Please ensure Javascript is enabled for purposes of website accessibility

Why Williams-Sonoma Stock Jumped on Friday

By John Rosevear – May 30, 2020 at 10:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A profit that surprised Wall Street was one factor.

What happened

Shares of upscale home-goods retailer Williams-Sonoma (WSM -4.12%) surged on Friday, after the company reported results for the quarter ended May 5 that were well above Wall Street's expectations. 

Williams-Sonoma's shares ended Friday's session at $83.21, up 13.9% on the day. 

So what

Williams-Sonoma's results for its fiscal first quarter were surprisingly good given that its stores were closed for most of the period. Net income of $35.4 million was down from $52.7 million in the year-ago quarter, but it was far better than the loss that Wall Street had expected. 

A Williams-Sonoma home-goods store.

Image source: Williams-Sonoma.

On a non-GAAP adjusted basis, Williams-Sonoma earned $0.74 per share on revenue of $1.235 billion. That was a double beat: Wall Street analysts polled by Thomson Reuters had expected a loss of $0.15 per share on revenue of $1.02 billion.

CEO Laura Alber attributed the results to the company's strong and growing online storefronts. 

"Our teams maximized demand online, leaning into new and innovative ways to engage and serve our customers virtually," Alber said. "We gained market share with strong new customer growth in our DTC business, giving us even more confidence in the growth trajectory of our e-commerce business longer term."

Now what

Understandably, given the ongoing economic uncertainties, Williams-Sonoma declined to provide consumer-discretionary investors with guidance for the remainder of the 2020 fiscal year. But it reiterated its longer-term financial targets:

  • Revenue growth in the mid to high-single-digit percentage range.
  • Non-GAAP operating income growth in line with revenue growth, driving operating margin stability.
  • Return on invested capital above the industry average.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends Williams-Sonoma. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Williams-Sonoma, Inc. Stock Quote
Williams-Sonoma, Inc.
WSM
$122.45 (-4.12%) $-5.26
Thomson Reuters Corporation Stock Quote
Thomson Reuters Corporation
TRI
$103.73 (-1.05%) $-1.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
107%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.