Well, at least the market isn't playing favorites.
Along with other uber-retailers like HomeDepot (NYSE:HD), Bed Bath & Beyond (NASDAQ:BBBY), and Best Buy (NYSE:BBY), Williams-Sonoma (NYSE:WSM) has seen investor sentiment turn downright frosty as we head into summer.
Granted, it's not like the earnings report from this retailer of various housewares and furniture is going to really cheer investors. Total revenue grew a bit more than 10%, with companywide comp-store sales growth of 1.3% -- the lowest result I've seen in the last year and a half. At least Internet revenue growth stayed strong -- once again up more than 30%.
Margins were a little dicey this quarter, even when you factor out some accounting items. Topping it off, management acknowledged what several other retailers have said -- namely, that consumer shopping trends have gotten more volatile since April. And while volatility might please the trading desks of Wall Street, it's not nearly as welcome with the analysts and professional investors.
I think this is the first time that I've seen Williams-Sonoma not overvalued by a double-digit percentage in my models. Of course, that doesn't mean that I'm eager to be racing into the stock. First, it's not nearly cheap enough (relative to my required margin of safety). Second, if customers really are starting to sit on their pocketbooks in response to higher interest rates, higher gas prices, and all-around weaker confidence, then the growth estimates might need to come down as well.
Williams-Sonoma is a fine company and I don't think there's a serious challenger to its spot in the accessible-yet-high-end housewares market. Well, at least not a publicly traded challenger -- until and unless Crate & Barrel goes public. But with so many other great companies getting cheaper these days, I don't feel the rush to get into this stock just yet.
For more retail Foolishness:
- Another Merry Christmas at Williams-Sonoma
- Cost Plus Still a Negative
- What's Ahead for Bed Bath & Beyond?
Home Depot is a Motley Fool Inside Value recommendation. Bed Bath & Beyond and Best Buy are Motley Fool Stock Advisor recommendations. Whatever your investing style, the Fool has a newsletter for you.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
