LONDON, UK / ACCESSWIRE / August 30, 2016 / Active Wall St. announces its post-earnings coverage on Williams-Sonoma Inc. (NYSE: WSM). The company released second-quarter fiscal 2016 (Q2 FY16) results on August 24, 2016. The home furnishing stores earnings was in-line with expectations; however revenue disappointed the Wall Street. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Numbers
During the reported quarter, Williams-Sonoma reported revenue of $1.16 billion, up 2.8% y-o-y basis from the year ago quarter, primarily driven by higher comparable brand revenues. However, it missed analysts' consensus estimate of $1.17 billion. The company's Q2 FY16 diluted earnings per share came in flat at $0.58, but was in-line with the company's expected range of $0.54 to $0.60 cents per share.
The San Francisco, California based company reported operating margin of 7.2% for the quarter ended July 31, 2016 compared to 7.4%, in the year ago quarter. Meanwhile, the company's gross margin fell to 35.4% in Q2 FY16 from 36.1% in Q2 FY15. For the reported period, Williams-Sonoma's SG&A expenses stood at $327.26 million, or 28.2% of net revenues, compared to $323.28 million, or 28.7% of net revenues, in Q2 FY15.
"Our second quarter results reflect the strength of our portfolio of brands, our balanced multi-channel model, our successful growth initiatives and a relentless focus on operational improvements," commented Laura Alber, Williams-Sonoma's President and Chief Executive Officer, "We saw substantial improvements across all of our supply chain and inventory initiatives which helped elevate our customer service levels, reduce costs and drive down merchandise inventories."
Segment-wise
The company's ecommerce net revenues grew 5.2% in Q2 FY16 to $599.68 million from $569.91 million in the comparable year ago quarter. Furthermore, the ecommerce segment contributed 51.7% to the company's total net revenues in Q2 FY16 versus 50.6% in Q2 FY15.
For the reported quarter, Williams-Sonoma's retail net revenues improved marginally by 0.4% on y-o-y basis to $559.35 million from $557.12 million in the prior year period. Additionally, its contribution to the total revenue decreased to 48.3% in Q2 FY16 from 49.4% in Q2 FY15.
Balance Sheet and Cash Flow
As of July 31, 2016, Williams-Sonoma's merchandise inventories stood at $962.94 million, down 6.6% on y-o-y basis from $1.03 billion as on August 2, 2015. Furthermore, the company had cash and cash equivalents worth $111.12 million at the end of Q2 FY16 compared to $119.78 million as at the end of Q2 FY15.
Stock Repurchases
During Q2 FY16, the company bought back 665,517 shares of common stock at an average cost of $53.38 per share for a total cost of $36 million approximately. Additionally, the company has $486 million approximately remaining under its current stock repurchase program as of July 31, 2016.
Earnings Guidance
For the upcoming third quarter of fiscal 2016 (Q3 FY16), the company expects total net revenues to be in the range of $1.24 billion to $1.29 billion with a growth of 0% to 4% in comparable brand revenue. The company's management also anticipates diluted EPS to be in the range of $0.75 to $0.80 for Q3 FY16.
In its guidance for full year FY16, the Pottery Barn owner forecasts total net revenues to be in the range of $5.08 billion to $5.23 billion with a growth of 1% to 4% in comparable brand revenue. The company also expects non-GAAP operating margin in the range of 9.4% to 9.8% and non-GAAP diluted EPS to be in the range of $3.35 to $3.55 for full year FY16.
Stock Performance
On August 29, 2016, Williams-Sonoma's shares gained 1.02% to end the session at $53.27. A total volume of 2.01 million shares changed hands during the day, which was higher than the 3 months average volume of 1.92 million shares. The company's share price has gained 1.13% in the past three months. However, in the last six months, the stock has lost 0.37%. The stock is trading at a PE ratio of 15.95.
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