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Williams-Sonoma (WSM) Stock Up on Q1 Earnings & Revenue Beat

Williams-Sonoma Inc. WSM registered decent results in first-quarter fiscal 2024 (ended Apr 28, 2024). In the quarter, earnings and net revenues beat the Zacks Consensus Estimate. On a year-over-year basis, the top line declined, but the bottom line increased.

Following the earnings release, shares of this multi-channel specialty retailer of premium quality home products moved up 8.2% in the pre-market trading session on May 22.

Earnings, Revenue & Comps Discussion

Non-GAAP earnings per share (EPS) of $4.07 surpassed the Zacks Consensus Estimate of $2.78 by 46.4%. Also, the metric increased 54.2% from $2.64 reported a year ago.

Net revenues of $1.66 billion topped the consensus mark of $1.65 billion by 0.3% but declined 5.4% year over year.

Williams-Sonoma, Inc. Price, Consensus and EPS Surprise

 

Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise

Williams-Sonoma, Inc. price-consensus-eps-surprise-chart | Williams-Sonoma, Inc. Quote

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In the fiscal first quarter, comps fell 4.9% compared with 6% in the year-ago period. Our model predicted comps to decline 4.6% in the quarter.

Comps at West Elm brand decreased 4.1% compared with 15.8% reported in the year-ago quarter. Comps at Pottery Barn dipped 10.8% compared with 0.4% reported in the year-ago quarter. Williams-Sonoma comps inched up 0.9% against a 4.4% decline registered in the year-ago quarter. Pottery Barn Kids and Teens comps increased 2.8% against a 3.3% decline reported in the year-ago quarter.

Operating Highlights

The gross margin was 48.3%, up 970 basis points (bps) from the year-ago period’s tally. The increase was due to higher merchandise margins and lower costs from supply-chain efficiencies.

Non-GAAP selling, general and administrative expenses were 28.8% of net revenues (above our projection of 27.5%), reflecting an increase of 310 bps year over year. The non-GAAP operating margin expanded 600 bps from the year-ago period’s figure to 19.5% for the quarter.

Financials

As of Apr 28, 2024, Williams-Sonoma reported cash and cash equivalents of $1.25 billion, down from $1.26 billion in the fiscal 2023 end. Net cash from operating activities totaled $226.8 billion in the first three months of the fiscal 2024 compared with $342.5 million a year ago.

Fiscal 2024 Guidance Raised

Williams-Sonoma still anticipates fiscal 2024 net revenues to be in the range of -3% to +3%. Comps for the year are expected to be in the range of -4.5% to +1.5%.

The company now expects its operating margin to be between 17.6% and 18% (versus earlier expectations of 16.5% and 16.8%).

For the long term, the company still projects mid-to-high-single-digit annual net revenue growth and an operating margin in the mid-to-high teens.

Zacks Rank

Williams-Sonoma currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Recent Retail-Wholesale Releases

Yum China Holdings, Inc. YUMC reported impressive first-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside can be attributed to robust total system sales growth and new unit contribution.

During the quarter, YUMC reported adjusted EPS of 71 cents, beating the Zacks Consensus Estimate of 66 cents. The bottom line moved up 2.9% from 69 cents reported a year ago. Quarterly revenues of $2.96 billion outpaced the consensus mark of $2.94 billion. The top line inched up 1% on a year-over-year basis. Excluding foreign currency translation, revenues increased 7% year over year.

Chipotle Mexican Grill, Inc. CMG released stellar first-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company reported benefits from enhanced throughput and effective marketing initiatives like Braised Beef Barbacoa and Chicken Al Pastor, leading to strong sales and transaction growth. The company stated that the momentum continued into April.

During the quarter, CMG reported adjusted EPS of $13.37, outpacing the Zacks Consensus Estimate of $11.63. The bottom line increased 27.3% from $10.50 reported in the year-ago quarter. Quarterly revenues of $2.7 billion surpassed the consensus mark of $2.68 billion by 1%. The top line rose 14.1% on a year-over-year basis on the back of strong comparable restaurant sales growth and new restaurant openings.

McDonald's Corporation MCD posted mixed first-quarter 2024 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and the bottom line increased on a year-over-year basis.

During the quarter, MCD registered adjusted EPS of $2.70, missing the Zacks Consensus Estimate of $2.71. EPS increased 2% year over year. Quarterly net revenues of $6,169 million beat the consensus mark of $6,168 million. The top line rose 5% year over year.

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