We continue to skim corporate filings for interesting disclosures about coronavirus, and the Q1 2020 report just filed by Williams Sonoma ($WSM) did not disappoint.

Like other retailers, Williams Sonoma did report all the usual signs of calamity we’ve seen lately: store closures, inventory write-down, impairment charges, and so forth. But the numbers weren’t that awful, considering the grim state of retail these days; and the firm also provided decent disclosure about how it arrived at several important decisions.

First, store closures. In the 10-K Williams Sonoma filed on March 27, the company said it had closed 592 stores in the United States and Canada — out of 614 stores Williams Sonoma operates worldwide. In other words, the company pretty much closed its entire physical store footprint, which had accounted for 44 percent of company revenues in 2019.

As of the Q1 2020 filing on June 8, William Sonoma had reopened 350 of those closed stores. We don’t yet know how sales traffic is performing at those locations yet, since most of the stores opened after the company’s quarter end; presumably we’ll get a better sense of that with the next quarterly filing sometime after Labor Day.

Still, we do know that Williams Sonoma is moving to reopen its retail operations. Also, if 44 percent of 2019 revenue came from store sales, that means 56 percent came from other channels — and those other channels weren’t closed during the Covid-19 shutdowns.

Second, impairment charges. The company did record an impairment charge of $11.82 million related to property and equipment; another $11.3 million write-off of damaged inventory that couldn’t be sold elsewhere; and a $3.8 million charge on its operating lease right-of-use assets.

In total, however, that’s still only $26.9 in impairments, against assets at the end of Q4 2019 that totaled $4.05 billion. Plus, Williams Sonoma also tapped a $488 million line of credit when Covid-19 it, so the company’s pile of cash nearly doubled from $432 million in February to $861 million in June.

Third, goodwill impairment. Williams Sonoma carries about $85.3 million of goodwill on the balance sheet, mostly from a few acquisitions in the early and mid-2010s. The company did not declare any impairment to goodwill this quarter.

Why not? Read on…

We evaluated the need to test goodwill for potential impairment. Our most recently completed qualitative goodwill impairment assessment [conducted in November 2019] indicated that the fair values of our reporting units significantly exceeded their carrying values. Further, we currently do not expect the impact of COVID-19 to significantly affect the long-term estimates or assumptions of revenue and operating income growth, nor the long-term strategies of our brands, considered in our most recently completed goodwill assessment. Therefore, we currently do not consider the pandemic to be a triggering event requiring the testing of goodwill between annual tests.

In other words, goodwill assets looked good when Williams Sonoma last tested them in November 2019, and they still look good now, so management saw no need to conduct a formal (and painstaking) impairment test now. The company expects its goodwill to weather the COVID-19 storm.

Is that correct? Financial analysts need to judge that for themselves, but the company does stake out a defensible position. Then again, it also warned that prolonged economic difficulty “may lead to increased impairment risk in the future.” We’ll be curious to see how well that position bears out over the next few quarters.

Fourth, segment disclosures. Williams Sonoma operates stores under its own name, but it also operates as Pottery Barn, Pottery Barn Kids, West Elm, and a few other brand names overseas. How are they all doing? Take a look.

So three of the company’s five operating segments saw revenue improve from the year-ago period, despite coronavirus. Even in Pottery Barn, its biggest segment, sales declined only 2.5 percent from the year-ago period.

Cost of goods sold did rise by 3 percent, and ultimately operating income tumbled from $71.9 million in Q1 2019 to $46.5 million in Q1 2020.

Still, the company made a profit. Not every retailer can say the same.

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