Williams-Sonoma Inc. (WSM - Free Report) reported earnings beat in first-quarter fiscal 2017. Shares of the company rallied 9.4% in after-hour trading on May 24, after the company bettered estimates in the quarter.
The company’s first-quarter fiscal 2017 adjusted earnings per share (after adjusting for severance costs and pretax expenses) of 51 cents beat the Zacks Consensus Estimate of 48 cents by 6.3%. Earnings, however, declined 3.8% from the year-ago level.
Net revenue of $1.112 billion was slightly above the Zacks Consensus Estimate of $1.107 billion. Net sales increased 1.2% year over year on strong growth at West Elm and Williams-Sonoma brands, along with newer businesses like Rejuvenation and Mark and Graham and international businesses.
Comparable Brand Revenues
Comparable brand revenues increased 0.1% in the quarter, significantly lower than the 4.5% increase recorded in the preceding quarter. Comparable brand revenues for all the brands declined, except West Elm and William Sonoma.
Williams-Sonoma’s comparable brand revenues were up 3.2%, lower than 3.5% growth recorded in the prior-year quarter.
West Elm’s comparable brand revenues increased 6%, compared with the 19% rise in the prior-year quarter.
Pottery Barn’s comparable brand revenues were down 1.4% against a 0.2% increase in the prior-year quarter, which management believes is due to inventory outages across several key categories. However, the figure improved sequentially.
Pottery Barn Kids’ comparable brand revenues decreased 5.7%, compared with 1.7% in the year-ago quarter.
PBteen’s comparable brand revenues decreased 14.3%, as against a 1.9% increase in the year-ago quarter.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Segment Details
E-commerce: The segment reported net revenue of $581 million in quarter, up 0.7% year over year.
Retail: The segment reported net revenue of $531 million in the reported quarter, up 1.8% year over year, primarily driven by West Elm and Pottery Barn.
Margin Details
Adjusted operating margin was 6.1% in the quarter, down 90 basis points (bps) from the year-ago quarter.
Adjusted selling, general and administrative (SG&A) expenses were 29.5% of net revenue or $329 million in the quarter, reflecting an increase of 70 bps year over year.
Financials
Williams-Sonoma has cash and cash equivalents of $93.9 million as of Apr 30, 2017, compared with $99.2 million as of May 1, 2016.
Cash returned to stockholders in the quarter totaled $72 million, comprising $38 million in stock repurchases and $34 million in dividends. As of Apr 30, 2017, the company had approximately $372 million remaining under the current stock repurchase authorization.
Second-Quarter Guidance
Williams-Sonoma expects second-quarter fiscal 2017 earnings per share in the band of 55 cents to 61 cents.
The company expects net revenue in the range of $1.195 billion to $1.230 billion. Comparable brand revenues are likely to grow in the 2% to 5% range.
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 operating margin in the range of 9.4–9.6%. Income tax rate is projected between 36.5% and 37.5%.
Zacks Rank & Stocks to Consider
Williams-Sonoma carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Retail-Wholesale sector include Papa Murphy's Holdings, Inc. (FRSH - Free Report) , Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) and Del Taco Restaurants, Inc. .
Papa Murphy's and Red Robin Gourmet sport a Zacks Rank #1 (Strong Buy). Full-year 2017 earnings for Papa Murphy's are expected to increase 40.6%, while that of Red Robin Gourmet is likely to rise 2.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Del Taco, a Zacks Rank #2 (Buy) stock, is expected to witness 5.8% growth in full-year 2017 earnings.
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Williams-Sonoma Inc. (WSM - Free Report) reported earnings beat in first-quarter fiscal 2017. Shares of the company rallied 9.4% in after-hour trading on May 24, after the company bettered estimates in the quarter.
The company’s first-quarter fiscal 2017 adjusted earnings per share (after adjusting for severance costs and pretax expenses) of 51 cents beat the Zacks Consensus Estimate of 48 cents by 6.3%. Earnings, however, declined 3.8% from the year-ago level.
Net revenue of $1.112 billion was slightly above the Zacks Consensus Estimate of $1.107 billion. Net sales increased 1.2% year over year on strong growth at West Elm and Williams-Sonoma brands, along with newer businesses like Rejuvenation and Mark and Graham and international businesses.
Comparable Brand Revenues
Comparable brand revenues increased 0.1% in the quarter, significantly lower than the 4.5% increase recorded in the preceding quarter. Comparable brand revenues for all the brands declined, except West Elm and William Sonoma.
Williams-Sonoma’s comparable brand revenues were up 3.2%, lower than 3.5% growth recorded in the prior-year quarter.
West Elm’s comparable brand revenues increased 6%, compared with the 19% rise in the prior-year quarter.
Pottery Barn’s comparable brand revenues were down 1.4% against a 0.2% increase in the prior-year quarter, which management believes is due to inventory outages across several key categories. However, the figure improved sequentially.
Pottery Barn Kids’ comparable brand revenues decreased 5.7%, compared with 1.7% in the year-ago quarter.
PBteen’s comparable brand revenues decreased 14.3%, as against a 1.9% increase in the year-ago quarter.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Segment Details
E-commerce: The segment reported net revenue of $581 million in quarter, up 0.7% year over year.
Retail: The segment reported net revenue of $531 million in the reported quarter, up 1.8% year over year, primarily driven by West Elm and Pottery Barn.
Margin Details
Adjusted operating margin was 6.1% in the quarter, down 90 basis points (bps) from the year-ago quarter.
Adjusted selling, general and administrative (SG&A) expenses were 29.5% of net revenue or $329 million in the quarter, reflecting an increase of 70 bps year over year.
Financials
Williams-Sonoma has cash and cash equivalents of $93.9 million as of Apr 30, 2017, compared with $99.2 million as of May 1, 2016.
Cash returned to stockholders in the quarter totaled $72 million, comprising $38 million in stock repurchases and $34 million in dividends. As of Apr 30, 2017, the company had approximately $372 million remaining under the current stock repurchase authorization.
Second-Quarter Guidance
Williams-Sonoma expects second-quarter fiscal 2017 earnings per share in the band of 55 cents to 61 cents.
The company expects net revenue in the range of $1.195 billion to $1.230 billion. Comparable brand revenues are likely to grow in the 2% to 5% range.
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 operating margin in the range of 9.4–9.6%. Income tax rate is projected between 36.5% and 37.5%.
Zacks Rank & Stocks to Consider
Williams-Sonoma carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Retail-Wholesale sector include Papa Murphy's Holdings, Inc. (FRSH - Free Report) , Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) and Del Taco Restaurants, Inc. .
Papa Murphy's and Red Robin Gourmet sport a Zacks Rank #1 (Strong Buy). Full-year 2017 earnings for Papa Murphy's are expected to increase 40.6%, while that of Red Robin Gourmet is likely to rise 2.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Del Taco, a Zacks Rank #2 (Buy) stock, is expected to witness 5.8% growth in full-year 2017 earnings.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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