Williams-Sonoma Beats Q4 Earnings Estimate - Analyst Blog

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Williams-Sonoma, Inc. ( WSM ), a well-known specialty retailer of home products, reported adjusted earnings (excluding one-time items) of $1.38 per share in the fourth quarter of 2013, beating the Zacks Consensus Estimate of $1.35 per share by 2.2%, owing to better than expected sales. Earnings increased 2.99% from the comparable prior-year quarter level of $1.34 on the back of solid top-line growth and decline in expenses. Excluding the additional week in the fourth quarter of 2012, earnings increased 8.7%

Quarter Highlights

Net revenue of $1.47 billion in the fourth quarter of 2013 beat the Zacks Consensus Estimate of $1.43 million by 2.8%. Net revenue grew 4.3% year over year, driven by solid increase in comparable brand revenues. Excluding the additional week in the fourth quarter of 2012, net revenue rose 10.0%.

Comparable brand revenues (including retail comparable store sales, direct-to-customer sales, and other adjustments like shipping fees, sales returns and other discounts associated with current period sales) grew 10.4% compared with a 4.0% increase in the prior-year quarter, owing to strong sales growth in most of the brands.  

The company's net revenue comprises direct-to-customer net revenue and retail net revenue. The direct-to-customers net revenue is generated from sales through e-commerce websites, catalogs and shipping fees. Retail net revenue is generated from sales in retail stores and shipping fees for home delivery of products.

During the fourth quarter of 2013, direct-to-customer net revenue was $706 million, up 11.4%. Excluding the additional week in the fourth quarter of 2012, direct-to-customer net revenue increased 19.0% due to solid sales, particularly in brands such as Pottery Barn, West Elm, Williams-Sonoma and Pottery Barn Kids. Excluding the additional week in the fourth quarter of 2012, retail net revenue rose 2.7% to $760 million in the quarter on the back of strong business in Pottery Barn and West Elm.

Selling, general and administrative (SG&A) expenses increased 2.2% from the prior-year quarter to $378 million. However, as a percentage of revenues, SG&A was down 50 basis points to 25.8% in the quarter on the back of low advertising expenses. The company's adjusted operating margin of 14.8% was down 20 basis points year over year owing to investments in global operations and loss of a week in the quarter of 2013.

During fourth quarter 2013, the company repurchased 402,810 shares of its common stock. As of Feb 2, 2014, the company had $511 million worth of shares remaining under its $750 million stock repurchase program announced in Mar 2013. The company also increased its quarterly dividend by 6% to 33 cents per common share.

Fiscal 2013

Williams-Sonoma reported adjusted earnings of $2.84 per share in fiscal 2013, beating the Zacks Consensus Estimate of $2.82 per share by 0.7%. Excluding the additional week in 2012, earnings increased 13.1% from the comparable prior-year quarter on the back of solid top line growth.

Net revenue of $4.39 billion in fiscal 2013 beat the Zacks Consensus Estimate of $4.34 billion by 1.2%. Excluding the additional week, net revenue grew 10.5% year over year, driven by high single-digit increase in comparable brand revenues.

2014 Outlook

For the first quarter of 2014, the company expects net revenue in the range of $920 million to $940 million. Comparable brand revenues are expected to increase in the range of 4% to 6%. Earnings per share are expected to be in the range of 41 cents to 44 cents in the quarter.

For fiscal 2014, Williams-Sonoma expects to report adjusted earnings per share in the range of $3.05 to $3.15. The company expects to generate net revenue in the range of $4.63 billion to $4.71 billion. Comparable brand revenues are expected to grow in the range of 5% to 7%.

Williams-Sonoma carries a Zacks Rank #3 (Hold).

Two other companies in the retail furnishing industry that recently reported their fourth quarter results and surpassed both the top line and earnings estimates include Fortune Brands Home & Security, Inc. ( FBHS ) and Masco Corp. ( MAS ). Another company in the sector surpassed earnings estimate in the fourth quarter of 2013 is Home Depot Inc . ( HD ).



FORTUNE BRD H&S (FBHS): Free Stock Analysis Report

HOME DEPOT (HD): Free Stock Analysis Report

MASCO (MAS): Free Stock Analysis Report

WILLIAMS-SONOMA (WSM): Free Stock Analysis Report

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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: Investing , Business , Earnings , Stocks

Referenced Stocks: FBHS , HD , MAS , WSM

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