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Williams-Sonoma Inc. (WSM - Free Report) recently reported better-than-expected results in the second quarter, given broad-based strength across all its brands, with Pottery Barn brand recording a steady year-over-year improvement.
Notably, shares of Williams-Sonoma have increased more than 7% in after-hour trading on Aug 22, following stellar results in the second quarter of fiscal 2018.
Non-GAAP earnings of 77 cents per share surpassed the Zacks Consensus Estimate of 68 cents by 13.2%. The figure also grew 26.2% year over year backed by gross margin expansion.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
The company’s revenues were $1,275.2 million, up 6.1% year over year. The improvement was driven by broad-based strength across all its brands. Also, the reported figure surpassed the consensus mark of $1,258 million by 1.4%.
Comparable brand revenues increased 4.6% in the quarter compared with 2.8% growth recorded in the year-ago quarter.
The company’s West Elm’s brand’s comparable brand revenues increased 9.5% compared with 10.1% increase in the prior-year quarter. Also, Pottery Barn’s comparable brand revenues were up 2% from 1.2% in the year-ago quarter. Meanwhile, Pottery Barn Kids and Teen recorded growth of 5.7% against 2.7% decline in the year-ago quarter.
However, the company’s Williams Sonoma brand’s comparable brand revenues were up 1.6%, down from 1.9% growth registered in the prior-year quarter.
Segment Details
E-Commerce (53.9% of fiscal second-quarter revenues) segment reported net revenues of $686.9 million in the quarter, up 8.9% year over year.
Retail (46.1%) segment’s net revenues rose 3.1% to $588.2 million in the reported quarter.
Operating Highlights
Non-GAAP gross margin was 36.5%, up 130 basis points (bps) from the year-ago figure. The upside was attributable to higher selling margins and occupancy leverage.
Non-GAAP selling, general and administrative (SG&A) expenses were 29.7% of net revenues or $378.6 million in the quarter, reflecting an increase of 130 bps year over year, owing to adoption of the new accounting standard associated with revenue recognition.
Non-GAAP operating margin was 6.8% in the quarter, flat year over year. Merchandise inventories increased 2.5% to $1.100 billion.
Financials
Williams-Sonoma reported cash and cash equivalents of $174.6 million as of Jul 29, 2018 compared with $390.1 million on Jan 28, 2018.
During fiscal second quarter, the company repurchased 2,409,000 shares of common stock at an average cost of $56.90 per share and a total cost of approximately $137 million. As of Jul 29, 2018, Williams-Sonoma has approximately $344 million remaining under its present stock repurchase program.
Fiscal Third-Quarter Guidance
Williams-Sonoma currently expects non-GAAP earnings per share in the band of 90-95 cents.
The company expects net revenues in the range of $1,355-$1,380 million. Comparable brand revenues are likely to grow 3-5%.
Fiscal 2018 Guidance
Williams-Sonoma increased its 2018 outlook. The company currently expects its total revenues in the $5,565-$5,665 million range versus $5,495-$5,655 million expected earlier.
Comparable brand revenues are expected to grow in the range of 3-5% compared with prior expectation of 2-5%.
Williams-Sonoma now expects non-GAAP earnings within $4.26-$4.36 versus $4.15-$4.25 per share projected earlier.
Non-GAAP operating margin is revised upward to the range of 8.4-9% from 8.2-9% projected earlier. However, the company retained its tax rate and capital expenditure guidance of 24-26% and $200-$220 million, respectively.
Zacks Rank & Key Picks
Currently, Williams-Sonoma carries a Zacks Rank #3 (Hold).
BJ's Restaurants has an expected current-year earnings growth rate of 50.4%.
Darden’s expected fiscal 2019 earnings growth rate is 14.4%.
Carrols is expected to register an earnings growth rate of 80% this year.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Williams-Sonoma (WSM) Q2 Earnings Beat, View Up, Stock Rises
Williams-Sonoma Inc. (WSM - Free Report) recently reported better-than-expected results in the second quarter, given broad-based strength across all its brands, with Pottery Barn brand recording a steady year-over-year improvement.
Notably, shares of Williams-Sonoma have increased more than 7% in after-hour trading on Aug 22, following stellar results in the second quarter of fiscal 2018.
Non-GAAP earnings of 77 cents per share surpassed the Zacks Consensus Estimate of 68 cents by 13.2%. The figure also grew 26.2% year over year backed by gross margin expansion.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise | Williams-Sonoma, Inc. Quote
Revenue Discussion
The company’s revenues were $1,275.2 million, up 6.1% year over year. The improvement was driven by broad-based strength across all its brands. Also, the reported figure surpassed the consensus mark of $1,258 million by 1.4%.
Comparable brand revenues increased 4.6% in the quarter compared with 2.8% growth recorded in the year-ago quarter.
The company’s West Elm’s brand’s comparable brand revenues increased 9.5% compared with 10.1% increase in the prior-year quarter. Also, Pottery Barn’s comparable brand revenues were up 2% from 1.2% in the year-ago quarter. Meanwhile, Pottery Barn Kids and Teen recorded growth of 5.7% against 2.7% decline in the year-ago quarter.
However, the company’s Williams Sonoma brand’s comparable brand revenues were up 1.6%, down from 1.9% growth registered in the prior-year quarter.
Segment Details
E-Commerce (53.9% of fiscal second-quarter revenues) segment reported net revenues of $686.9 million in the quarter, up 8.9% year over year.
Retail (46.1%) segment’s net revenues rose 3.1% to $588.2 million in the reported quarter.
Operating Highlights
Non-GAAP gross margin was 36.5%, up 130 basis points (bps) from the year-ago figure. The upside was attributable to higher selling margins and occupancy leverage.
Non-GAAP selling, general and administrative (SG&A) expenses were 29.7% of net revenues or $378.6 million in the quarter, reflecting an increase of 130 bps year over year, owing to adoption of the new accounting standard associated with revenue recognition.
Non-GAAP operating margin was 6.8% in the quarter, flat year over year. Merchandise inventories increased 2.5% to $1.100 billion.
Financials
Williams-Sonoma reported cash and cash equivalents of $174.6 million as of Jul 29, 2018 compared with $390.1 million on Jan 28, 2018.
During fiscal second quarter, the company repurchased 2,409,000 shares of common stock at an average cost of $56.90 per share and a total cost of approximately $137 million. As of Jul 29, 2018, Williams-Sonoma has approximately $344 million remaining under its present stock repurchase program.
Fiscal Third-Quarter Guidance
Williams-Sonoma currently expects non-GAAP earnings per share in the band of 90-95 cents.
The company expects net revenues in the range of $1,355-$1,380 million. Comparable brand revenues are likely to grow 3-5%.
Fiscal 2018 Guidance
Williams-Sonoma increased its 2018 outlook. The company currently expects its total revenues in the $5,565-$5,665 million range versus $5,495-$5,655 million expected earlier.
Comparable brand revenues are expected to grow in the range of 3-5% compared with prior expectation of 2-5%.
Williams-Sonoma now expects non-GAAP earnings within $4.26-$4.36 versus $4.15-$4.25 per share projected earlier.
Non-GAAP operating margin is revised upward to the range of 8.4-9% from 8.2-9% projected earlier. However, the company retained its tax rate and capital expenditure guidance of 24-26% and $200-$220 million, respectively.
Zacks Rank & Key Picks
Currently, Williams-Sonoma carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Retail-Wholesale sector are BJ's Restaurants, Inc. (BJRI - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Carrols Restaurant Group, Inc. (TAST - Free Report) . While BJ's Restaurants sports a Zacks Rank #1 (Strong Buy), both Darden and Carrols carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ's Restaurants has an expected current-year earnings growth rate of 50.4%.
Darden’s expected fiscal 2019 earnings growth rate is 14.4%.
Carrols is expected to register an earnings growth rate of 80% this year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>