Williams-Sonoma (WSM 1.43%) just released strong second-quarter 2018 results on Wednesday after the market closed, including continued broad growth from each of its core retail concepts and the steadily increasing contribution of online sales to its total.
With shares up around 7% in after-hours trading as of this writing, let's take a deeper look at what drove the home-furnishings retailer this quarter, and what investors can expect down the road.
IMAGE SOURCE: WILLIAMS-SONOMA.
Williams-Sonoma results: The raw numbers
| Metric |
Fiscal Q2 2018* |
Fiscal Q2 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$1.275 billion |
$1.202 billion |
6.1% |
|
GAAP net income |
$51.7 million |
$52.9 million |
(2.3%) |
|
GAAP earnings per diluted share |
$0.62 |
$0.61 |
1.6% |
DATA SOURCE: WILLIAMS-SONOMA. *FOR THE QUARTERENDED JULY 29, 2018.
What happened with Williams-Sonoma this quarter?
- On an adjusted (non-GAAP) basis, which excludes items like acquisition expenses and stock-based compensation, earnings per share increased 26.2% year over year to $0.77.
- By comparison, Williams-Sonoma's latest guidance, provided in May, called for lower adjusted earnings of $0.65 to $0.70 per share on revenue of $1.25 billion to $1.275 billion.
- Comparable-brand revenue grew 4.6%, also near the high end of guidance for an increase of 3% to 5%.
- By retail concept, comparable-brand revenue increased 2% at Pottery Barn, 9.5% as West Elm, 1.6% at Williams-Sonoma, and 5.7% at Pottery Barn Kids and Teen.
- E-commerce net revenue climbed 8.9% to $687 million, or 53.9% of total sales, up from 53.7% last quarter.
- Retail revenue grew 3.1% to $588 million.
- The company repurchased 2.409 million shares of common stock for $137 million, or an average price of $56.90 per share. That left $344 million remaining under the company's current stock-repurchase authorization at the end of the quarter.
What management had to say
Williams-Sonoma CEO Laura Alber stated:
Today, we are announcing another quarter of strong results with topline growth at the high-end of guidance, gross margin significantly above last year and a substantial EPS outperformance. Our powerful multi-channel, multi-brand platform, together with our strong execution of our strategic initiatives in digital leadership, product innovation, retail transformation and operational excellence are having a positive impact on all parts of our business. Given the results in the first half and the momentum our initiatives are creating, we are raising our full-year guidance for net revenues, comp revenue growth, operating margin and EPS.
Looking forward
For the current third quarter of fiscal 2018, Williams-Sonoma is targeting revenue in the range of $1.355 billion to $1.38 billion, comparable-brand revenue growth of 3% to 5%, and adjusted earnings per share of $0.90 to $0.95.
With both that outlook and its relative outperformance so far this year in mind, Williams-Sonoma also raised its full fiscal-year guidance to call for revenue of $5.565 billion to $5.665 billion, up from $5.495 billion to $5.655 billion before, comparable-brand revenue growth of 3% to 5%, up from 2% to 5% previously, and adjusted earnings per share of $4.26 to $4.36, up $0.11 per share from both ends of its prior range.
All told, this was as good a quarter as Williams-Sonoma investors could have hoped for, and it should be no surprise to see the stock touching new multi-year highs in response.
