Williams-Sonoma (NYSE:WSM)
Consumer Discretionary - Specialty Retail | Reports May 25, After Market Closes
Key Takeaways
- The Estimize consensus on WSM is looking for earnings of 51 cents per share on $1.07 billion in revenue, 1 cent higher than Wall Street on the bottom line and $6 million below on the top
- Last quarter featured a 0.8% increase in comparable revenue with losses coming from Pottery Barn and PB teen
- WSM is guided mid single digit growth for the first quarter and full year 2016
Retail company Williams-Sonoma, is scheduled to report first quarter earnings Wednesday after the closing bell. Williams-Sonoma is best known as an upscale home furnishing retailers which also runs notable brands like Pottery Barn and West Elm. Lately, upscale retailers have suffered from waning demand but that hasn’t stopped William Sonoma from posting modest growth. Fiscal 2015 saw revenue grow in the mid single digits while earnings were consistently positive. Early indications look as if Williams-Sonoma will kick off 2016 on a similar note.
The Estimize consensus is looking for earnings of 51 cents per share on $1.07 billion in revenue, 1 cent higher than Wall Street on the bottom line and $6 million below on the top. Compared to a year ago this represents a 4% increase on both the top and bottom line. On average the stock is a positive mover during earnings season. This should provide comfort to shareholders who have seen shares drop 15% in the past 12 months.
As the housing market continues to recover, home improvement retailers have seen financial results pick up. This season we have already seen Ethan Allen (NYSE:ETH), Bed Bath & Beyond (NASDAQ:BBBY), Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) trounce expectations, setting the stage for Williams-Sonoma to beat this quarter. Williams-Sonoma is coming off a strong 2015 which saw net revenue grow 5.9%, comparable brand revenue increased 3.7% and online sales soar 6.4%. The company is guiding similar mid single digit growth for the first quarter and full year fiscal 2016.
Heading into 2016, Williams-Sonoma is well positioned to increase its market share. Currently the company operates 618 stores, but plans to increase that to 627 stores by the end of 2016, by opening 27 new locations and closing 18 unprofitable ones. These locations are spread across the world but its core market still remains in the United States. Currently the U.S. market accounts for 94% of the company’s income in a given quarter.
This works well into its favor since they haven’t suffered the ongoing effects of a stronger dollar. Williams-Sonoma has worked to improve its catalog of products through strategic partnerships. Recently they partnered with London based department store, Fortnum & Mason, to offer 35 exclusive items in its retail locations and online stores.
