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Williams-Sonoma Delivers As Promised, Sees Challenges Ahead

Image source: Williams-Sonoma.

Williams-Sonoma (NYSE:WSM) reported fiscal-second-quarter 2016 results Wednesday after the market closed, and the home furnishing specialist appears to have held up relatively well despite operating in an increasingly difficult retail environment. Let's take a closer look, then, at how Williams-Sonoma capped the first half of its year.

Williams-Sonoma results: The raw numbers

Metric

Q2 2016 Actuals

Q1 2015 Actuals

Growth (YOY)

Revenue

$1.159 billion

$1.127 billion

2.8%

Net income

$51.8 million

$53.7 million

(3.5%)

Earnings per diluted share

$0.58

$0.58

0%

What happened with Williams-Sonoma this quarter?

  • Both revenue and earnings came within Williams-Sonoma's guidance ranges provided last quarter, which called for revenue of $1.145 billion to $1.175 billion and adjusted diluted EPS of $0.54 to $0.60.
  • Revenue growth was driven by a 5.2% increase in e-commerce sales, to $600 million, representing 51.7% of total sales, and 0.4% growth in retail sales, to $559 million.
  • Comparable-brand revenue growth was 0.6% -- below guidance for comps growth of 1% to 4%, including
    • a 4.8% year-over-year decline in comparable-brand sales at Pottery Barn.
    • flat comps at Williams-Sonoma.
    • 15.8% growth at West Elm.
    • 0.1% growth at Pottery Barn Kids.
    • a 5.2% comps decline at PBteen.
  • The company repurchased 665,517 shares of common stock for roughly $36 million, or an average of $53.38 per share.
  • $486 million remains under Williams-Sonoma's current repurchase authorization.
  • Gross margin fell 70 basis points...

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