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In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 14.7% but decreased by 19.4% year over year. Revenues of this multi-channel specialty retailer of premium-quality home products lagged the consensus mark by 5.2% and declined by 12.9%.
Williams-Sonoma reported better-than-expected earnings in three of the last four quarters, the average being 6.1%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has increased to $3.37 from $3.35 over the past 30 days. The estimated figure indicates a fall of 9.4% from $3.72 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $1.96 billion, suggesting a 10.7% decline from the year-ago figure of $2.19 billion.
Slowing discretionary demand conditions, a slow macroeconomic outlook and excess inventory in the industry are expected to weigh on WSM’s fiscal third-quarter results. Softening category demand due to inflationary pressure and macro and geopolitical concerns has been weighing on consumers’ capacity to spend on discretionary products.
WSM is reducing its advertising efforts and aiming to uphold stable pricing in a fiercely competitive market. This strategy is intensifying the decline in market share, impacting not only its main growth brand, West Elm (representing about 26% of sales), but also its core Pottery Barn brand (representing around 41% of sales).
However, strength across all brands, rising e-commerce growth, accelerating growth initiatives and operational improvements are expected to have somewhat contributed to Williams-Sonoma’s net sales in the third quarter of fiscal 2023. The accelerating trend in online sales is also expected to have aided its top line in the to-be-reported quarter.
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 supported the top line. Also, cross-brand initiatives are expected to have positively contributed to consolidated comps to some extent.
However, higher input costs and increased expenses for ocean freight, detention and demurrage due to supply-chain disruptions and global inflation pressures are likely to have weighed on its to-be-reported quarterly performance.
We expect Pottery Barn Kids and Teen’s comps growth to be at negative 3.2%. The same had declined 4.8% a year ago. In the second quarter of fiscal 2023, comps were negative 9%.
Our model predicts Pottery Barn’s comps to decline 8.7% year over year. The same improved 19.6% a year ago. In the second quarter of fiscal 2023, comps were negative 10.6%.
Our model predicts West Elm’s comps to decline 19.3%. The metric witnessed 4.2% growth a year ago but declined 20.8% in the last reported quarter.
We expect the namesake brand’s comps to be up 1%. The metric witnessed 1.5% growth a year ago and negative 0.7% in the previously reported quarter.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Williams-Sonoma this time. 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. However, that is not the case here, as elaborated below.
Earnings ESP: Williams-Sonoma has an Earnings ESP of -1.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies in the Zacks Retail-Wholesale sector which, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Costco (COST - Free Report) currently has an Earnings ESP of +4.26% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share (EPS) of $3.43 suggests a rise of 10.7% from a year ago.
The consensus estimate for revenues is pegged at $57.69 billion, hinting at an increase of 6% from the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +2.08% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter fiscal 2023 EPS of $1.21 indicates 21% growth from the year-ago levels.
The consensus mark for revenues is pegged at $4.83 billion, implying a 5.8% jump from the prior-year figure. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart (WMT - Free Report) currently has an Earnings ESP of +0.63% and carries a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter fiscal 2024 EPS of $1.51 suggests a 0.7% gain from the year-ago quarter.
The consensus estimate for revenues is pegged at $159.2 billion, which indicates a climb of 4.2% from the prior-year number. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
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Williams-Sonoma (WSM) to Post Q3 Earnings: What's in Store?
Williams-Sonoma, Inc. (WSM - Free Report) is scheduled to release third-quarter fiscal 2023 results on Nov 16 before market open.
In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 14.7% but decreased by 19.4% year over year. Revenues of this multi-channel specialty retailer of premium-quality home products lagged the consensus mark by 5.2% and declined by 12.9%.
Williams-Sonoma reported better-than-expected earnings in three of the last four quarters, the average being 6.1%.
Trend in Estimate Revision
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has increased to $3.37 from $3.35 over the past 30 days. The estimated figure indicates a fall of 9.4% from $3.72 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $1.96 billion, suggesting a 10.7% decline from the year-ago figure of $2.19 billion.
Williams-Sonoma, Inc. Price and EPS Surprise
Williams-Sonoma, Inc. price-eps-surprise | Williams-Sonoma, Inc. Quote
Factors to Note
Slowing discretionary demand conditions, a slow macroeconomic outlook and excess inventory in the industry are expected to weigh on WSM’s fiscal third-quarter results. Softening category demand due to inflationary pressure and macro and geopolitical concerns has been weighing on consumers’ capacity to spend on discretionary products.
WSM is reducing its advertising efforts and aiming to uphold stable pricing in a fiercely competitive market. This strategy is intensifying the decline in market share, impacting not only its main growth brand, West Elm (representing about 26% of sales), but also its core Pottery Barn brand (representing around 41% of sales).
However, strength across all brands, rising e-commerce growth, accelerating growth initiatives and operational improvements are expected to have somewhat contributed to Williams-Sonoma’s net sales in the third quarter of fiscal 2023. The accelerating trend in online sales is also expected to have aided its top line in the to-be-reported quarter.
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 supported the top line. Also, cross-brand initiatives are expected to have positively contributed to consolidated comps to some extent.
However, higher input costs and increased expenses for ocean freight, detention and demurrage due to supply-chain disruptions and global inflation pressures are likely to have weighed on its to-be-reported quarterly performance.
We expect Pottery Barn Kids and Teen’s comps growth to be at negative 3.2%. The same had declined 4.8% a year ago. In the second quarter of fiscal 2023, comps were negative 9%.
Our model predicts Pottery Barn’s comps to decline 8.7% year over year. The same improved 19.6% a year ago. In the second quarter of fiscal 2023, comps were negative 10.6%.
Our model predicts West Elm’s comps to decline 19.3%. The metric witnessed 4.2% growth a year ago but declined 20.8% in the last reported quarter.
We expect the namesake brand’s comps to be up 1%. The metric witnessed 1.5% growth a year ago and negative 0.7% in the previously reported quarter.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Williams-Sonoma this time. 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. However, that is not the case here, as elaborated below.
Earnings ESP: Williams-Sonoma has an Earnings ESP of -1.45%. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
Here are some companies in the Zacks Retail-Wholesale sector which, according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Costco (COST - Free Report) currently has an Earnings ESP of +4.26% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share (EPS) of $3.43 suggests a rise of 10.7% from a year ago.
The consensus estimate for revenues is pegged at $57.69 billion, hinting at an increase of 6% from the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +2.08% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter fiscal 2023 EPS of $1.21 indicates 21% growth from the year-ago levels.
The consensus mark for revenues is pegged at $4.83 billion, implying a 5.8% jump from the prior-year figure. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart (WMT - Free Report) currently has an Earnings ESP of +0.63% and carries a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter fiscal 2024 EPS of $1.51 suggests a 0.7% gain from the year-ago quarter.
The consensus estimate for revenues is pegged at $159.2 billion, which indicates a climb of 4.2% from the prior-year number. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.