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Williams-Sonoma (WSM) Q2 Earnings & Revenues Top, Shares Up
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Williams-Sonoma Inc.'s (WSM - Free Report) earnings beat streak continued for the fourth time in second-quarter fiscal 2017. The company reported adjusted earnings of 61 cents per share, beating the Zacks Consensus Estimate of 59 cents by 3.4%.
Shares of the company rallied 6.6% in after-hour trading on Aug 23, after the company bettered estimates in the quarter.
The company’s quarterly adjusted earnings per share also increased 5.2% from the year-ago level.
Net revenue of $1.202 billion came in line with the Zacks Consensus Estimate but improved 3.7% year over year. The upside primarily reflects the success in driving the top-line growth through innovations and operational excellence.
Comparable Brand Revenues
Comparable brand revenues increased 2.8% in the quarter, significantly higher than the 0.1% increase recorded in the preceding quarter and 0.6% in the year-ago period. Comparable brand revenues for all the brands increased, except Pottery Barn Kids.
Pottery Barn’s comparable brand revenues were up 1.2% against a 4.8% decrease in the prior-year quarter, which management believes is due to the initiatives undertaken by the team across all areas of the business from product to value to marketing.
The company’s namesake brand’s comparable brand revenues were up 1.9%, better than 0.0% growth in the prior-year quarter.
West Elm’s comparable brand revenues increased 10.1% compared with the 15.8% rise in the prior-year quarter.
Pottery Barn Kids’ comparable brand revenues decreased 3.9% compared with 0.1% growth in the year-ago quarter.
PBteen’s comparable brand revenues registered 0.2% growth against a 5.2% plunge in the year-ago quarter.
Segment Details
e-commerce: The segment reported net revenue of $631 million in quarter, up 5.2% year over year. The growth came from Williams-Sonoma brand, the company’s newer businesses Rejuvenation and Mark and Graham and its owned international operations almost all of which had double-digit growth.
Retail: The segment reported net revenue of $471 million in the reported quarter, up 2.1% year over year, primarily driven by West Elm and Pottery Barn. The upside reflects the continued success the company has experienced across its various retail initiatives, including its in-home design services and store remodels.
Margin Details
Operating margin was 6.8% in the quarter, down 40 basis points (bps) from the year-ago quarter.
Selling, general and administrative (SG&A) expenses were 28.4% of net revenue or $341 million in the quarter, reflecting an increase of 20 bps year over year.
Financials
Williams-Sonoma has cash and cash equivalents of $103.1 million as of Jul 30, 2017 compared with $111.1 million as of Jul 31, 2016.
During the quarter, the company repurchased 1,160,381 shares of common stock at an average cost of $47.41 per share and a total cost of approximately $55 million. William-Sonoma has approximately $317 million remaining under its present stock repurchase authorization as of Jul 30, 2017.
Third-Quarter Guidance
Williams-Sonoma expects third-quarter fiscal 2017 earnings per share in the band of 80 cents to 87 cents.
The company expects net revenue in the range of $1.270 billion to $1.310 billion. Comparable brand revenues are likely to grow in the 2- 5% range.
Fiscal 2017 Guidance
The company maintained its previously stated fiscal 2017 outlook.
Williams-Sonoma expects earnings in the range of $3.45-$3.65 per share.
Net revenue is projected in the range $5.165-$5.265 billion.
Comparable brand revenues are likely to grow in the 1-3% range. The company expects non-GAAP operating margin in the range of 9.4-9.6%. Income tax rate is projected between 36.5% and 37.5%. Capital expenditure is expected in the $200-$220 million range for the year.
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
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Williams-Sonoma (WSM) Q2 Earnings & Revenues Top, Shares Up
Williams-Sonoma Inc.'s (WSM - Free Report) earnings beat streak continued for the fourth time in second-quarter fiscal 2017. The company reported adjusted earnings of 61 cents per share, beating the Zacks Consensus Estimate of 59 cents by 3.4%.
Shares of the company rallied 6.6% in after-hour trading on Aug 23, after the company bettered estimates in the quarter.
The company’s quarterly adjusted earnings per share also increased 5.2% from the year-ago level.
Net revenue of $1.202 billion came in line with the Zacks Consensus Estimate but improved 3.7% year over year. The upside primarily reflects the success in driving the top-line growth through innovations and operational excellence.
Comparable Brand Revenues
Comparable brand revenues increased 2.8% in the quarter, significantly higher than the 0.1% increase recorded in the preceding quarter and 0.6% in the year-ago period. Comparable brand revenues for all the brands increased, except Pottery Barn Kids.
Pottery Barn’s comparable brand revenues were up 1.2% against a 4.8% decrease in the prior-year quarter, which management believes is due to the initiatives undertaken by the team across all areas of the business from product to value to marketing.
The company’s namesake brand’s comparable brand revenues were up 1.9%, better than 0.0% growth in the prior-year quarter.
West Elm’s comparable brand revenues increased 10.1% compared with the 15.8% rise in the prior-year quarter.
Pottery Barn Kids’ comparable brand revenues decreased 3.9% compared with 0.1% growth in the year-ago quarter.
PBteen’s comparable brand revenues registered 0.2% growth against a 5.2% plunge in the year-ago quarter.
Segment Details
e-commerce: The segment reported net revenue of $631 million in quarter, up 5.2% year over year. The growth came from Williams-Sonoma brand, the company’s newer businesses Rejuvenation and Mark and Graham and its owned international operations almost all of which had double-digit growth.
Retail: The segment reported net revenue of $471 million in the reported quarter, up 2.1% year over year, primarily driven by West Elm and Pottery Barn. The upside reflects the continued success the company has experienced across its various retail initiatives, including its in-home design services and store remodels.
Margin Details
Operating margin was 6.8% in the quarter, down 40 basis points (bps) from the year-ago quarter.
Selling, general and administrative (SG&A) expenses were 28.4% of net revenue or $341 million in the quarter, reflecting an increase of 20 bps year over year.
Financials
Williams-Sonoma has cash and cash equivalents of $103.1 million as of Jul 30, 2017 compared with $111.1 million as of Jul 31, 2016.
During the quarter, the company repurchased 1,160,381 shares of common stock at an average cost of $47.41 per share and a total cost of approximately $55 million. William-Sonoma has approximately $317 million remaining under its present stock repurchase authorization as of Jul 30, 2017.
Third-Quarter Guidance
Williams-Sonoma expects third-quarter fiscal 2017 earnings per share in the band of 80 cents to 87 cents.
The company expects net revenue in the range of $1.270 billion to $1.310 billion. Comparable brand revenues are likely to grow in the 2- 5% range.
Fiscal 2017 Guidance
The company maintained its previously stated fiscal 2017 outlook.
Williams-Sonoma expects earnings in the range of $3.45-$3.65 per share.
Net revenue is projected in the range $5.165-$5.265 billion.
Comparable brand revenues are likely to grow in the 1-3% range. The company expects non-GAAP operating margin in the range of 9.4-9.6%. Income tax rate is projected between 36.5% and 37.5%. Capital expenditure is expected in the $200-$220 million range for the year.
Zacks Rank & Stocks to Consider
Williams-Sonoma carries a Zacks Rank #2 (Buy).
Other stocks in the Retail-Wholesale sector include Kirkland's, Inc. (KIRK - Free Report) , Tempur Sealy International, Inc. (TPX - Free Report) and Marks and Spencer Group plc (MAKSY - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kirkland's has a VGM Score of “A” and 3-5 year expected EPS growth rate of 15%.
Tempur Sealy has a solid EPS surprise history, surpassing earnings estimates in each of the trailing four quarters, the average beat being 14.61%.
Marks and Spencer also has a VGM Score of A.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise | Williams-Sonoma, Inc. Quote
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
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