Williams-Sonoma (NYSE:WSM) announced better-than-expected fiscal second-quarter 2019 results on Wednesday after the market closed, showcasing a sustained acceleration in comparable-brand sales growth as the home-furnishings retailer continues to enjoy the fruits of the strategic direction it took at the start of 2019. The company also raised its full-year outlook for the second time in as many reports.

Still, with shares down modestly in after-hours trading right now -- albeit after a nearly 40% year-to-date gain -- let's get comfortable for a closer look at what Williams-Sonoma accomplished over the past few months.

Interior of a Pottery Barn store with contemporary decor.

IMAGE SOURCE: WILLIAMS-SONOMA.

Williams-Sonoma results: The raw numbers

Metric

Fiscal Q2 2019*

Fiscal Q2 2018**

Year-Over-Year Growth

Revenue

$1.371 billion

$1.275 billion

7.5%

GAAP net income

$62.6 million

$51.7 million

21.1%

GAAP earnings per diluted share

$0.79

$0.62

27.4%

Data source: Williams-Sonoma. *For the quarter ended Aug. 4, 2019. **For the quarter ended July 29, 2018

What happened with Williams-Sonoma this quarter?

  • On an adjusted (non-GAAP) basis, which excludes one-time items related to restructuring and tax legislation, Williams-Sonoma's earnings increased 13% to $0.87 per share.
  • Recall Williams-Sonoma decided to stop providing specific quarterly guidance earlier this year in favor of focusing on its full-year outlook. So while we don't typically pay close attention to Wall Street's demands, most analysts were modeling lower adjusted earnings of $0.87 per share on revenue of $1.32 billion. 
  • Comparable brand revenue increased 6.5% (accelerating from 3.5% last quarter), as a 1.1% decline at Williams-Sonoma's namesake stores was more than offset by growth of 4.2% at Pottery Barn, 17.5% at West Elm, and 3.7% at Pottery Barn Kids and Teen.

What management had to say

Williams-Sonoma CEO Laura Alber stated:

We continue to deliver very strong results. [...] The growth strategy that we outlined at the beginning of the year is driving results and giving us the competitive advantage to continue to outperform. West Elm, our biggest growth opportunity, continues to accelerate, the Pottery Barn brands have returned to strength, and our cross-brand initiatives such as The Key and Business-to-Business are becoming more impactful levers of growth. We are also improving the customer experience through innovation and experimentation, and we are seeing the results of this work fuel brand level performance across our portfolio. In addition, our data-driven performance marketing is producing outsized returns on our digital media investments.

Looking forward

Given its relative outperformance in the first half, and sustained profitable growth stemming from its strategic initiatives, Williams-Sonoma raised its full-year outlook to call for fiscal 2019 revenue of $5.74 billion to $5.90 billion (up from $5.67 to $5.84 billion before), comparable-brand revenue growth of 3% to 6% (up from 2% to 5% previously), and adjusted earnings per share of $4.60 to $4.80 (up from its old per-share target range of $4.55 to $4.75).

Williams-Sonoma also reaffirmed its longer-term targets for total revenue and adjusted operating income growth in the mid- to high-single-digit percent range, with "above-industry average" returns on invested capital (ROIC).

So while it remains to be seen how the market reacts on Thursday to Williams-Sonoma's report, at first glance it appears there should be little not to like about this beat-and-raise performance.