Higher Online Sales to Aid Williams-Sonoma (WSM) Q2 Earnings

Williams-Sonoma, Inc. WSM is scheduled to report second-quarter fiscal 2020 results on Aug 26, after the closing bell.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 722.2% and 14.5%, respectively. On a year-over-year basis, earnings of this multi-channel specialty retailer of premium quality home products declined 8.6% but revenues almost remained flat.

Markedly, Williams-Sonoma reported better-than-expected earnings in the last four quarters, with the average surprise being 183.2%.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has increased 4.5% to 92 cents over the past seven days. However, the estimated figure indicates an increase of 5.8% from 87 cents per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $1.40 billion, suggesting 2% growth from the year-ago reported figure of $1.37 billion.

WilliamsSonoma, Inc. Price and EPS Surprise

WilliamsSonoma, Inc. Price and EPS Surprise

WilliamsSonoma, Inc. price-eps-surprise | WilliamsSonoma, Inc. Quote

Factors to Note

Williams-Sonoma’s sales and earnings are expected to be have increased in the fiscal second quarter, albeit at a modest rate. While the global impact of the coronavirus pandemic, stiff competition, tariffs and tough comparisons are expected to have been pressing concerns, a strong housing backdrop is anticipated to have benefited the company. Home furnishing demand has been strong and probably should have accelerated over the July/August time frame, given strong housing market data.

Again, its multi-channel multi-brand platform, strong e-commerce growth, solid execution of strategic initiatives, digital leadership, product innovation, retail transformation and operational excellence across businesses are expected to have provided some support to the top line. Also, cross-brand initiatives and momentum of the West Elm brand are likely to have positively contributed to consolidated comps to some extent.

Importantly, Williams-Sonoma’s online sales trends accelerated, which more than offset the lost sales from closed stores. This is expected to have meaningfully contributed to its top line in the to-be-reported quarter.

The Zacks Consensus Estimate for Pottery Barn Kids and Teen’s comps growth is pegged at 6.3%. The metric came in at 3.7% a year ago and 8.5% in the last reported quarter.

The Zacks Consensus Estimate for Pottery Barn’s comps growth is pegged at 5.3%, indicating growth from 4.2% a year ago. In the fiscal first quarter, comps declined 1.1%.

The Zacks Consensus Estimate for West Elm’s comps growth is pegged at 15.7%. The metric was 17.5% a year ago and 3.3% in the last reported quarter.

The Zacks Consensus Estimate for Williams-Sonoma’s comps growth is pegged at 7.8%. Comps declined 1.1% a year ago. In the fiscal first quarter, the namesake brand’s comps grew 5.4% year over year.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Williams-Sonoma this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Williams-Sonoma — which shares space with RH RH, At Home Group Inc. HOME and Ethan Allen Interiors Inc. ETH in the Zacks Retail - Home Furnishings industry — currently carries a Zacks Rank #2 and has an Earnings ESP of +20.59%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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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.

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