Stock Story -
Kitchenware and home goods retailer Williams-Sonoma (NYSE:WSM) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 5.4% year on year to $1.66 billion. It made a non-GAAP profit of $4.07 per share, improving from its profit of $2.64 per share in the same quarter last year.
Is now the time to buy Williams-Sonoma? Find out by reading the original article on StockStory, it's free.
Williams-Sonoma (WSM) Q1 CY2024 Highlights:
- Revenue: $1.66 billion vs analyst estimates of $1.65 billion (small beat)
- EPS (non-GAAP): $4.07 vs analyst estimates of $2.73 (49.3% beat)
- Gross Margin (GAAP): 48.3%, up from 38.5% in the same quarter last year
- Free Cash Flow of $187.3 million, down 36% from the same quarter last year
- Same-Store Sales were down 4.9% year on year
- Store Locations: 517 at quarter end, decreasing by 14 over the last 12 months
- Market Capitalization: $20.2 billion
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE:WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.
Home Furniture RetailerFurniture retailers understand that ‘home is where the heart is’ but that no home is complete without that comfy sofa to kick back on or a dreamy bed to rest in. These stores focus on providing not only what is practically needed in a house but also aesthetics, style, and charm in the form of tables, lamps, and mirrors. Decades ago, it was thought that furniture would resist e-commerce because of the logistical challenges of shipping large furniture, but now you can buy a mattress online and get it in a box a few days later; so just like other retailers, furniture stores need to adapt to new realities and consumer behaviors.
Sales GrowthWilliams-Sonoma is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.
As you can see below, the company's annualized revenue growth rate of 6.1% over the last five years was weak as its store count dropped.
This quarter, Williams-Sonoma reported a rather uninspiring 5.4% year-on-year revenue decline to $1.66 billion in revenue, in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 2.3% over the next 12 months, an acceleration from this quarter.
Same-Store SalesSame-store sales growth is a key performance indicator used to measure organic growth and demand for retailers.
Williams-Sonoma's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 3.2% year on year. The company has been reducing its store count as fewer locations sometimes lead to higher same-store sales, but that hasn't been the case here.
In the latest quarter, Williams-Sonoma's same-store sales fell 4.9% year on year. This decrease was a further deceleration from the 6% year-on-year decline it posted 12 months ago. We hope the business can get back on track.
Key Takeaways from Williams-Sonoma's Q1 Results We were impressed by how significantly Williams-Sonoma blew past analysts' EPS and gross margin expectations this quarter. We were also excited it raised its full-year operating margin guidance to 17.8% at the midpoint. Zooming out, we think this was an impressive quarter that should delight shareholders. The stock is up 5% after reporting and currently trades at $330.15 per share.
