Williams-Sonoma (WSM 1.73%) announced fiscal fourth-quarter 2018 results on Wednesday after the market closed. The home-furnishings retailer not only highlighted better-than-expected growth during the crucial holiday quarter, but also raised its dividend and announced a large new stock repurchase authorization.
With shares up modestly in after-hours trading as of this writing, let's take a closer look at how Williams-Sonoma ended the year, as well as how the company set the stage for the quarters ahead.
IMAGE SOURCE: WILLIAMS-SONOMA.
Williams-Sonoma results: The raw numbers
| Metric |
Fiscal Q4 2018* |
Fiscal Q4 2017** |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$1.836 billion |
$1.68 billion |
9.3% |
|
GAAP net income |
$155.3 million |
$95.8 million |
62.2% |
|
GAAP earnings per diluted share |
$1.93 |
$1.13 |
70.8% |
DATA SOURCE: WILLIAMS-SONOMA. *FOR THE 14 WEEKS ENDED FEB. 3, 2019. **FOR THE 13 WEEKS ENDED JAN. 28, 2018.
What happened with Williams-Sonoma this quarter?
- The extra week in this quarter as compared to the same year-ago period added $85 million in revenue and $0.10 per share in earnings.
- Even so, revenue arrived above the high end of guidance provided in November, which called for a range of $1.733 billion to $1.833 billion.
- On an adjusted (non-GAAP) basis, which excludes items like acquisition costs and equity compensation, net income was $169.4 million, or $2.10 per share, also well above guidance for a range of $1.89 to $1.99 per share.
- Comparable-brand revenue grew 2.4%, in the middle of guidance for a range of flat to up 5%, as a 0.4% decline from Pottery Barn was more than offset by growth of 11.1% at West Elm, 0.1% at Williams Sonoma, and 1.6% from Pottery Barn Kids and Teen.
- E-commerce net revenue rose 14.3% (or 14.2% on a non-GAAP basis), accelerating from 8.2% growth last quarter and representing 54.6% of total company revenue.
- Retail net revenue increased 3.9% to $834.2 million.
- In a separate press release Wednesday, Williams-Sonoma announced that its board authorized an 11.6% boost (or $0.05 per share) to the company's quarterly dividend, bringing it to $0.48 per share.
- The board also approved a $500 million increase to WSM's existing share repurchase authorization, bringing the total remaining to $710 million.
Check out the latest earnings call transcript for Williams-Sonoma.
What management had to say
Williams-Sonoma CEO Laura Alber stated:
2018 was a strong year for our business. We outperformed revenue and EPS expectations while making important investments in our business that set us up for accelerated long-term growth. [...] For 2019 and beyond, our goal is to maximize growth and maintain high profitability, and we have several substantial growth engines that we will be aggressively prioritizing, including West Elm, our newly launched Business to Business offering, our emerging brands -- Williams Sonoma Home, Rejuvenation and Mark and Graham -- as well as growth in our largest brand Pottery Barn and our namesake brand Williams Sonoma. In addition to our brands, we have a number of cross-brand initiatives, including The Key, which we believe will also be significant drivers of our future growth.
Looking forward
From now on, Williams-Sonoma will only be offering guidance on an annual basis, with any relevant updates provided on a quarterly basis.
It expects full fiscal-year 2019 revenue ranging from $5.67 billion to $5.84 billion (up from $5.67 billion in fiscal 2018), assuming a net of 30 store closures and comparable-brand revenue growth of 2% to 5%. On the bottom line, that should translate to adjusted earnings per share of $4.50 to $4.70. By comparison -- and while we don't typically lend much credence to Wall Street's demands -- most analysts were modeling lower fiscal 2019 earnings of $4.44 per share on revenue just below the midpoint of Williams-Sonoma's guidance range.
All told, this was as strong a quarter as any Williams-Sonoma investor could have hoped in the all-important holiday season. Coupled with the company's optimistic outlook, I think the market has every justification to bid up Williams-Sonoma stock in response today.
