Williams Sonoma (NYSE: $WSM) is an American retail company that manufactures home appliances, kitchen items, furniture, and cookware. The company serves its product services worldwide. It is one of the oldest retailers, founded in 1956 by Charles E. (Chucks) Williams.
On Wednesday, May 22, the retailer unveiled positive first-quarter results for fiscal 2024. Despite this, the stock was over 10% lower at closing.
Williams Sonoma Revenue Beats Estimates
In the first quarter of 2024, the company reported revenue of $1.66 billion, down by 5.4% from the same quarter of the prior year. Moreover, the revenue surpassed Zack Consensus estimates surprisingly by 0.35% compared to $1.65 billion.
Diluted earnings per share (EPS) came at $4.07, with the inclusion of $0.59 per share from an out-of-period adjustment. The EPS also beat the estimate by 46.40%, at $2.78 per share. Furthermore, the gross margin was 48.3% in the first quarter, with an addition of 290 bps (base points). The gross margin increased by 690 bps compared to LY GAAP and 680 bps compared to LY non-GAAP.
Operating income is $324 million, with an operating margin of 19.5%, which includes a 290-basis-point benefit from an out-of-period adjustment. Excluding this adjustment, the operating margin would be 16.6%. Additionally, merchandise inventories slumped by 13.1% to the first quarter LY, amounting to $1.2 billion.
Moreover, the company maintained a robust cash liquidity position of $1.3 billion. The operating cash flow of $227 million allowed the company to return $107 million to stockholders, which included $63 million in dividends and $44 million in stock repurchases in the first quarter.
President and CEO Laura Alber said, “We are pleased to deliver strong results in the first quarter of 2024, driven by an improving top-line trend and continued strength in our profitability. We remain committed to executing our three key priorities in 2024 – returning to growth, elevating our world-class customer service, and driving margin.”
Key Metrics for Quarter One
The comparable store sales dipped 4.5% compared to the 6% in the prior year. Furthermore, Comparable sales at the West Elm brand fell by 4.1%, compared to an increase of 15.8% in the same quarter last year. Pottery Barn’s comparable sales dropped by 10.8%, following a slight decrease of 0.4% in the year-ago quarter.
Williams-Sonoma’s comparable sales increased by 0.9%, reversing a 4.4% decline from the previous year. Meanwhile, comparable sales for Pottery Barn Kids and Teens rose by 2.8%, compared to a 3.3% decline in the prior year.
WSM Stock Performance
Williams Sonoma (WMS) stock opened at $345.61 on Wednesday, and closed at $279.93. At one point during the Wednesday trading session, the stock spiked to a new all-time high of $348.5, representing an over 200% rise over the past 52 weeks. That may have led some investors to take profit, causing the stock to slide 10.96% at the closing bell. The market cap is $17.896 billion, and the average 24-hour volume is 1,106,959. The 52-week high is $348.51, and the low is $109.44.
Should You Add Williams Sonoma to Your Portfolio?
\Williams Sonoma is a profitable country that offers great shareholder returns. While its guidance signals revenue will remain relatively flat for fiscal 2024, it has shown an ability for strong gains in recent years and is likely to continue doing so in the future. While it might not be lucrative to growth investors, it is potentially a great option for investors looking for steady returns in the long term.
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