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Williams-Sonoma Stock Surges 10% on Strong Beat, Analysts Positive -Breaking


© Reuters. Williams-Sonoma stock rises 10% after strong beat, analysts positive

By Senad Karaahmetovic

Williams-Sonoma shares (NYSE:) have risen nearly 10% during premarket trading following better-than-expected quarter-end net revenues and similar sales growth.

WSM’s net revenue topped the consensus estimate of $1.81 trillion in the quarter. It reported an EPS of 3.50 in Q1, $0.62 more than analysts expected at $2.88.

Comparable sales rose 9.5% in the quarter, as compared with a 40.4% increase over the same period last year. Analysts had expected a growth rate of 3.29%. In the third quarter, the adjusted operating margin was 17.1%, as compared to 15.9% last year. Analyst estimates were also at 15.9%.

Concerning guidance, the company stated:

“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. We are confident in its ability to maintain its operating margins because of the good inventory and cost control. As such, we maintain our Outperform rating,” Fernández told clients.

Bradley Thomas, KeyBanc analyst expects WSM will continue to gain market share.

“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.