Williams-Sonoma Earnings: Margin Expansion BOOSTED by Rising Revenue, Net Income Rises

Williams-Sonoma Inc. (NYSE:WSM) reported net income above Wall Street’s expectations for the second 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 Inc. Earnings Cheat Sheet

Results: Net income for Williams-Sonoma Inc. rose to $43.4 million (43 cents per share) vs. $39.3 million (37 cents per share) in the same quarter a year earlier. This marks a rise of 10.4% from the year-earlier quarter.

Revenue: Rose 7.3% to $874 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Williams-Sonoma Inc. beat the mean analyst estimate of 40 cents per share. It beat the average revenue estimate of $811.7 million.

Quoting Management: Laura Alber, President and Chief Executive Officer commented, “During the quarter, we delivered strong performance in revenues, operating margin and earnings per share. Diluted EPS grew 16% on revenue growth of 7%, with comparable brand revenue growth accelerating from 5.4% in Q1 to 7.4% in Q2. Importantly, we drove this growth in revenues and earnings while simultaneously investing in our long-term growth initiatives.”

Key Stats:

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 2 cents in the first quarter, by 4 cents in the fourth quarter of the last fiscal year, and by 3 cents in the third quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 6.1% to $817.6 million in the first quarter. The figure rose 6.1% in the fourth quarter of the last fiscal year from the year earlier and climbed 6.3% in the third quarter of the last fiscal year from the year-ago quarter.

Margins rose in the first quarter after falling the quarter before. Gross margins grew to 38.2%, up 0.3 percentage point from the year-earlier quarter. In the fourth quarter of the last fiscal year, the figure rose 0.6 percentage point to 37.8% from the year earlier quarter.

Last quarter’s profit increase comes after net income dropped in the prevoius quarter. In the first quarter, net income declined 2.8% to $30.7 million.

Looking Forward: The average estimate for the third quarter remains unchanged at 43 cents a share. At $2.49 per share, the average estimate for the fiscal year has risen from $2.45 sixty days ago.

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

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