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Williams-Sonoma Inc. (WSM - Free Report) reported mixed results for second-quarter fiscal 2024 (ended Jul 30, 2024).
The company’s earnings beat the Zacks Consensus Estimate, but net revenues missed the same. On a year-over-year basis, the top line declined, but the bottom line increased on the back of the 2-for-1 stock split completed in July.
Following the earnings release, shares of this multi-channel specialty retailer of premium quality home products lost 9.3% on Aug 22.
Earnings, Revenues & Comps Discussion
Non-GAAP earnings of $1.74 per share surpassed the Zacks Consensus Estimate of $1.64 by 6.1% and increased 11.5% from $1.56 reported a year ago.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Revenues of $1.79 billion missed the consensus mark of $1.82 billion by 1.5% and decreased 4% year over year.
In the fiscal second quarter, comps were down 3.3% compared with 11.9% in the year-ago period. Our model predicted comps to decline 1.8% in the quarter.
Comps at West Elm brand decreased 4.8% compared with 20.8% reported in the year-ago quarter. Comps at Pottery Barn dipped 7.1% compared with 10.6% reported in the year-ago quarter. Williams-Sonoma comps fell 0.8% compared with 0.7% registered in the year-ago quarter. Pottery Barn Kids and Teens comps increased 1.5% against a 9% decline reported in the year-ago quarter.
Merchandise inventories fell 4.1% to $1.25 billion during the reported quarter.
Operating Highlights
The gross margin was 46.2%, which increased 550 basis points (bps) from the year-ago period’s tally (above our projection of 42.9%). The increase was due to higher merchandise margins and lower costs from supply-chain efficiencies, partially offset by occupancy deleverage.
Non-GAAP selling, general and administrative expenses were 30% of net revenues (above our projection of 27.6%), reflecting an increase of 390 bps year over year due to higher performance-based incentive compensation and advertising spend.
The non-GAAP operating margin expanded 160 bps from the year-ago period’s figure to 16.2% for the quarter. Our model predicted an operating margin of 15.3% in the quarter.
Financials
As of Jul 28, 2024, Williams-Sonoma reported cash and cash equivalents of $1.27 billion, slightly up from $1.26 billion in the fiscal 2023-end.
Net cash from operating activities totaled $473.3 billion in the first six months of fiscal 2024 compared with $715 million a year ago.
Fiscal 2024 Guidance Updated
Williams-Sonoma now anticipates fiscal 2024 net revenues to decline in the 1.5-4% range compared with the prior projection between -3% and +3%. Comps for the year are now expected to be in the range of -3% to -5.5% compared with -4.5% to +1.5% expected earlier.
The company now expects its operating margin between 18% and 18.4% (versus earlier expectations of 17.6% and 18%), including the impact of the first-quarter out-of-period adjustment of 60bps.
Annual interest income is projected to be approximately $45 million, and the annual effective tax rate is likely to be 25.5%.
For the long term, the company still projects mid-to-high-single-digit annual net revenue growth and an operating margin in the mid-to-high teens.
The Wendy’s Company (WEN - Free Report) reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line declined. Solid same-restaurant sales and strength in the U.S. breakfast sales and digital sales momentum aided the company’s performance.
The company continues to focus on industry-leading quality, innovation and value. WEN aims to maintain a customer-first approach while driving its restaurant economic model throughout the year and beyond.
Shake Shack Inc. (SHAK - Free Report) posted decent second-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. The bottom and top lines increased on a year-over-year basis. In the quarter, the company benefited from product innovations, strategic menu pricing, technology implementations and promotions.
Looking ahead, SHAK is committed to achieving efficiency across regions and formats by utilizing drive-throughs and third-party delivery. The company plans to reduce build costs by 10% in 2024 and further lower costs in 2025, enabling the exploration of new real estate options while maintaining returns. It intends to achieve strong unit-level economics and boost ROI, fostering long-term value creation for its shareholders.
The Cheesecake Factory Incorporated (CAKE - Free Report) reported second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom and the top line increased from the prior-year quarter’s figure.
In the quarter, CAKE stated benefits from strong demand and sales performance of new restaurant openings. Also, improvements in food efficiencies, labor productivity, overtime and wage management enhanced restaurant-level profitability. The company emphasizes strengthening its operational service to drive long-term growth.
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Williams-Sonoma (WSM) Q2 Earnings Beat, FY24 Guidance Lowered
Williams-Sonoma Inc. (WSM - Free Report) reported mixed results for second-quarter fiscal 2024 (ended Jul 30, 2024).
The company’s earnings beat the Zacks Consensus Estimate, but net revenues missed the same. On a year-over-year basis, the top line declined, but the bottom line increased on the back of the 2-for-1 stock split completed in July.
Following the earnings release, shares of this multi-channel specialty retailer of premium quality home products lost 9.3% on Aug 22.
Earnings, Revenues & Comps Discussion
Non-GAAP earnings of $1.74 per share surpassed the Zacks Consensus Estimate of $1.64 by 6.1% and increased 11.5% from $1.56 reported a year ago.
Williams-Sonoma, Inc. Price, Consensus and EPS Surprise
Williams-Sonoma, Inc. price-consensus-eps-surprise-chart | Williams-Sonoma, Inc. Quote
Revenues of $1.79 billion missed the consensus mark of $1.82 billion by 1.5% and decreased 4% year over year.
In the fiscal second quarter, comps were down 3.3% compared with 11.9% in the year-ago period. Our model predicted comps to decline 1.8% in the quarter.
Comps at West Elm brand decreased 4.8% compared with 20.8% reported in the year-ago quarter. Comps at Pottery Barn dipped 7.1% compared with 10.6% reported in the year-ago quarter. Williams-Sonoma comps fell 0.8% compared with 0.7% registered in the year-ago quarter. Pottery Barn Kids and Teens comps increased 1.5% against a 9% decline reported in the year-ago quarter.
Merchandise inventories fell 4.1% to $1.25 billion during the reported quarter.
Operating Highlights
The gross margin was 46.2%, which increased 550 basis points (bps) from the year-ago period’s tally (above our projection of 42.9%). The increase was due to higher merchandise margins and lower costs from supply-chain efficiencies, partially offset by occupancy deleverage.
Non-GAAP selling, general and administrative expenses were 30% of net revenues (above our projection of 27.6%), reflecting an increase of 390 bps year over year due to higher performance-based incentive compensation and advertising spend.
The non-GAAP operating margin expanded 160 bps from the year-ago period’s figure to 16.2% for the quarter. Our model predicted an operating margin of 15.3% in the quarter.
Financials
As of Jul 28, 2024, Williams-Sonoma reported cash and cash equivalents of $1.27 billion, slightly up from $1.26 billion in the fiscal 2023-end.
Net cash from operating activities totaled $473.3 billion in the first six months of fiscal 2024 compared with $715 million a year ago.
Fiscal 2024 Guidance Updated
Williams-Sonoma now anticipates fiscal 2024 net revenues to decline in the 1.5-4% range compared with the prior projection between -3% and +3%. Comps for the year are now expected to be in the range of -3% to -5.5% compared with -4.5% to +1.5% expected earlier.
The company now expects its operating margin between 18% and 18.4% (versus earlier expectations of 17.6% and 18%), including the impact of the first-quarter out-of-period adjustment of 60bps.
Annual interest income is projected to be approximately $45 million, and the annual effective tax rate is likely to be 25.5%.
For the long term, the company still projects mid-to-high-single-digit annual net revenue growth and an operating margin in the mid-to-high teens.
Zacks Rank & Recent Releases
Williams-Sonoma currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Wendy’s Company (WEN - Free Report) reported dismal second-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line declined. Solid same-restaurant sales and strength in the U.S. breakfast sales and digital sales momentum aided the company’s performance.
The company continues to focus on industry-leading quality, innovation and value. WEN aims to maintain a customer-first approach while driving its restaurant economic model throughout the year and beyond.
Shake Shack Inc. (SHAK - Free Report) posted decent second-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. The bottom and top lines increased on a year-over-year basis. In the quarter, the company benefited from product innovations, strategic menu pricing, technology implementations and promotions.
Looking ahead, SHAK is committed to achieving efficiency across regions and formats by utilizing drive-throughs and third-party delivery. The company plans to reduce build costs by 10% in 2024 and further lower costs in 2025, enabling the exploration of new real estate options while maintaining returns. It intends to achieve strong unit-level economics and boost ROI, fostering long-term value creation for its shareholders.
The Cheesecake Factory Incorporated (CAKE - Free Report) reported second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The bottom and the top line increased from the prior-year quarter’s figure.
In the quarter, CAKE stated benefits from strong demand and sales performance of new restaurant openings. Also, improvements in food efficiencies, labor productivity, overtime and wage management enhanced restaurant-level profitability. The company emphasizes strengthening its operational service to drive long-term growth.