Williams Sonoma (NYSE:WSM) announced Q4 results and year end. The numbers are difficult to terrible, and the company announced a few initiatives to improve. With a lot of jargon and buzzwords they talk about inventory control and improving the catalog operation. They plan on cutting expenses wherever possible. The margins narrowed as sales revenue dropped faster than expenses could be cut out. Hopefully on the way up revenues will rise faster than expenses.
The interesting strategy is Williams-Sonoma's insistence on paying a dividend. The current cash position looks good and they can cut the cheque quite easily. The question becomes: is the strategy of paying a dividend in difficult times properly aligned with whatever strategies will be needed to position for the future?
Williams Sonoma has cash which can be used to gain strategic advantage for the future. Many retailers and businesses can only dream of this luxury. Did investors buy this stock for dividend yield (probably not) or do they want to look to the future for growth. The question that is begged is "Does the board have the necessary vision for the next cycle or are they just fiddling with today's details"?
Disclosure: No position