Williams-Sonoma Plunges on Retail Weakness
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Williams-Sonoma (NYSE: WSM) announced seemingly decent third-quarter 2018 results on Thursday after the market closed, including modest growth from its largest brand concepts and a reiterated full-year outlook.
But that top-line growth was also near the lower end of expectations, causing shares of the home-furnishings retailer to plunge around 12% in after-hours trading as of this writing. Lets open the curtains to get a better view of how Williams-Sonoma kicked off the second half.
IMAGE SOURCE: WILLIAMS-SONOMA.
Williams-Sonoma results: The raw numbers
| Metric | Fiscal Q3 2018* | Fiscal Q3 2017 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $1.357 billion | $1.299 billion | 4.4% |
| GAAP net income | $81.5 million | $71.3 million | 14.2% |
| GAAP earnings per diluted share | $1.00 | $0.84 | 19% |
DATA SOURCE: WILLIAMS-SONOMA. *FOR THE QUARTER ENDED OCTOBER 29, 2018. GAAP = generally accepted accounting principles.
What happened with Williams-Sonoma this quarter?
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By comparison, revenue was near the low end of guidance provided in August, which called for a range of $1.355 billion to $1.38 billion.
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Adjusted for items like acquisition expenses and stock-based compensation, Williams-Sonoma generated (non-GAAP) earnings of $77.8 million, or $0.95 per share, at the high end of guidance for a range of $0.90 to $0.95.
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Comparable-brand revenue grew 3.1%, near the low end of guidance for growth of 3% to 5%.
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By retail concept, comparable-brand revenue climbed 1.4% at Pottery Barn, 8.3% at West Elm, 2.1% at Williams Sonoma, and remained flat at Pottery Barn Kids and Teen.
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E-commerce net revenue grew 8.2% year over year, to $747 million, or 55% of total sales, up from 53.9% last quarter.
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Retail net revenue grew 0.2%, to $610 million.
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Williams-Sonoma repurchased 742,508 shares of common stock for $45 million, or an average price of $61.15 per share. That left $299 million remaining under the company's repurchase authorization at the end of the quarter.
What management had to say
Williams-Sonoma CEO Laura Alber stated:
We delivered third quarter with EPS [earnings per share] at the high end of guidance and continued strength in demand and customer growth. This performance demonstrates our team's strong execution, the ongoing benefits of our strategic initiatives and the power of our multi-channel, multi-brand model. Given the substantial progress we've made in our business this year and our compelling pipeline of innovative product and inspiring content, we believe we are well-prepared to deliver this holiday season and remain on track to meet our full-year guidance.