Williams-Sonoma is investing in its digital future with a new acquisition on the heels of impressive third quarter results.
The company is buying Silicon Valley startup Outward for $112 million in cash. Outward specializes in replicating physical products in high-quality 3-D imagery that can be used for visual merchandising on retail websites and apps.
Outward has already worked with Williams-Sonoma's Pottery Band brand to use product renderings in augmented-reality apps that help customers visualize how a piece of furniture or decor would look in their home.
“Outward brings proprietary and transformative technology at the forefront of our industry, and we welcome them to WSI,” said Laura Alber, President and Chief Executive Officer of WSI. “We are excited to own and collaborate in the further development of Outward’s technology that enables applications in product visualization, digital room design, and augmented and virtual reality. Together, we will drive digital innovation to create highly engaging and interactive consumer shopping experiences.”
Following the close of the transaction, which is expected by the end of this calendar year, Outward will operate as a wholly-owned subsidiary of WSI, and will be managed by Outward’s current leadership team. The company will maintain existing operations under the Outward brand, while expanding its digital capabilities and servicing its customers around the world. Clarence Chui will remain as President and Founder, and Outward’s headquarters will remain in San Jose, Calif.
The Outward deal comes as Williams-Sonoma is demonstrating healthy sales across its various store brands.
Same store sales in the third quarter ended Oct. 29 grew 3.3%, accelerating slightly from 2.8% from the previous quarter quarter. E-commerce revenue increased 6.4% to $690 million, increasing 100 basis points as a percentage of total revenue to 53.1%.
Williams-Sonoma reported earnings per share of 84 cents, an 8% increase over 78 cents for last year’s period. Net revenues rose to $1.299 billion, up 4.3% compared with the prior year’s third quarter.
“Our third quarter results demonstrate the effectiveness of our strategic priorities to deliver value, quality and excellent customer service,” Alber added. "During the quarter, strong execution against our product and digital initiatives drove new customer acquisition and top-line expansion in a competitive and dynamic retail environment. Importantly, our demand during the quarter exceeded or was at least equal to net revenues across all of our brands, most notably in Pottery Barn and PBteen, which is a strong indication of the health of our business. Our investments in digital innovation and cross-brand services, as well as continued optimization of our supply chain, position us to further differentiate our business and to deliver long-term profitable growth.”