Williams-Sonoma Designs an Impressive Beat and Raise

MarketsMotley Fool

Williams-Sonoma (NYSE: WSM) just released strong second-quarter 2018 results on Wednesday after the market closed, including continued broad growth from each of its core retail concepts and the steadily increasing contribution of online sales to its total.

With shares up around 7% in after-hours trading as of this writing, let's take a deeper look at what drove the home-furnishings retailer this quarter, and what investors can expect down the road.

Continue Reading Below

Williams-Sonoma results: The raw numbers

Metric

Fiscal Q2 2018*

Fiscal Q2 2017

Year-Over-Year Change

Revenue

$1.275 billion

$1.202 billion

6.1%

GAAP net income

$51.7 million

$52.9 million

(2.3%)

GAAP earnings per diluted share

$0.62

$0.61

1.6%

What happened with Williams-Sonoma this quarter?

  • On an adjusted (non-GAAP) basis, which excludes items like acquisition expenses and stock-based compensation, earnings per share increased 26.2% year over year to $0.77.
  • By comparison, Williams-Sonoma's latest guidance, provided in May, called for lower adjusted earnings of $0.65 to $0.70 per share on revenue of $1.25 billion to $1.275 billion.
  • Comparable-brand revenue grew 4.6%, also near the high end of guidance for an increase of 3% to 5%.
  • By retail concept, comparable-brand revenue increased 2% at Pottery Barn, 9.5% as West Elm, 1.6% at Williams-Sonoma, and 5.7% at Pottery Barn Kids and Teen.
  • E-commerce net revenue climbed 8.9% to $687 million, or 53.9% of total sales, up from 53.7% last quarter.
  • Retail revenue grew 3.1% to $588 million.
  • The company repurchased 2.409 million shares of common stock for $137 million, or an average price of $56.90 per share. That left $344 million remaining under the company's current stock-repurchase authorization at the end of the quarter.

What management had to say

Williams-Sonoma CEO Laura Alber stated:

Looking forward

For the current third quarter of fiscal 2018, Williams-Sonoma is targeting revenue in the range of $1.355 billion to $1.38 billion, comparable-brand revenue growth of 3% to 5%, and adjusted earnings per share of $0.90 to $0.95.

With both that outlook and its relative outperformance so far this year in mind, Williams-Sonoma also raised its full fiscal-year guidance to call for revenue of $5.565 billion to $5.665 billion, up from $5.495 billion to $5.655 billion before, comparable-brand revenue growth of 3% to 5%, up from 2% to 5% previously, and adjusted earnings per share of $4.26 to $4.36, up $0.11 per share from both ends of its prior range.

All told, this was as good a quarter as Williams-Sonoma investors could have hoped for, and it should be no surprise to see the stock touching new multi-year highs in response.

10 stocks we like better than Williams-SonomaWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Williams-Sonoma wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Williams-Sonoma. The Motley Fool has a disclosure policy.