Shares of home-goods retailer Williams-Sonoma (WSM -6.13%) jumped in early trading on Wednesday after the company reported results for its fiscal first quarter of 2024. As of 11:15 a.m. ET today, the stock was actually down almost 3% after being up as much as 11% shortly after the opening bell.
A new all-time high didn't hold
In the first quarter (which ended in April), Williams-Sonoma generated net revenue of almost $1.7 billion, which was down 5% year over year. On the bottom line, the company had diluted earnings per share (EPS) of $4.07, which blew past expectations by a mile. But there's an asterisk with this number.
In past years, management overestimated some expenses. Realizing the mistake, it's correcting that, which provided a one-time boost to this quarter's profit from an accounting perspective.
Still, the quarter was fairly strong for Williams-Sonoma. It had an operating margin of almost 20% which is impressive considering its pullback in sales. No doubt this was on investors' minds early today as the stock jumped to an all-time high of nearly $350 per share.
However, the all-time high might explain its subsequent pullback. The stock was up nearly 200% in the past year when it was at its highs today. It seems that some shareholders decided it was a good time to take some profits, explaining the current drop in price.
A profitable company and good investment
Management essentially maintained its full-year guidance today. It technically raised its guidance for its operating margin, but this was only done to reflect the one-time accounting adjustment in the first quarter.
For the year, it expects sales to be roughly flat with an operating margin of almost 18%.
It might not appeal to growth investors. But Williams-Sonoma is highly profitable and returns a lot of cash to shareholders, which has propelled it to strong gains in recent years and could continue to do so.
