Williams-Sonoma (NYSE:WSM) stock was rising by 3.3% on Wednesday after official market hours, as the company released its earnings report for the quarter ended on May 3. Most retailers are being hurt by the West Coast port slowdown and lackluster consumer spending, and while Williams-Sonoma is not immune to these factors, the company continues proving its ability to deliver consistent financial performance over time.
Solid numbers in a difficult context
Total revenues during the first quarter of 2015 grew 5.8% year over year, to $1.03 billion, versus $974 million in the first quarter of 2014. Wall Street analysts were on average expecting $1.01 billion in sales during the quarter, so the number came in ahead of expectations.
Importantly, comparable revenue grew at a healthy 4.6%, fueled by strong performance across the company's portfolio of brands. Comparable sales from its flagship Williams-Sonoma brand grew 2.7%, Pottery Barn sales increased 2.4%, West Elm delivered a 15.3% increase in comps, Pottery Barn Kids grew 0.8%, and sales from PBteen increased 3% year over year.
Although this represents a considerable slowdown versus the growth rates the company delivered in previous quarters, management had already warned investors about the expected negative impact from the West Coast port slowdown, which reduced revenues by between $30 million and $40 million during the quarter.
Williams-Sonoma is doing an amazing job at expanding its online presence, and the latest quarter was no exception at all. E-commerce net revenues increased 8.4% to $533 million during the last quarter, from $491 million in the same period last year. Since online sales are outgrowing total revenue, the e-commerce channel is representing a growing percentage of total sales, accounting for 52% of total company revenue, versus 50% of sales coming from the online channel in the year ago quarter.
Operating margin was at 7% of sales during the last quarter, a decline from 7.6% of revenues during the same period last year. Analysts broadly anticipated this performance, since the impact from the ports slowdown was already incorporated into projections. That said, earnings per share came in at $0.48, flat versus the same quarter last year, but above the $0.45 per share Wall Street analysts forecasted on average.
CEO Laura Alber sounded quite satisfied with Williams-Sonoma's performance during the last quarter and the outlook for the business going forward. In Alber's own words:
Our first-quarter results were better than we expected, driven by West Elm and our new businesses, as well as strong operational and financial execution across all of our brands. Based on the results we see across our portfolio, we are confident in the fundamentals of our business and the year ahead. We believe that our growth strategies, consistent execution and operational discipline, put us on track to deliver another record year for our shareholders.
Management reaffirmed guidance for the full-year fiscal 2015. The company is expecting total revenues in the range of $4.95 to $5.02 billion on the back of an increase of 4% to 6% in comparable brand sales. Operating margin is forecast to be in the range of 10.2% to 10.5% for the full year.
Strong merchandising, brand differentiation, and a big online presence are key competitive strengths for Williams-Sonoma, and management has consistently translated those advantages into above-average financial performance over time. Williams-Sonoma hasn't missed earnings estimates a single time since March 2011.
The latest quarter was no exception, as Williams-Sonoma continues proving that it has what it takes to deliver solid performance through all kinds of scenarios.