Williams-Sonoma Earnings: Tops Revenue Estimates, Shares Pop Big

Williams-Sonoma Inc. (NYSE:WSM) reported its results for the first quarter. Williams-Sonoma is a retailer of products for the home. The retail segment of its business sells products through five retail store concepts: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and Williams-Sonoma Home.

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Williams-Sonoma Earnings Cheat Sheet for the First Quarter

Results: Net income for Williams-Sonoma Inc. fell to $30.7 million (30 cents per share) vs. $31.6 million (29 cents per share) a year earlier. This is a decline of 2.8% from the year-earlier quarter.

Revenue: Rose 6.1% to $817.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Williams-Sonoma Inc. fell short of the mean analyst estimate of 32 cents per share. Analysts were expecting revenue of $811.7 million.

Quoting Management: Laura Alber, President and Chief Executive Officer commented, “Our first quarter fiscal 2012 financial results represent the best first quarter in the company’s history, exceeding our expectations on a non-GAAP basis for both operating margin and diluted EPS, on revenue growth of 6%. We drove this earnings growth while simultaneously investing in our future growth strategies. We are pleased with this performance – both in terms of operational execution and progress against our long-term growth initiatives.”

Key Stats:

Last quarter’s profit decreases breaks a four-quarter run of profit increases. In the fourth quarter of the last fiscal year, net income rose 8.1% from the year earlier, while the figure increased 18.9% in the third quarter of the last fiscal year, 27.8% in the second quarter of the last fiscal year and 61.8% in the first quarter of the last fiscal year.

Gross margin shrank 0.6 percentage point to 37.8%. The contraction appeared to be driven by increased costs, which rose 7% from the year earlier quarter while revenue rose 6.1%.

Revenue has increased for four consecutive quarters. Revenue increased 6.1% to $1.27 billion in the fourth quarter of the last fiscal year. The figure rose 6.3% in the third quarter of the last fiscal year from the year earlier and climbed 5.1% in the second quarter of the last fiscal year from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the fourth quarter of the last fiscal year, it topped the mark by 4 cents, and in the third quarter of the last fiscal year, it was ahead by 3 cents.

Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 41 cents per share to 40 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. At $2.45 per share, the average estimate for the fiscal year has fallen from $2.46 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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