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Williams-Sonoma (WSM) Q1 Earnings Beat, Margins Down Y/Y

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Williams-Sonoma Inc. (WSM - Free Report) reported mixed results for first-quarter fiscal 2023 (ended Apr 30, 2023). Earnings surpassed the Zacks Consensus Estimate, but revenues missed the same.

However, earnings and revenues declined on a year-over-year basis. Shares of this leading home furnishings retailer fell 0.28% on May 23.

Earnings, Revenues & Comps Discussion

Non-GAAP earnings of $2.64 per share surpassed the Zacks Consensus Estimate of $2.41 by 9.5% but declined 24.6% from $3.50 reported a year ago.

Revenues of $1.76 billion missed the consensus mark of $1.79 billion by 1.7% and decreased 7.2% year over year.

Williams-Sonoma, Inc. Price, Consensus and EPS Surprise


Williams-Sonoma, Inc. Price, Consensus and EPS Surprise

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


Comps fell 6% versus 9.5% growth in the year-ago period. Comps at West Elm brand decreased by 15.8% versus 12.8% growth. Williams-Sonoma comps decreased 4.4% compared with a 2.2% fall registered in the prior-year quarter. Comps at Pottery Barn dipped 0.4% against a 14.6% rise a year ago. Pottery Barn Kids and Teens registered comps decline of 3.3% compared with 3.1% reported in the prior-year quarter.

Operating Highlights

Adjusted gross margin was 38.6%, down 520 basis points (bps) from the year-ago period. The decline was due to higher inbound and outbound shipping and freight costs, as well as 160 bps increased occupancy costs during the reported period.

Non-GAAP selling, general and administrative expenses were 25.7% of net revenues, reflecting an improvement of 100 bps. Furthermore, non-GAAP operating margin contracted 420 bps from the year-ago period to 12.9% for the quarter.


As of Apr 30, 2023, Williams-Sonoma reported cash and cash equivalents of $297.3 million compared with $367.3 million at fiscal 2022-end. Net cash provided by operating activities totaled $342.5 million in the first three months of fiscal 2023 compared with $184.5 million a year ago.

Williams-Sonoma returned nearly $358 million to shareholders through dividends ($58 million) and share repurchases (approximately $300 million).

Guidance Maintained

WSM anticipates fiscal 2023 net revenues to range between a decline of 3% and a growth of 3%. It also expects its operating margin to be 14-15%.

Further, WSM projects mid-to-high single-digit annual net revenue growth and an operating margin above 15% in the long term (by fiscal 2024).

Zacks Rank & Recent Releases

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.

Jack in the Box Inc. (JACK - Free Report) reported solid second-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.

Darin Harris, Jack in the Box’s chief executive officer, stated, "The momentum in our business continued throughout the second quarter, reflected in outstanding sales, positive net unit growth, improved margin performance and the signing of a development agreement for expansion into Mexico. Over the last year we have been focused on the execution of our strategy and the results are beginning to show.”

The Wendy's Company (WEN - Free Report) reported impressive first-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.

President and chief executive officer Todd Penegor stated, "We delivered our sixth consecutive quarter of double-digit global same-restaurant sales growth on a two-year basis driven in part by our compelling marketing programs, continued operational improvements and the significant acceleration of our digital business. Our successful start to the year and clear alignment behind our strategic pillars give us confidence that we will deliver meaningful global growth for the remainder of 2023 and beyond."

The Cheesecake Factory Incorporated (CAKE - Free Report) reported first-quarter fiscal 2023 results, wherein earnings beat the Zacks Consensus Estimate, but revenues missed the mark. The top and bottom lines rose year over year. Incremental pricing and cost-saving efforts resulted in the uptick despite continued inflation, volatility and a dynamic operating environment.

David Overton, chairman and CEO of Cheesecake Factory, stated, “We were pleased with our first quarter performance highlighted by comparable sales growth across our portfolio of concepts. We delivered a solid start to the year with revenue finishing in-line with our expectations and adjusted net income margin at the high end of our guidance range.”

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