Williams-Sonoma Hikes Dividend By 10%, Resumes Share Buyback Plan

Williams-Sonoma announced that its Board of Directors has authorized a 10% increase in the company’s quarterly cash dividend to $0.53 per share, sending shares up 1.9% in Monday’s after-market session.

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Furthermore, Williams-Sonoma (WSM) disclosed that on the back of on-going strength of its business and liquidity position, it has also decided to resume its share repurchase program and has repaid in full the short-term borrowings under its $500 million revolver.

The high-end kitchenware retailer said the quarterly dividend is payable on November 27, 2020 to stockholders of record as of the close of business on October 23, 2020. The company, which owns West Elm and Pottery Barn, had previously announced a quarterly dividend of $0.48 on August 26, 2020.

“Our decisions to increase our quarterly dividend, resume our share buyback program and pay down our revolver reflect the strength of our business and financial position, and our commitment to maximizing returns for our shareholders,” said Williams-Sonoma CEO Laura Alber. “Our strong performance during this pandemic reinforces the relevance of our curated, sustainable products and the power of our digital-first platform. We are seeing an inflection point in our business and are more confident than ever in our strategies to deliver strong, long-term growth with increasing profitability.”

More time at home during coronavirus-related lockdowns has triggered more interest in fixing up homes and setting up home offices, which has benefited home improvement and furnishing companies like Williams-Sonoma, who have been capitalizing on this trend.

Oppenheimer analyst Brian Nagel last month assigned a Buy rating on the stock with a $115 price target (15% upside potential), citing the potential for long-term operating margin expansion

“Amid a further strengthening domestic housing market and healthy home furnishing sector, we are increasingly optimistic that operating margin will continue to expand at the company, as WSM drives the acceleration of its profitable e-commerce business,” Nagel wrote in a note to investors. “WSM indicates that, as a result of now stronger online sales trends, operating margins at the chain should climb over time, consistent with our longer-held positive thesis on the story.” (See WSM stock analysis on TipRanks)

The rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus breaks down into 5 Buys, 7 Holds and 1 Sell. With shares up 36% this year, the $104.58 average analyst price target indicates 4.9% upside potential to current levels.