WSM - Williams-Sonoma smashes comparable sales estimates sees margins fall

Shares of Williams-Sonoma ( NYSE: WSM ) jumped after the retailer reported a record Q2 sales tally of $2.14B and EPS comfortably ahead of the consensus mark.

Comparable brand revenue was up 11.3% during the quarter vs. +5.9% consensus.

Comparable brand revenue growth was positive for the West Elm (6.1%), Pottery Barn (+21.5%), Pottery Barn Kids and Teen (+5.3%) and Williams Sonoma (+0.5%) brands.

The retailer reported gross margin of 43.5% vs. 44.1% a year ago. The margin drop was attributed to higher shipping and freight costs, partially offset by merchandise margin expansion. Non-GAAP operating margin improved 40 basis points year-over-year during the quarter.

WSM generated $199M in operating cash flow during the quarter to enable it to repurchase over $265M in shares and to pay over $54M in dividends.

CEO update: "Our performance was driven by strong order fulfillment, positive demand comps, and our successful continued elimination of site-wide promotions."

Guidance from WSM is for FY22 and long-term is for mid-to-high single digit annual net revenue growth. WSM expects to increase revenue to $10B by FY24 and operating margins relatively in-line with the FY21 operating margin.

Shares of Williams-Sonoma ( WSM ) edged up 0.18% in after-hours trading after falling back 1.22% in regular trading just ahead of the earnings report.

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