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Williams Sonoma (WSM) Partners Capital One, Unveils New Card

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WilliamsSonoma, Inc. (WSM - Free Report) recently announced a collaboration with Capital One Financial (“COF”) to launch the new co-brand and private-label credit card program.

Per the agreement, Capital One will acquire the existing portfolio of Williams-Sonoma credit card accounts, subject to waiver of customary closing conditions. Also, it will act as exclusive long-term credit issuing partner.

In this regard, president and CEO of Williams Sonoma, Laura Alber, said, "Our partnership with Capital One will allow us to also provide enhanced rewards to our cardmembers, enabling them to earn and redeem across our family of brands."

Notably, the association will cover brands like Williams Sonoma, Pottery Barn, Pottery Barn Teen, Pottery Barn Kids, West Elm and Mark & Graham.

Backed by Visa payment network, the company expects to launch the new credit cards and loyalty enhancements before the end of 2021.

Focus on Cross Brand Initiatives

Williams-Sonoma is the number one on-pure-play digital retailer in home furnishing and one of the top 25 retailers in the United States across all industries.

The company's products representing distinct merchandise strategies — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, and Mark and Graham — are marketed through e-commerce websites, direct-mail catalogs and retail stores. All these brands are part of the key rewards and free-to-join loyalty programs that offer members exclusive benefits across the Williams-Sonoma family of brands.

Nonetheless, the company is focused on enhancing customer experience through technology innovation and operational improvement. In order to drive brand awareness and increase customer engagement as well as cross-selling opportunities, the company shifted its advertising spend toward social media campaigns and in cross-brand initiatives.

Notably, cross-brand initiatives such as The Key, Design Crew Room Planner and The One Registry are expected to be incremental growth drivers for all its brands in fiscal 2021 and beyond.

Share Performance

Williams-Sonoma’s shares have surged 59.8% in the past six months compared with the industry’s 47.1% rally. The company has been benefitting from continued enhancement of e-commerce channel, optimization of supply chain and transformation efforts with respect to the retail fleet. Going forward, encouraging macro trends and disciplined cost control as well as higher merchandise and occupancy leverage are likely to benefit the company. Also, earnings estimates for 2021 have moved up over the past 30 days, depicting analysts’ optimism regarding the stock’s growth potential.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

Williams-Sonoma carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space include At Home Group Inc. (HOME - Free Report) , The Lovesac Company (LOVE - Free Report) and Fortune Brands Home & Security, Inc. (FBHS - Free Report) in the Zacks Retail - Home Furnishings industry, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

At Home has a long-term expected earnings per share (three-to-five years) growth rate of 36.8%.

Lovesac has a trailing four-quarter earnings surprise of 118%, on average.

Fortune Brands’ earnings for 2021 are expected to surge 34.8%.

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