Before the Wednesday morning bell, home products retailer Williams-Sonoma
What analysts say:
- Buy, sell, or waffle? Twenty-six Wall Street analysts follow the company. Six of them have buy ratings on the stock, one a sell rating, and the other 19 firms are holding. In our Motley Fool CAPS investor community, it's a four-star stock on the rise, based on 85 user ratings so far.
- Revenue. Management says it expects $812 million to $830 million in sales this quarter, and the average analyst would settle for $820 million. A year ago, the revenue total came in at $794 million.
- Earnings. The average analyst expects about $0.13 per share, down from $0.21 per share last year.
What management does:
Gross margin has been slipping slowly. With a relatively fixed operating cost structure underneath, that drop has translated to a thinner bottom line as well. At the same time, revenue growth is stagnating, and it all adds up to unimpressive trends everywhere you look. What's going on here?
|
10/2005 |
01/06 |
04/06 |
07/06 |
10/06 |
01/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
40.8% |
40.7% |
40.4% |
40.4% |
40.1% |
40.0% |
|
Operating |
9.9% |
10.2% |
9.9% |
10.0% |
9.8% |
9.8% |
|
Net |
6.1% |
6.1% |
5.9% |
5.9% |
5.7% |
5.6% |
|
Growth (YOY) |
10/05 |
01/06 |
04/06 |
07/06 |
10/06 |
01/07 |
|---|---|---|---|---|---|---|
|
Revenue |
11.5% |
12.8% |
12.3% |
10.9% |
8.2% |
5.3% |
|
Earnings |
15.7% |
12.4% |
8.0% |
8.7% |
0.4% |
-2.8% |
What management says:
Let's hear it from CEO Howard Lester, who described the key challenges of 2006 as a "housing-related macro environment" and a weak performance from the Pottery Barn brand. "We assure you that revitalizing its performance is our highest priority as we enter fiscal 2007," he said "How quickly can we react? Immediately, but the execution will take some time."
One Fool says:
Considering the slow business at competing businesses like Pier 1
We don't know exactly what the company intends to do about its struggling Pottery Barn concept, except the usual "merchandising, marketing, and store execution strategies," without any detail on these strategies. Visiting a Pottery Barn store last week, I couldn't tell if there were any drastic changes to the assortment, pricing, or advertising compared with past visits.
I guess we'll hear more tomorrow morning, including an update on the success of these plans. But as long as the housing market stays sluggish, I suppose we won't see anything exciting out of the retailers that aim to fill new houses with furniture and kitchen tools -- like Williams-Sonoma. Call it a slump, or call it a value opportunity.
Bed Bath & Beyond is both a Motley Fool Inside Value pick and a Stock Advisor recommendation. Talk stocks with other investors and our analysts when you give our newsletters a try.
Fool contributor Anders Bylund holds no position in any of the companies discussed here, though he is a frequent shopper at all of these stores. Well, maybe not Pier 1. You can check out Anders' holdings if you like, and Foolish disclosure looks spiffy on any nightstand or coffee table.
