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Williams-Sonoma Hits 52-Week High: Can It Scale Higher?


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On Jun 7, shares of Williams-SonomaWSM rallied to a 52-week high of $62.48. However, the company ended the trading session at $61.47.

The multi-channel specialty retailer's shares have rallied about 19% so far this year, against a 4.1% decline of the industry. That said, we have noticed that the company has outperformed the industry in each of the 4-week, 12-week and 52-week time frames.

The stock has a market cap of $5.19 billion. Average volume of shares traded over the last three months was approximately 2.18 million. Over the last 30 days, the Zacks Consensus Estimate for Williams-Sonoma's earnings moved up 10% to $4.23 for fiscal 2018. Earnings for this Zacks Rank #3 (Hold) company are expected to grow 17.2% in fiscal 2018.

Can It Scale Higher?

Constant enhancement of e-commerce channel, product innovation and global market expansion worked in favor of Williams-Sonoma. Let's discuss in details to what extent these initiatives have aided the company and will they continue to aid growth going forward.

E-commerce channel Strong

Williams-Sonoma is one of the largest e-commerce retailers in the United States.  The company's direct-to-customer segment operates through e-commerce websites and direct mail catalogs. This segment generates around 53% of the company's revenues and regularly posts strong operating margins. Also, the company's investment in merchandising of its brands, efficient catalog circulations and digital marketing boosts its e-commerce revenues.

The company is striving to improve the e-commerce experience by incorporating attractive content and making online shopping more convenient through its mobile wallet options. It has also introduced online self-service scheduling capability for in-home delivery to provide customers more visibility and control over the delivery process. In the second quarter, it will be launching SMS notification of order status to improve customer visibility at all stages of the shopping experience. Such initiatives are expected to strengthen e-commerce channel further and boost revenues.

Focus on Innovation

Product innovation plays a huge role in the company's success.  Williams-Sonoma also collaborates with celebrated brands and designers to offer exclusive home furnishings products. The company believes that such collaborations attract new customers, invent new trends in home furnishing and augment social media reach. Any new retail stores incorporate a Design Studio, where customers can receive assistance from trained professionals. This personalized service has been one of the driving forces behind improving results in the recent quarters.

In the second quarter, the company has a number of product introductions and innovative collaborations lined up across its brands. It sees opportunity in the children's home furnishings market and plans on investing in the same.

Global Market Expansion

Expanding global business is one of the key growth initiatives of Williams-Sonoma. In the last quarter, the company reported improved profits and double-digit revenue growth in the company-owned operations in Australia, the U.K. and Canada. Retail store expansion continued in the U.K. with the opening of its third West Elm store and a wholesale location in Westfield London shopping center. The company is focused on driving brand awareness in that market through the launch of Pottery Barn Kids in the second half of 2018.

Across Mexico, South Korea and the Middle East, another eight retail locations in the first quarter have been added. The company is on track to meet its long-term global strategy of multichannel expansion into larger size markets, particularly Asia and Europe.

Williams-Sonoma, Inc. Price

Williams-Sonoma, Inc. Price | Williams-Sonoma, Inc. Quote




Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the Retail-Wholesale sector are Amazon.com, Inc AMZN , Domino's Pizza, Inc DPZ and Darden Restaurants, Inc DRI .

Amazon.com carries a Zacks Rank #1 (Strong Buy). Earnings are expected to increase 180% in 2018. You can see the complete list of today's Zacks #1 Rank stocks here .

Domino's Pizza, a Zacks Rank #2 stock, is expected to see 55.2% rise in earnings in 2018.

Darden Restaurants, a Zacks Rank #2 stock, is expected to see 18.7% rise in earnings in fiscal 2018.

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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 Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: AMZN , DPZ , DRI , WSM



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