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Williams-Sonoma (WSM) Benefits From E-commerce Platform

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  • WSM
  • FAST
  • HD

Williams-Sonoma, Inc. WSM has been benefiting from solid e-commerce growth, focus on innovation, marketing, and digitalization techniques as well as transformation of the retail fleet.

This multi-channel specialty retailer’s shares have gained 115% so far this year compared with Zacks Retail - Home Furnishings industry’s 62% rally. The price performance was backed by a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing 16 quarters. Earnings estimates for fiscal 2021 have moved 1.9% upward over the past seven days.

Although the company noted that it has been witnessing short-term and long-term delays owing to supply issues across the world, macro-economic trends are encouraging.

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Zacks Investment Research

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Let’s delve deeper into the factors justifying its Zacks Rank #2 (Buy) and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

E-commerce Business: Williams-Sonoma has a history of driving market share gains, supported by strong e-commerce websites, direct mail catalogs and retail stores along with shipping fees received for the delivery of merchandise. The company is expected to generate strong revenues from the e-commerce channel, as it focuses on re-platforming mobile sites to progressive web app technology, streamlining the checkout process, and implementing the next generation of machine learning, on-site search as well as personalization experience.

E-commerce penetration accounted for more than 67% of total revenues for third-quarter fiscal 2021, buoyed by its in-house tech platform, rapid experimentation program, content-rich online experience and marketing strategies.

Strategic Initiatives: Williams-Sonoma is a highly customer-centric company and focuses on enhancing customer experience through technological innovation as well as operational improvement. Also, continuous technological and new products innovation helps it enhance customer engagement. Cross-brand initiatives such as The Key, Design Crew Room Planner, and The One Registry are expected to be incremental growth drivers for all its brands in fiscal 2021 and beyond.

It has also been reworking on the marketing strategy, placing more emphasis on digital targeted marketing and investing in store remodeling. In digital advertising, the company is transitioning from catalog mailing to higher-impact digital channels for driving short-term returns on investment, long-term gains and customer growth. Higher digital marketing is driving incremental customer count.

Upbeat View: Williams-Sonoma is optimistic about business strength. For fiscal 2021, Williams-Sonoma now expects revenues to witness 22-23% growth versus low high-teens to low-20s improvement expected earlier. It also expects non-GAAP operating margin between 16.9% and 17.1% for the year compared with 16-17% projected earlier. Furthermore, the company now projects revenue acceleration to $10 billion over the next four years (a year earlier than the previous projection).

Recent Releases in the Retail-Wholesale Sector

Fastenal Company FAST — which currently carries a Zacks Rank #3 (Hold) — reported impressive third-quarter 2021 results.

Fastenal’s top and bottom lines not only beat the respective Zacks Consensus Estimate but also improved on a year-over-year basis.

Builders FirstSource BLDR — which currently carries a Zacks Rank #1 — reported solid results for third-quarter 2021, wherein earnings and net sales surpassed the Zacks Consensus Estimate as well as increased significantly on a year-over-year basis.

Builders FirstSource’s results were driven by an increase in net sales and gross margin, partially offset by higher tax and selling, general & administrative expenses.

The Home Depot, Inc. HD — which currently carries a Zacks Rank #1 — posted third-quarter fiscal 2021 results, wherein earnings and sales beat the Zacks Consensus Estimate as well as improved year over year.

Home Depot gained from continued strong demand for home-improvement projects, robust housing market trends and ongoing investments.


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WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report

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