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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Williams-Sonoma Inc., economic profit calculation

US$ in thousands

12 months ended:	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Net operating profit after taxes (NOPAT)¹	1,034,060)	1,172,531)	1,237,417)	799,145)	399,368)	390,105)
Cost of capital²	18.52%	17.01%	17.81%	17.99%	14.09%	14.92%
Invested capital³	3,907,227)	3,497,304)	3,332,675)	3,503,840)	3,110,082)	3,192,653)

Economic profit⁴	310,494)	577,742)	643,776)	168,859)	(38,696)	(86,274)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,034,060 – 18.52% × 3,907,227 = 310,494

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Williams-Sonoma Inc. economic profit decreased from 2022 to 2023 and from 2023 to 2024.

Williams-Sonoma Inc., NOPAT calculation

US$ in thousands

12 months ended:	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Net earnings	949,762)	1,127,904)	1,126,337)	680,714)	356,062)	333,684)
Deferred income tax expense (benefit)¹	(29,085)	(23,823)	2,535)	(13,061)	(2,557)	23,639)
Increase (decrease) in gift card and other deferred revenue²	94,675)	31,459)	74,606)	83,551)	(832)	(10,162)
Increase (decrease) in equity equivalents³	65,590)	7,636)	77,141)	70,490)	(3,389)	13,477)
Interest income (expense), net	(29,162)	(2,260)	1,865)	16,231)	8,853)	6,706)
Interest expense, operating lease liability⁴	52,844)	49,084)	41,096)	44,453)	50,255)	47,653)
Adjusted interest income (expense), net	23,682)	46,824)	42,961)	60,684)	59,108)	54,359)
Tax benefit of interest income (expense), net⁵	(4,973)	(9,833)	(9,022)	(12,744)	(12,413)	(11,415)
Adjusted interest income (expense), net, after taxes⁶	18,708)	36,991)	33,939)	47,941)	46,695)	42,944)
Net operating profit after taxes (NOPAT)	1,034,060)	1,172,531)	1,237,417)	799,145)	399,368)	390,105)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in gift card and other deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net earnings.

⁴ 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,390,621 × 3.80% = 52,844

⁵ 2024 Calculation
Tax benefit of interest income (expense), net = Adjusted interest income (expense), net × Statutory income tax rate
= 23,682 × 21.00% = 4,973

⁶ Addition of after taxes interest expense to net earnings.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Williams-Sonoma Inc. NOPAT decreased from 2022 to 2023 and from 2023 to 2024.

Williams-Sonoma Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Provision for income taxes	323,593)	372,778)	324,914)	213,752)	100,959)	95,563)
Less: Deferred income tax expense (benefit)	(29,085)	(23,823)	2,535)	(13,061)	(2,557)	23,639)
Add: Tax savings from interest income (expense), net	4,973)	9,833)	9,022)	12,744)	12,413)	11,415)
Cash operating taxes	357,651)	406,434)	331,401)	239,557)	115,929)	83,339)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Williams-Sonoma Inc. cash operating taxes increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Williams-Sonoma Inc., invested capital calculation (financing approach)

US$ in thousands

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Current debt	—)	—)	—)	299,350)	299,818)	—)
Long-term debt	—)	—)	—)	—)	—)	299,620)
Operating lease liability¹	1,390,621)	1,443,658)	1,284,248)	1,234,811)	1,322,502)	1,484,531)
Total reported debt & leases	1,390,621)	1,443,658)	1,284,248)	1,534,161)	1,622,320)	1,784,151)
Stockholders’ equity	2,127,861)	1,701,051)	1,664,207)	1,651,185)	1,235,860)	1,155,714)
Net deferred tax (assets) liabilities²	(107,482)	(78,988)	(55,266)	(58,741)	(45,222)	(41,525)
Gift card and other deferred revenue³	573,904)	479,229)	447,770)	373,164)	289,613)	290,445)
Equity equivalents⁴	466,422)	400,241)	392,504)	314,423)	244,391)	248,920)
Accumulated other comprehensive (income) loss, net of tax⁵	15,552)	13,809)	10,828)	7,117)	14,587)	11,073)
Adjusted stockholders’ equity	2,609,835)	2,115,101)	2,067,539)	1,972,725)	1,494,838)	1,415,707)
Construction in progress⁶	(93,229)	(61,455)	(19,112)	(3,046)	(7,076)	(7,205)
Invested capital	3,907,227)	3,497,304)	3,332,675)	3,503,840)	3,110,082)	3,192,653)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of gift card and other deferred revenue.

⁴ Addition of equity equivalents to stockholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Williams-Sonoma Inc. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Williams-Sonoma Inc., cost of capital calculations

Jan 28, 2024

	Capital (fair value)¹	Weights					Cost of capital
Equity²	18,916,324)	18,916,324)	÷	20,306,945)	=	0.93	0.93	×	19.66%	=	18.31%
Long-term debt³	—)	—)	÷	20,306,945)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	1,390,621)	1,390,621)	÷	20,306,945)	=	0.07	0.07	×	3.80% × (1 – 21.00%)	=	0.21%
Total:	20,306,945)					1.00					18.52%

Based on: 10-K (reporting date: 2024-01-28).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Jan 29, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	7,795,064)	7,795,064)	÷	9,238,722)	=	0.84	0.84	×	19.66%	=	16.59%
Long-term debt³	—)	—)	÷	9,238,722)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	1,443,658)	1,443,658)	÷	9,238,722)	=	0.16	0.16	×	3.40% × (1 – 21.00%)	=	0.42%
Total:	9,238,722)					1.00					17.01%

Based on: 10-K (reporting date: 2023-01-29).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Jan 30, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	10,630,071)	10,630,071)	÷	11,914,319)	=	0.89	0.89	×	19.66%	=	17.54%
Long-term debt³	—)	—)	÷	11,914,319)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	1,284,248)	1,284,248)	÷	11,914,319)	=	0.11	0.11	×	3.20% × (1 – 21.00%)	=	0.27%
Total:	11,914,319)					1.00					17.81%

Based on: 10-K (reporting date: 2022-01-30).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Jan 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	14,019,507)	14,019,507)	÷	15,553,668)	=	0.90	0.90	×	19.66%	=	17.72%
Long-term debt³	299,350)	299,350)	÷	15,553,668)	=	0.02	0.02	×	2.79% × (1 – 21.00%)	=	0.04%
Operating lease liability⁴	1,234,811)	1,234,811)	÷	15,553,668)	=	0.08	0.08	×	3.60% × (1 – 21.00%)	=	0.23%
Total:	15,553,668)					1.00					17.99%

Based on: 10-K (reporting date: 2021-01-31).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Feb 2, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	3,246,162)	3,246,162)	÷	4,868,482)	=	0.67	0.67	×	19.66%	=	13.11%
Long-term debt³	299,818)	299,818)	÷	4,868,482)	=	0.06	0.06	×	3.32% × (1 – 21.00%)	=	0.16%
Operating lease liability⁴	1,322,502)	1,322,502)	÷	4,868,482)	=	0.27	0.27	×	3.80% × (1 – 21.00%)	=	0.82%
Total:	4,868,482)					1.00					14.09%

Based on: 10-K (reporting date: 2020-02-02).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Feb 3, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	4,663,557)	4,663,557)	÷	6,447,708)	=	0.72	0.72	×	19.66%	=	14.22%
Long-term debt³	299,620)	299,620)	÷	6,447,708)	=	0.05	0.05	×	3.21% × (1 – 21.00%)	=	0.12%
Operating lease liability⁴	1,484,531)	1,484,531)	÷	6,447,708)	=	0.23	0.23	×	3.21% × (1 – 21.00%)	=	0.58%
Total:	6,447,708)					1.00					14.92%

Based on: 10-K (reporting date: 2019-02-03).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Williams-Sonoma Inc., economic spread ratio calculation, comparison to benchmarks

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	310,494)	577,742)	643,776)	168,859)	(38,696)	(86,274)
Invested capital²	3,907,227)	3,497,304)	3,332,675)	3,503,840)	3,110,082)	3,192,653)
Performance Ratio
Economic spread ratio³	7.95%	16.52%	19.32%	4.82%	-1.24%	-2.70%
Benchmarks
Economic Spread Ratio, Competitors⁴
Amazon.com Inc.	—	-4.48%	-15.73%	4.33%	1.69%	-1.65%
Home Depot Inc.	16.94%	20.89%	25.39%	16.21%	23.31%	23.73%
Lowe’s Cos. Inc.	21.44%	16.33%	24.54%	12.03%	8.16%	-1.38%
TJX Cos. Inc.	10.47%	7.45%	7.38%	-9.54%	8.16%	7.43%

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 310,494 ÷ 3,907,227 = 7.95%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Williams-Sonoma Inc. economic spread ratio deteriorated from 2022 to 2023 and from 2023 to 2024.

Williams-Sonoma Inc., economic profit margin calculation, comparison to benchmarks

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	310,494)	577,742)	643,776)	168,859)	(38,696)	(86,274)

Net revenues	7,750,652)	8,674,417)	8,245,936)	6,783,189)	5,898,008)	5,671,593)
Add: Increase (decrease) in gift card and other deferred revenue	94,675)	31,459)	74,606)	83,551)	(832)	(10,162)
Adjusted net revenues	7,845,327)	8,705,876)	8,320,542)	6,866,740)	5,897,176)	5,661,431)
Performance Ratio
Economic profit margin²	3.96%	6.64%	7.74%	2.46%	-0.66%	-1.52%
Benchmarks
Economic Profit Margin, Competitors³
Amazon.com Inc.	—	-2.52%	-8.21%	1.86%	0.66%	-0.74%
Home Depot Inc.	6.21%	7.34%	8.07%	6.10%	7.73%	7.50%
Lowe’s Cos. Inc.	6.44%	4.17%	6.67%	3.81%	3.02%	-0.47%
TJX Cos. Inc.	4.08%	3.04%	2.99%	-6.64%	3.66%	3.32%

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Economic profit. See details »

² 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × 310,494 ÷ 7,845,327 = 3.96%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Williams-Sonoma Inc. economic profit margin deteriorated from 2022 to 2023 and from 2023 to 2024.

Williams-Sonoma Inc. (NYSE:WSM)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin