Shares of Williams-Sonoma (WSM -0.48%) were climbing today after the home furnishings retailer posted another blowout earnings report as the company continued to benefit from the pandemic-driven boom in home goods.
The stock was up 7.5% as of 10:42 a.m. EST.
Comparable sales at the high-end home goods retailer, which also owns West Elm and Pottery Barn, jumped 24.4% in the quarter as e-commerce sales, which make up about half of the company's revenue in normal times, jumped 49%, contributing nearly 70% of revenue. In-store sales were down 11% in the period, but gradually recovered over the course of the quarter, and sales were strong across all of its brands with Williams-Sonoma leading the pack with 30.4% comparable sales growth.
Demand was even stronger as the value of all orders placed in the quarter rose 31%, and overall revenue increased 22.4% to $1.77 billion, easily beating estimates at $1.6 billion.
The sales boom drove strong profit growth as gross margin increased from 35.9% to 40% due to improved merchandise margins and leverage on fixed costs. Operating income more than doubled in the quarter to $275 million. Adjusted earnings per share jumped from $1.02 to $2.56, well ahead of expectations at $1.53.
CEO Laura Alber touted the company's momentum and its mission, saying:
Our vision is to own the home. And, with our distinctive positioning we will only become more relevant. We have the strategies, the team and the world-class platform to maximize the industry trends that favor our business and successfully execute on our growth opportunities.
Shares of Williams-Sonoma are now up nearly 50% for the year as the company has gotten a huge tailwind from the pandemic, much like other home furnishings retailers, including Wayfair and RH. The company declined to give guidance for the key holiday quarter, but reiterated long-term guidance of annual revenue growth in the mid- to high single digits, adjusted operating margin expansion, and a return on invested capital that's above the industry average.
With its strong e-commerce operations, Williams-Sonoma seems poised to benefit from the accelerated shift to online shopping, but the company will face some difficult comparisons once the pandemic comes to an end.