Williams-Sonoma (WSM) Surges After Smashing Q2 Views and Raising Guidance, Analyst Bulled-Up as Strong Demand for Home Decor Continues
Shares of Williams-Sonoma (NYSE: WSM) have surged about 14% in pre-open after the company smashed analyst estimates for Q2.
Williams-Sonoma reported Q2 EPS of $3.24, $0.64 better than the analyst estimate of $2.60. Revenue for the quarter came in at $1.95 billion versus the consensus estimate of $1.81 billion.
"We are proud to report another quarter of outperformance with a 30% comp, strong growth across all brands and channels, and 360 basis points of operating margin expansion. These second quarter results demonstrate the success of our growth strategies and the earnings power of our company. We have an advantage in the industry due to our exclusive in-house design capability, our channel strategy which is digital-first but not digital only, and our values - with sustainability and equity underlying all that we do," said Laura Alber, President and Chief Executive Officer.
On the guidance front, the company raised raising the fiscal year 2021 outlook to “high-teens to low-twenties net revenue growth and non-GAAP operating margin between 16% to 17%.”
Long-term, the company said it forecasts “net revenue growth of mid-to-high single digits with an accelerated path to $10 billion in net revenues now over the next four years.”
Citi analyst Steven Zaccone maintained a ‘Neutral’ rating on the stock as he sees balanced risk-reward after a big move in extended Wednesday trading. A new price target is $197.00 per share from the prior $193.00
“It’s hard to fight the momentum in home furnishings right now — consumers have experienced a wealth effect from rising asset prices, more time at home is causing a prioritization to spend on home décor, promotions are minimal because of supply chain imbalances, and scale is helping the big players gain market share. WSM is well-positioned to ride this near-term wave,” Zaccone said in a client note.
Telsey analyst Cristina Fernández hiked the price target to $220.00 per share from the prior $205.00 on the “Outperform” rated stock.
“Looking ahead, we continue to view Williams-Sonoma as well positioned to benefit from three trends: 1) a permanent shift to digital that plays to its strength with ~65% of sales online in 1H21; 2) higher spending on home categories driven by housing turnover, a shift to larger suburban homes, and permanent work-from-home arrangements; and, 3) an affluent consumer (HHI >$100,000) who is in strong financial shape, given rising home values and stock market gains,” Fernández wrote in a client note.