Williams-Sonoma Inc
Q3 2024 Earnings
Market Reaction
S&P 500 over the same 30 days: +0.71%.
Did WSM Beat Earnings? Q3 2024 Results
Williams-Sonoma delivered a stronger-than-expected third quarter of fiscal 2024, with results that sent its stock surging to record levels as investors cheered both the earnings beat and a raised full-year outlook. The home-goods retailer posted GAAP diluted EPS of $1.96, beating the $1.77 consensus estimate by 10.81%, while net revenues of $1.80 billion edged past the $1.78 billion estimate by 0.89%, even as the top line fell 2.9% from the prior-year period. The primary driver of the earnings outperformance was a sharp expansion in gross margin, which widened 230 basis points year-over-year to 46.7%, fueled by stronger merchandise margins and meaningful supply chain efficiencies. Operating income reached $320.64 million, with an operating margin of 17.8%, up 80 basis points. Pottery Barn Kids and Teen was a notable bright spot, posting 3.8% comparable brand revenue growth while larger siblings Pottery Barn and West Elm continued to face softness. Management raised its fiscal 2024 guidance, now projecting annual net revenue change of negative 3.0% to negative 1.5% and an operating margin of 17.8% to 18.2% on an adjusted basis, a 40-basis-point improvement from prior guidance.
- Higher merchandise margins of +130bps
- Supply chain efficiencies of +100bps
- Continued improvement in comparable brand revenue trend
- Market-share gains
- Pottery Barn Kids and Teen returned to positive comp growth of 3.8%
- Occupancy costs declined 2.7% year-over-year
“We are pleased with the results of our third quarter, beating both top and bottom-line expectations. The quarter was driven by continued improvement in our sales trend, market-share gains, and strong profit. In Q3, our comp came in at -2.9%, with an operating margin of 17.8%, delivering a 7.1% increase in earnings per share to $1.96. Our operating results reflect the operational improvements that we have been focused on all year, and demonstrate the strength of our margin profile in a difficult environment.”
Williams Sonoma CEO, on the earnings call
Forward Guidance & Outlook
The company raised its fiscal 2024 guidance. Annual net revenue is now expected to decline 3.0% to 1.5%, with comparable brand revenue in the range of -4.5% to -3.0%. Operating margin guidance was raised to 18.4% to 18.8% (including 60bps from a Q1 out-of-period adjustment), or 17.8% to 18.2% excluding the adjustment — a 40bps raise. Annual interest income is expected to be approximately $50 million with an effective tax rate of approximately 25.0%. Fiscal 2024 is a 53-week year, with the extra week expected to contribute 150bps to net revenue and 10bps to operating margin. Over the long term, the company continues to expect mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.
WSM YoY Financials
WSM Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.