By Senad Karaahmetovic
Shares of Williams-Sonoma (NYSE:WSM) are up nearly 10% in premarket trading after the company reported better-than-expected Q1 net revenue and comparable sales growth.
WSM reported net revenue of $1.89 billion in the first quarter, topping the consensus estimates of $1.81 billion. The company reported a Q1 EPS of $3.50, $0.62 better than the analyst estimate of $2.88.
Comparable sales grew 9.5% in the period, compared to a 40.4% growth in the year-ago period while analysts were expecting a growth of 3.29%. The adjusted operating margin stood at 17.1% in the quarter, compared with 15.9% in the same period last year and analyst estimates of also 15.9%.
On the guidance front, the company commented:
“We are expecting our fiscal year 2022 financial performance to be in line with our long-term financial guidance of mid-to-high single digit annual net revenue growth, increasing revenues to $10 billion by fiscal year 2024, and operating margins relatively in-line with our fiscal year 2021 operating margin.”
Telsey Advisory Group analyst Cristina Fernández said WSM delivered a “strong beat”.
“As we look at the rest of 2022, we expect demand to slow given macro pressures, but Williams-Sonoma has a strong backlog and company-specific merchandise and growth drivers (global, B2B, marketplace) to fare better than the industry. Its inventory also remains in a good position, which combined with cost discipline, gives us confidence in the company's ability to preserve its operating margin. As such, we maintain our Outperform rating,” Fernández told clients.
KeyBanc analyst Bradley Thomas expects to see continued market share gains from WSM.
“While 2Q demand has slowed slightly, and we believe there is further risk of consumer deterioration, WSM reiterated its 2022 guidance. We maintain that WSM can outperform its peers but also believe slowing furnishing spend and historically high margins are likely to weigh on investor sentiment,” Thomas told clients.