A number of companies, including Williams Sonoma (WSM -1.91%) have benefited tremendously from an acceleration in growth as a result of the COVID-19 pandemic's impact on daily life. 

While Williams Sonoma has thrived during the COVID-19 pandemic, some analysts are questioning whether the company will continue to produce strong operating results as the pandemic recedes.

Here are my 3 reasons why I believe Williams Sonoma will hold its own even as daily life returns to a degree of normalcy.

A person using a tablet while relaxing on a living room couch.

Image source: Getty Images.

1. Strong housing market translates into demand for Williams Sonoma's products

The first catalyst for sustaining Williams Sonoma's robust operating fundamentals is the hot housing market. The housing market has been boosted by near record-low interest rates and a shortage of housing inventory to meet the demand from millennials.

Even after 5.7 million existing homes were sold last year (up 5.9% from 2019), Zillow is anticipating a 21.9% year-over-year increase in existing home sales to 6.9 million in 2021 -- the most sales recorded since 2005.

As a company operating in the consumer discretionary sector, Williams Sonoma notes in the risk factors section of its recent 10-K that consumer demand for its products depends on general economic conditions, such as the condition of the housing market and consumer confidence.

Overall, Williams Sonoma appears to be positioned to benefit from a housing market that is forecast to remain healthy for the foreseeable future.

2. Increased remote work acceptance also bolsters demand

While the housing market will inevitably experience a downturn at some point in the future, a more enduring trend that has greatly accelerated since the start of the COVID-19 pandemic is the increasing adoption of permanent remote work.

According to Upwork's December 2020 Future Workforce Pulse Report, 68% of hiring managers surveyed felt that remote work was going better nine months into the process than it was at the beginning. This points to increased acceptance of remote work by hiring managers.

Because many hiring managers have cited increased productivity and flexibility as key benefits of remote work, its prevalence is likely to continue to grow in the years ahead.

Therefore, Upwork anticipates the number of U.S. remote workers will nearly double from 19.5 million pre-COVID to 36.2 million by 2025.

You may be asking how does more time spent at home lead to improved operating fundamentals for companies such as Williams Sonoma?

According to Dartmouth economist and professor Brian Melzer, the more time that people spent at home due to the COVID-19 pandemic, the more "they realized they wanted to invest a lot in those spaces."

As more Americans work from home, Williams Sonoma's brands should be able to capitalize on this shift in the nature of work.

3. A low housewares/home furnishings e-commerce penetration rate

Finally, the housewares and home-furnishings industry e-commerce penetration rate is relatively low in comparison to other industries.

Only 22% of sales in the housewares and home-furnishings industry are derived from e-commerce, which is significantly less than other industries such as toys/hobbies (25%) and apparel (33%).

Grand View Research is forecasting that global e-commerce sales will grow at 14.7% annually from $10.4 trillion in 2020 to $27.2 trillion by 2027. In light of this estimate, I believe it's fair to expect that the penetration rate of the housewares and home-furnishings industry will increase in the years ahead.

As an e-commerce-driven specialty retailer (70% of its 2020 sales were from e-commerce), Williams Sonoma is poised to increase its operating margin with the continued shift to e-commerce. According to CFO Julie Whalen's opening remarks during Williams Sonoma's Q4 2020 earnings call, this is because the e-commerce business is "more efficient and profitable."

While a strong housing market and increased remote-work acceptance will likely lead to higher revenues, an increased e-commerce sales mix will help the company to increase its operating margin from 14.2% in 2020 to its 15% target in five years.

A dividend growth stock with potential

With several tailwinds boosting Williams Sonoma for the foreseeable future, I don't believe that the company will face as much of a setback as some are expecting.

At just 13 times this year's earnings estimates, Williams Sonoma appears to be trading at a fair valuation for long-term, dividend-growth investors at the current price.

Even with analysts forecasting a slight pullback in diluted earnings per share (EPS) from $11.76 this year to $11.41 next year, Williams Sonoma seems to offer a safe, market-beating 1.6% yield compared to the S&P 500's 1.3%.