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Williams-Sonoma (WSM)
NYSE:WSM
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Williams-Sonoma
(NYSE:WSM)74Outperform
Positive Factors
Earnings
The EPS of $1.96 exceeded Street's expectations by approximately 11%, driven by stronger revenue and more material gross margin expansion.
Shareholder Value
WSM also used its fortress balance sheet to repurchase $533M of stock in 3Q, which is approximately 3% of outstanding shares.
Negative Factors
Macroeconomic Risks
Macroeconomic uncertainty and a shortened holiday shopping period are factors considered in the forecast.
Williams-Sonoma (WSM) vs. S&P 500 (SPY)
Market Cap
$23.10B
Dividend Yield1.25%
Average Volume (3M)1.29M
Price to Earnings (P/E)22.2
Beta (1Y)1.34
Revenue Growth-5.00%
EPS Growth17.77%
CountryUS
Employees19,300
SectorConsumer Cyclical
Sector Strength53
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)8.46
Shares Outstanding123,099,945
10 Day Avg. Volume1,515,193
30 Day Avg. Volume1,285,316
Financial Highlights & Ratios
PEG Ratio1.25
Price to Book (P/B)N/A
Price to Sales (P/S)3.07
Price to Cash Flow (P/CF)22.80
P/FCF Ratio34.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$199.70Price Target Upside5.99% Upside
Rating ConsensusHold
Number of Analyst Covering10
Williams-Sonoma Business Overview & Revenue Model
Company DescriptionWilliams-Sonoma, Inc. is a renowned American retail company that specializes in high-quality home products. Established in 1956, the company is headquartered in San Francisco, California, and operates a diverse portfolio of brands, including Williams Sonoma, Pottery Barn, West Elm, and others. These brands offer a wide range of products, such as kitchenware, furniture, home décor, and cookware, catering to a broad spectrum of customers seeking premium home furnishings and lifestyle goods.
How the Company Makes MoneyWilliams-Sonoma generates revenue primarily through the sale of home-related products across its various retail brands. The company operates both brick-and-mortar stores and a significant e-commerce presence, allowing it to reach customers through multiple channels. Key revenue streams include direct-to-consumer sales via their online platforms, in-store purchases, and catalog sales. The company also leverages its brand strength and customer loyalty programs to drive repeat sales and expand its customer base. Additionally, Williams-Sonoma benefits from strategic partnerships with designers and exclusive product lines, enhancing its market differentiation and appeal. Seasonal and promotional campaigns further contribute to its earnings by boosting sales during peak shopping periods.
Williams-Sonoma Financial Statement Overview
Summary
Williams-Sonoma shows strong profitability and operational efficiency with high margins and return metrics. However, challenges exist in revenue growth and maintaining cash flow levels, necessitating a focus on sales growth and cash flow management.Income Statement
Williams-Sonoma exhibits a strong financial performance with a solid Gross Profit Margin of 46.73% and a robust Net Profit Margin of 14.54% in the TTM period. The EBIT Margin of 18.51% and EBITDA Margin of 20.90% further underscore operational efficiency. However, the company experienced a decline in revenue from the previous year, indicating potential headwinds in sales growth.80
Positive
Balance Sheet
The company's balance sheet is relatively stable with a moderate Debt-to-Equity Ratio of 0.69, reflecting manageable leverage. The Return on Equity stands at an impressive 57.42%, indicating effective utilization of equity. The Equity Ratio of 38.37% suggests a solid equity base, though there is room for improvement in reducing liabilities.75
Positive
Cash Flow
Williams-Sonoma demonstrates strong cash flow management with a healthy Operating Cash Flow to Net Income Ratio of 1.28. The Free Cash Flow to Net Income Ratio is also strong at 1.09. However, Free Cash Flow has decreased compared to the previous year, indicating potential challenges in maintaining cash generation levels.78
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 7.53B | 7.75B | 8.67B | 8.25B | 6.78B | 5.90B | Gross Profit |
| 3.52B | 3.30B | 3.68B | 3.63B | 2.64B | 2.14B | EBIT |
| 1.39B | 1.24B | 1.50B | 1.45B | 910.70M | 465.87M | EBITDA |
| 1.57B | 1.49B | 1.50B | 1.65B | 1.13B | 653.63M | Net Income Common Stockholders |
| 1.09B | 949.76M | 1.13B | 1.13B | 680.71M | 356.06M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 826.78M | 1.26B | 367.34M | 850.34M | 1.20B | 432.16M | Total Assets |
| 4.97B | 5.27B | 4.66B | 4.63B | 4.66B | 4.05B | Total Debt |
| 1.32B | 1.39B | 1.44B | 1.28B | 1.53B | 1.62B | Net Debt |
| 488.69M | 128.61M | 1.08B | 433.91M | 333.82M | 1.19B | Total Liabilities |
| 3.06B | 3.15B | 2.96B | 2.96B | 3.01B | 2.82B | Stockholders Equity |
| 1.91B | 2.13B | 1.70B | 1.66B | 1.65B | 1.24B |
| Cash Flow | Free Cash Flow | ||||
| 1.19B | 1.49B | 698.71M | 1.14B | 1.11B | 421.02M | Operating Cash Flow |
| 1.40B | 1.68B | 1.05B | 1.37B | 1.27B | 607.29M | Investing Cash Flow |
| -207.82M | -188.26M | -353.95M | -226.25M | -168.88M | -185.55M | Financing Cash Flow |
| -1.07B | -598.31M | -1.18B | -1.49B | -343.02M | -327.23M |
Williams-Sonoma Technical Analysis
Neutral
188.41
Price Trends
200.19
Negative
178.27
Positive
161.22
Positive
Market Momentum
-4.82
Positive
41.86
Neutral
32.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WSM, the sentiment is Neutral. The current price of 188.41 is below the 20-day moving average (MA) of 199.52, below the 50-day MA of 200.19, and above the 200-day MA of 161.22, indicating a neutral trend. The MACD of -4.82 indicates Positive momentum. The RSI at 41.86 is Neutral, neither overbought nor oversold. The STOCH value of 32.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WSM.
Williams-Sonoma Risk Analysis
Williams-Sonoma disclosed 41 risk factors in its most recent earnings report. Williams-Sonoma reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Williams-Sonoma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $23.10B | 22.19 | 58.86% | 1.25% | -5.00% | 17.77% | |
72 Outperform | ― | 68.75% | ― | 0.11% | 3.48% | ||
62 Neutral | $274.40M | 49.94 | 3.77% | ― | 0.15% | -65.52% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
47 Neutral | $5.39B | 80.64 | -38.18% | ― | 1.41% | -62.21% |
* Consumer Cyclical Sector Average
Performance Comparison
WSM
Williams-Sonoma
188.41
72.68
62.80%
SGI
―
―
―
―
RH
RH
262.43
-14.53
-5.25%
LOVE
The Lovesac Company
17.10
-5.12
-23.04%
Williams-Sonoma Earnings Call Summary
Earnings Call Date: Nov 20, 2024 | % Change Since: 37.68% | Next Earnings Date: Mar 12, 2025
Earnings Call Sentiment Neutral
Williams-Sonoma demonstrated strong profitability and operational efficiency with a record operating margin and effective inventory management. However, the company faced significant revenue challenges, particularly in high-ticket furniture sales, and notable declines in key brand segments such as West Elm and Pottery Barn.Highlights
Record Operating Margin
Williams-Sonoma reported a record third quarter operating margin of 17%, beating profitability estimates.
Earnings Per Share
Earnings per share for Q3 was $3.66, significantly above the 2019 EPS of $1.02.
Supply Chain Efficiencies
Supply chain improvements led to lower returns, damages, and replacements, contributing to higher selling margins.
Sustainability Achievements
Williams-Sonoma was named the top scorer on the Sustainable Furnishings Council's Wood Furniture Scorecard for the sixth consecutive year.
Cash and Inventory Management
Ended the quarter with a cash balance of $699 million and merchandise inventories down 17.2% from last year.
Lowlights
Decline in Revenue
Net revenues decreased by 14.6%, reflecting a negative macroeconomic environment affecting high-ticket discretionary furniture sales.
West Elm Performance
West Elm faced a 22.4% decline in comp sales, attributed to its high percentage of furniture offerings and customer base impacted by the macro environment.
Pottery Barn and Children's Brands
Pottery Barn saw a 16.6% decrease in comp sales, while Pottery Barn Kids and Teen experienced declines of 6.9% and 11.7% on a 2-year basis, respectively.
Company Guidance
During the Williams-Sonoma, Inc. third-quarter fiscal 2023 earnings call, the company provided updated guidance for the fiscal year. Operating margins were a highlight, with a record third-quarter operating margin of 17%, and earnings per share reaching $3.66. Despite a challenging environment, they managed to reduce promotional levels and focused on full-price selling, which contributed to their strong profitability. The company's updated guidance anticipates full-year revenues to decline by 10% to 12%, but they raised their outlook on operating margins to a range of 16% to 16.5%. This reflects their strategic focus on maintaining price integrity and operational efficiencies, even as top-line revenue faces pressures.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.