Williams-Sonoma Inc. ( WSM Quick Quote WSM - Free Report) reported impressive earnings for second-quarter fiscal 2022 (ended Aug 1, 2022). The company’s earnings and revenues beat the Zacks Consensus Estimate and improved on a year-over-year basis, courtesy of strength across all brands along with the success of growth initiatives. Defying supply-chain woes, material and labor shortages and capacity limitations, revenues improved from the year-ago period on strong demand. Shares of this leading home furnishing retailer gained 1% in the after-hours trading session on Aug 24. Laura Alber, president and CEO of Williams-Sonoma, said, “I am very proud of this performance especially given the macroeconomic backdrop and the strong compares we were up against, all while delivering an impressive 41.1% comp on a two-year basis. And it is this continued outperformance that gives us the confidence to reiterate our 2022 guidance and longer-term outlook today.” Earnings & Revenues
Non-GAAP earnings of $3.87 per share surpassed the Zacks Consensus Estimate of $3.54 by 9.3%. The figure also increased 19.4% from $3.24 per share reported a year ago.
Revenues of $2.14 billion beat the consensus mark by 5.2% and grew 9.7% year over year. The impressive revenues were driven by strong growth across all brands. The company’s total comps increased 11.3% compared with 29.8% growth in the year-ago period. Comps in the Pottery Barn brand grew 21.5% compared with 29.6% growth in the prior-year quarter. Comps at West Elm increased 6.1% compared with 51.1% growth registered in the prior-year quarter. Pottery Barn Kids and Teen’s comps grew 5.3% versus 18% growth in the year-ago quarter. Williams-Sonoma brand’s comps improved 0.5% compared with 6.4% growth in the year-ago quarter. Operating Highlights
The gross margin was 43.5%, down 60 basis points (bps) from the year-ago period. The downside was primarily caused by higher shipping and freight costs, partially offset by merchandise margin expansion.
Non-GAAP selling, general and administrative expenses were 26.4% of net revenues compared with 27.3% in the year-ago quarter, reflecting a decrease of 90 bps. Furthermore, the non-GAAP operating margin expanded 40 bps from the year-ago period to 17.1% for the quarter. Financials
As of Jul 31, 2022, Williams-Sonoma reported cash and cash equivalents of $124.9 million compared with $850.3 million at fiscal 2021-end. Net cash provided by operating activities totaled $383.6 million during the first six months of 2022, down $475.7 million in the year-ago quarter.
Williams-Sonoma rewarded shareholders in the form of dividends (more than $54 million) and share repurchases (more than $265 million) during the quarter. Fiscal 2022 Guidance
The company remains optimistic about business strength and continued success of new initiatives and competitive advantages that are rooted in key differentiators like in-house design, digital-first channel strategy, and values.
WSM expects fiscal 2022 net revenues to grow in mid-to-high single digits. It also expects the operating margin to be relatively in line with fiscal 2021. Further, WSM projects revenues to increase $10 billion over the long term (by fiscal 2024). Zacks Rank
Williams-Sonoma currently carries a Zacks Rank #3 (Hold). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here 3 Retail-Wholesale Stocks Hogging the Limelight
Some better-ranked stocks in the Zacks
Retail-Wholesale sector are Potbelly Corporation ( PBPB Quick Quote PBPB - Free Report) , Arcos Dorados Holdings Inc. ( ARCO Quick Quote ARCO - Free Report) and Dollar Tree Inc. ( DLTR Quick Quote DLTR - Free Report) . Potbelly has a Zacks Rank #2 (Buy), at present. PBPB has a trailing four-quarter earnings surprise of 22.2%, on average. Shares of PBPB have declined 11.7% in the past year. The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 17.5% and 100%, respectively, from the corresponding year-ago period’s levels. Arcos Dorados carries a Zacks Rank #2. ARCO has a long-term earnings growth of 34.4%. Shares of the company have increased 38.2% in the past year. The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels. Dollar Tree carries a Zacks Rank #2. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. The stock has gained 77.5% in the past year. The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the corresponding year-ago period’s levels.