Williams-Sonoma (WSM) – Get Report Shares soared to an all-time high on Thursday after the home furnishings brand group crushed Wall Street’s earnings forecasts and raised its full-year sales outlook.
The owners of the Pottery Barn and West Elm furniture stores have raised their full-year revenue outlook, forecasting a growth rate from ‘high teens to low twenties’, with improved profit margins, following a stronger-than-expected second quarter bottom line at $3.24 per share — an 80% year-over-year increase — on $1.95 billion in revenue.
Comparable store sales at Pottery Barn were up 29.6%, the company said, while West Elm’s compositions were up a whopping 51.1%. Marriage registration sales were up 98% from last year’s pandemic trough and Williams-Sonoma’s business-to-business unit is on track to hit $700 million in revenue this year.
Williams-Sonoma also increased its dividend by 20% to 71 cents a share, and approved a $1.25 billion buyback program.
“These second quarter results demonstrate the success of our growth strategies and the profitability of our company,” CEO Laura Alber told investors in a conference call late Wednesday. “We have an edge in our industry thanks to our exclusive in-house design capabilities, our channel strategy, which is digital first but not just digital, and our values of sustainability and fairness underpin everything we do.”
“We don’t see any evidence that growth trends are declining. And in fact, we see a favorable position in the macro environment as more people prioritize their homes and interiors,” she added. “We believe we are at the crossroads of transformative change that will accelerate our industry growth and market share within the industry.”
Williams-Sonoma shares were up 12.3% in early trading on Thursday to switch hands at $192.50 each, a move that would extend their gains to about 90% so far. The stock hit a record high of $204.02 at the start of the session.
“Second quarter earnings were better than expected across the board, continuing the favorable trend in home-related spending across most of our coverage. Encouragingly, drivers such as B2B, incremental advertising and wedding registration appear positioned to drive incremental growth.” beyond nesting trends,” said KeyBanc Capital market analyst Bradley Thomas, who has a “sector weight” rating on the stock.
“Given strong trends and the favorable macro environment, management has raised its outlook for 2021 and brought forward its LT target of $10 billion in revenues to 2024,” he added. “We are incrementally positive about WSM’s outlook and are trying to get more positive against a more attractive valuation.”