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Williams-Sonoma (WSM) Queued for Q4 Earnings: Factors to Note

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Williams-Sonoma, Inc. (WSM - Free Report) is scheduled to release fourth-quarter fiscal 2022 results on Mar 16, before the market opens.

In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.6%, but revenues surpassed 1.6%. On a year-over-year basis, earnings and revenues of this multi-channel specialty retailer of premium quality home products improved 12% and 7.1%, respectively.

Markedly, Williams-Sonoma reported better-than-expected earnings in three of the last four quarters with the average being 9.6%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased to $5.41 from $5.39 over the past seven days. That said, the estimated figure indicates a fall of 0.2% from $5.42 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $2.59 billion, suggesting 3.4% growth from the year-ago figure of $2.5 billion.

Factors to Note

Strength across all brands, along with rising e-commerce growth, accelerating growth initiatives and operational improvements, are expected to have contributed to Williams-Sonoma’s net sales in fourth-quarter fiscal 2022. Notably, the accelerating online sales trend is expected to have meaningfully added to its top line in the to-be-reported quarter.

Williams-Sonoma, Inc. Price and EPS Surprise


Williams-Sonoma, Inc. Price and EPS Surprise

Williams-Sonoma, Inc. price-eps-surprise | Williams-Sonoma, Inc. Quote


The multi-channel, multi-brand platform, strong e-commerce growth, solid execution of strategic initiatives, digital leadership, product innovation, retail transformation and operational excellence across businesses are also expected to have provided some support to the top line. Also, cross-brand initiatives are expected to have positively contributed to consolidated comps to some extent.

However, supply-chain disruptions and rising raw material and labor costs are likely to have weighed on its quarterly performance.

Importantly, slowing discretionary demand conditions, along with the slowing macroeconomic (particularly housing) outlook and excess inventory industry, are expected to weigh on WSM’s bottom-line results. Also, key leading indicators for WSM’s business, like existing home sales, are still depicting worrisome pictures. Softening category demand owing to inflationary pressure and macro and geopolitical concerns has been weighing on consumers’ capacity to spend on discretionary products.


What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Williams-Sonoma this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP is 0.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Williams-Sonoma currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Retail-Wholesale Releases

Beacon Roofing Supply, Inc. (BECN - Free Report) reported lower-than-expected results for fourth-quarter 2022. Both earnings and revenues missed the respective Zacks Consensus Estimate after beating in the preceding four quarters. Revenues increased, but earnings declined on a year-over-year basis.

In the first quarter of 2023, BECN expects net sales to increase approximately 5% on a year-over-year basis. The gross margin is expected to be 25.5%.

Papa John’s International, Inc. (PZZA - Free Report) reported fourth-quarter fiscal 2022 results with earnings and revenues beating the Zacks Consensus Estimate. However, both the top and bottom lines declined on a year-over-year basis.

PZZA cited a challenging macroeconomic environment, including softening economic conditions (in the U.K.), food and wage inflation and high energy prices. The company anticipates international comp sales to remain under pressure throughout 2023.  

The Cheesecake Factory Incorporated (CAKE - Free Report) reported fourth-quarter fiscal 2022 results, wherein earnings met the Zacks Consensus Estimate but revenues missed the same. The top and bottom lines rose year over year, courtesy of incremental pricing and cost-saving efforts despite continued inflation, volatility and a dynamic operating environment.

David Overton, chairman and CEO of Cheesecake Factory, stated, “During the quarter, we opened eight new restaurants and successfully implemented incremental pricing to support our stated objective of recovering our operating margins. We believe the strong consumer demand we experienced at our new restaurant openings and continued positive sales trends following our pricing actions demonstrate the strength and resilience of our concepts.”

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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