Home Goods Retailer Shows Good Growth; Solid Dividend


Life as a publicly traded company in the retail sector isn't easy. Business ebbs and flows with the economy. Sometimes consumers are in the mood to spend; sometimes they're not. And their tastes change like the wind.

After a sharp pullback in 2011 that saw home goods retailerWilliams-Sonoma ( WSM ) correct 39%, the stock has regained Wall Street favor as it flirts with new highs. The stock begins trading ex-dividend Thursday and currently yields 2.4%.

No surprise, really, because fundamentals continue to improve. The owner of the Williams-Sonoma, Pottery Barn, Rejuvenation, West Elm and Mark and Graham brands continues to benefit from a multi-distribution channel model. Williams-Sonoma sells its wares via seven e-commerce websites, eight direct-mail catalogs and 581 stores.

Shares surged 10% on March 20 after the company reported solid earnings, a dividend hike and a new share repurchase program. Fourth-quarter profit rose 15% from a year ago to $1.34 a share. Sales rose 11% to $1.41 billion, the third straight quarter of accelerating sales growth. The e-commerce business was the big winner in Q4, with revenue up 24% to $576 million.

Wall Street also cheered news of a 41% dividend increase to 31 cents a share. The company also announced a three-year $750 million share repurchase program.

Earlier this month, Citi added Williams-Sonoma to its top-picks list, citing continued growth opportunities overseas.

The stock's 10-week moving average around 49 currently sits about 1 point from the stock's last breakout area of 48.17. The 10-week line is a logical support level for the stock. If Williams-Sonoma closes within 1% of last week's closing price of 52.28, a three-weeks-tight pattern would be in place.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: WSM

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