Williams-Sonoma, which also own Pottery Barn and West Elm, is bouncing back, posting financial results that beat projections, and raising its forecast for the year ahead.
For the second quarter of its fiscal year, the company says revenue grew 7.5% to $1.37 billion, up from $1.28 billion a year ago. And comparable brand revenue rose 6.5%, primarily due to a 17.5% jump at West Elm, and a 4.2% rise at Pottery Barn. Sales at Williams-Sonoma fell 1.1%.
Net income advanced to $62.6 million, up from $51.7 million, a 21% leap.
As a result, the San Francisco-based retailer is upping its guidance for the full year and says it now anticipates annual sales to come in between $5.74 billion and $5.9 billion. It expects comparable brand growth to rise between 3% and 6%.
Management says cross-brand initiatives also contributed to the gains. So did its data-driven performance marketing, which is “producing outsized returns on our digital media investments," says Laura Alber, president and CEO, in the company’s announcement.
Williams-Sonoma continues to right-size its physical footprint, saying it will close 25 stores.
Wedbush Securities analyst Seth Basham, noting that recent reports from companies like Walmart, Target and TJ Maxx prove consumers are confident and happy to spend on home furnishings, writes that the West Elm brand is showing momentum, “while the Pottery Barn brand also appears to have turned the corner.”
Additionally, based on Wedbush’s analysis of varying levels of discounts and free shipping offers in the company’s email marketing campaigns, Williams-Sonoma’s improved profit margins imply it is not “buying” its sales gains through overly steep discounts, he writes. Despite an increase in promotional intensity in the quarter, email offers are using a more effective differentiation between prospects and existing customers. “Indeed, Williiams Sonoma continues to better personalize and tailor its promotional offers,” he writes.
But looming tariffs, including those set to kick in next month, “remain a concern.”