Williams-Sonoma shares tumble on revenue miss, lowered revenue outlook

Williams-Sonoma (NYSE: WSM) reported second-quarter earnings that beat analyst estimates but missed on revenue and lowered its full-year sales guidance, sending shares tumbling 12% in premarket trading.

The home goods retailer posted adjusted earnings per share of $1.74 for the quarter ended July 28, surpassing the analyst consensus of $1.61. However, revenue came in at $1.79 billion, falling short of the $1.81 billion expected by analysts and declining 3.3% YoY on a comparable brand basis.

Despite the revenue miss, Williams-Sonoma improved its profitability, with operating margin expanding to 16.2%, up 160 basis points from the same quarter last year. The company attributed this to higher merchandise margins and supply chain efficiencies.

"We are pleased with our operating results," said Laura Alber, President and CEO. "Our revised outlook today reflects our prudent view of the top-line, and the confidence we have in our profitability profile."

For fiscal 2024, Williams-Sonoma now expects annual net revenue growth in the range of -4.0% to -1.5%, down from its previous forecast of net revenue growth in the range of -3% to +3%. However, the company raised its operating margin guidance to between 17.4% and 17.8%, excluding a one-time adjustment.

The retailer maintained a strong liquidity position with $1.3 billion in cash and generated operating cash flow of $246 million. During the quarter, Williams-Sonoma returned $203 million to shareholders through stock repurchases and dividends.

By Sam Boughedda

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