WSM - Williams-Sonoma gains after full-year guidance is reaffirmed

2023-05-23 09:51:00 ET

Williams-Sonoma ( NYSE: WSM ) jumped in early trading on Tuesday after posting a better-than-feared Q1 earnings report .

Comparable brand revenue declined 6.0% with a 2-year comparable sales growth mark of 3.5% and a 4-year comparable sales growth mark of 46.5%. Comparable brand revenue was down across Pottery Barn (-0.4%), West Elm (-15.8%), Williams Sonoma (-4.4%), Pottery Barn Kids and Teen (-3.3%)

The retailer's gross margin rate deleveraged 520 basis points to 38.6% of sales, primarily driven by higher inbound and outbound shipping and freight costs with occupancy deleverage of 170bps. Occupancy costs increased 8.6% to $202M on a non-GAAP basis.

Williams-Sonoma ( WSM ) ended the quarter with a cash position of $297M.

CEO update: "Despite a challenging macro backdrop, we delivered another solid quarter of earnings. With our focus on compelling product, customer service, and profitability, we achieved our financial expectations,"

Looking ahead, WSM reiterated FY23 and long-term guidance. The retailer expects net revenue growth in the range of -3% to +3% with an operating margin between 14% to 15%. In the long-term, WSM expects mid-to-high single-digit annual net revenue growth with operating margin above 15%. The guidance update stood out with some mall peers lowering their expectations.

Shares of Williams-Sonoma ( WSM ) opened trading on Tuesday with a 3.98% swing higher to $116.62 vs. the 52-week range of $101.58 to $176.89.

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