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Why Is Williams-Sonoma (WSM) Up 1.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Williams-Sonoma (WSM - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Williams-Sonoma due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Williams-Sonoma Q2 Earnings Top, Up on Margin Forecast
Williams-Sonoma reported mixed results for second-quarter fiscal 2023 (ended Jul 30, 2023). Earnings beat the Zacks Consensus Estimate but revenues missed the same. Both the metrics declined year over year. The downside was primarily due to the increasing promotional environment and softening industry metrics.
Earnings, Revenues & Comps Discussion
Non-GAAP earnings per share (EPS) of $3.12 surpassed the Zacks Consensus Estimate of $2.72 by 14.7% but declined 19.4% from $3.87 reported a year ago.
Revenues of $1.86 billion missed the consensus mark of $1.97 billion and decreased 12.9% year over year.
Comps fell 11.9% versus 11.3% growth in the year-ago period. Our model predicted comps to decline 6% in the quarter.
Comps at West Elm brand decreased 20.8% versus 6.1% growth. Comps at Pottery Barn dipped 10.6% against a 21.5% rise a year ago. Williams-Sonoma comps decreased 0.7% against 0.5% growth registered in the prior-year quarter. Pottery Barn Kids and Teens registered comps decline of 9% against 5.3% growth reported in the prior-year quarter.
Operating Highlights
Adjusted gross margin was 40.7%, down 280 basis points (bps) from the year-ago period. The decline was due to higher shipping and freight costs, as well as 190 bps increased occupancy costs during the reported period.
Non-GAAP selling, general and administrative expenses were 26.1% of net revenues (below our projection of 26.6%), reflecting an improvement of 30 bps. Furthermore, the non-GAAP operating margin contracted 250 bps from the year-ago period to 14.6% for the quarter.
Financials
As of Jul 30, 2023, Williams-Sonoma reported cash and cash equivalents of $514.4 million compared with $367.3 million at the fiscal 2022-end. Net cash from operating activities totaled $715 million in the first six months of fiscal 2023 compared with $383.6 million a year ago.
Guidance Updated
WSM anticipates fiscal 2023 net revenues to decline between 5% and 10%. The company now expects its operating margin to be 15-16% versus earlier expectations of 14-15%.
Further, for the long term, WSM still projects mid-to-high single-digit annual net revenue growth and an operating margin above 15% in the long term.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 6.92% due to these changes.
VGM Scores
Currently, Williams-Sonoma has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Williams-Sonoma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Williams-Sonoma (WSM) Up 1.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Williams-Sonoma (WSM - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Williams-Sonoma due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Williams-Sonoma Q2 Earnings Top, Up on Margin Forecast
Williams-Sonoma reported mixed results for second-quarter fiscal 2023 (ended Jul 30, 2023). Earnings beat the Zacks Consensus Estimate but revenues missed the same. Both the metrics declined year over year. The downside was primarily due to the increasing promotional environment and softening industry metrics.
Earnings, Revenues & Comps Discussion
Non-GAAP earnings per share (EPS) of $3.12 surpassed the Zacks Consensus Estimate of $2.72 by 14.7% but declined 19.4% from $3.87 reported a year ago.
Revenues of $1.86 billion missed the consensus mark of $1.97 billion and decreased 12.9% year over year.
Comps fell 11.9% versus 11.3% growth in the year-ago period. Our model predicted comps to decline 6% in the quarter.
Comps at West Elm brand decreased 20.8% versus 6.1% growth. Comps at Pottery Barn dipped 10.6% against a 21.5% rise a year ago. Williams-Sonoma comps decreased 0.7% against 0.5% growth registered in the prior-year quarter. Pottery Barn Kids and Teens registered comps decline of 9% against 5.3% growth reported in the prior-year quarter.
Operating Highlights
Adjusted gross margin was 40.7%, down 280 basis points (bps) from the year-ago period. The decline was due to higher shipping and freight costs, as well as 190 bps increased occupancy costs during the reported period.
Non-GAAP selling, general and administrative expenses were 26.1% of net revenues (below our projection of 26.6%), reflecting an improvement of 30 bps. Furthermore, the non-GAAP operating margin contracted 250 bps from the year-ago period to 14.6% for the quarter.
Financials
As of Jul 30, 2023, Williams-Sonoma reported cash and cash equivalents of $514.4 million compared with $367.3 million at the fiscal 2022-end. Net cash from operating activities totaled $715 million in the first six months of fiscal 2023 compared with $383.6 million a year ago.
Guidance Updated
WSM anticipates fiscal 2023 net revenues to decline between 5% and 10%. The company now expects its operating margin to be 15-16% versus earlier expectations of 14-15%.
Further, for the long term, WSM still projects mid-to-high single-digit annual net revenue growth and an operating margin above 15% in the long term.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 6.92% due to these changes.
VGM Scores
Currently, Williams-Sonoma has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Williams-Sonoma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.