Williams-Sonoma Q4 tops Street as revenue climbs; West Elm surges

Strong growth across its e-commerce and retail operations, particularly West Elm, bolstered Williams-Sonoma’s holiday quarter with the retailer reporting earnings and revenue that beat Wall Street's estimates. The company also gave a strong outlook for the year.

Williams-Sonoma reported net income of $95.8 million, or $1.13 a share, for the period ended Jan. 28, compared with $144.6 million, or $1.63 a share, in the year-ago period. Income was impacted by the recent tax legislation. Adjusted earnings were $1.68 a share, topping Wall Street estimates of $1.61 a share.

Revenue rose 6.2% to $1.68 billion, from $1.58 billion. Analysts had estimated $1.65 billion. E-commerce revenue jumped 8.4%, and was 52.2% of total company net revenues.

The company reported overall comparable growth of 5.4%, with gains across all divisions, including Pottery Barn and Williams Sonoma, which increased 4.1% and 4.3%, respectively. But the standout was West Elm, where comp growth surged 12.3%. On the chain’s quarterly conference call with analysts, Williams-Sonoma president and CEO Laura Alber described West Elm as “one of the fastest-growing, most profitable brands in the industry,” and said it will expand into additional categories.

“We will also increase West Elm's brand awareness through new stores and high-impact advertising campaigns that have proven successful in driving new customers to the brand,” Alber said. “We are confident in the brand's potential to reach $2 billion in the near-term and be our biggest brand overtime.”

For the full year, net revenue increased 4.1% to $5.292 billion. Comparable brand revenue increased 3.2%, driven by accelerated growth from the Pottery Barn brand, and the eighth consecutive year of double-digit comp growth in West Elm.

E-commerce net revenues increase 5.5% to $2.778 billion, or 52.5% of total company net revenues.

Looking head to fiscal year 2018, the retailer expects full year EPS to be between $4.12 and $4.22. This reflects the impact of the 53rd week in fiscal year 2018, and the net benefits of the recently enacted Tax Cuts and Jobs Act.

The board of directors also authorized a $0.04, or 10% increase, in quarterly cash dividends to $0.43, and an increase in the company’s stock repurchase authorization to $500 million.

“In 2018, we will continue to strategically invest in digital advertising, technology and our customer experience, while driving efficiencies and cost savings throughout our business,” Alber added.