hw5fsaWilliams-Sonomab.doc - Jaegook Lee G26205244 Prof...

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Jaegook Lee G26205244 Prof. Jones Due March 20 Fifth Homework Use Williams-Sonoma’s financial statements to answer these questions. They are in a separate file. Williams-Sonoma owns Pottery Barn, Williams-Sonoma and West Elm. It reports revenues for its retail locations and for its e-commerce operations. 1. Predict revenues in 2017. Assume that revenues grow by 5% in 2017. Rev for 2016: 5,083,812,000 Expected rev for 2017: 5,083,812,000*105% = 5,338,002,600 2. Do retail or e-commerce units have a larger growth rate of revenues in 2016? E-commerce: (2,633,602-2,522,580)/2,522,580 = 4.4% Retail: (2,450,210-2,453,510)/2,453,510 = -0.13% E-commerce has a larger growth rate. In fact, retail has a negative growth rate 3. Williams-Sonoma’s e-commerce division has a larger profit margin. If that pattern persists, what does your answer to question 2 suggest about likely changes in the overall profit margin for the firm in 2017? With this information all you can provide is a direction not a precise answer. If the profit margin of E-commerce is greater than retail, the overall profit margin of the company will increase along with revenue increase in E-commerce. Moreover, decreasing revenue from retail business will accelerate the overall profit margin increase because retail business has a lesser profit margin 4.
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