rose from roughly $2.81 billion in 2019 to over $5.27 billion in 2024, showing a steady increase year-over-year except for a minor plateau between 2021 and 2023. Adjusted total assets mirrored these movements closely, indicating minimal adjustments relative to the reported figures.

Return on Assets (ROA)

Reported ROA decreased from 11.86% in 2019 to 8.78% in 2020, before significantly increasing to a peak of 24.35% in 2022. The ROA then slightly declined to about 24.19% in 2023 and further dropped to 18.01% in 2024. Adjusted ROA followed the same overall trend with minor variations, reflecting a similar pattern of recovery and decline. Both metrics improved markedly post-2020, suggesting improved profitability efficiency against the asset base during the period 2021-2023, followed by some moderation in 2024.

Overall Insights

The data reveals strong earnings growth and asset accumulation through 2022, indicating a period of expansion and increased profitability. The return on assets improved substantially during this time, suggesting better asset utilization. However, the observed decreases in net earnings and ROA in 2023 and 2024 may indicate emerging challenges or a normalization phase after the sharp growth. The close alignment between reported and adjusted figures suggests the adjustments for deferred income tax do not significantly distort overall financial trends.