Shares of Williams-Sonoma (NYSE:WSM) jumped an impressive 18% in early trading on March 18. The big news was the furniture retailer’s after-the-close earnings release on March 17. But that’s not the only news it put out yesterday.
The fourth quarter of 2020 was a strong one for Williams-Sonoma, which reported “comparable brand revenue growth” of nearly 26% year over year. That strength was widespread across its nameplates: Sales were up 26.2% at Williams-Sonoma, they were up 25.7% at Pottery Barn, Pottery Barn Kids and Teen experienced a 25.7% advance, and West Elm’s sales rounded things out with a rise of 25.2%. Online “comparable brand revenue growth” was up nearly 48%, with e-commerce penetration stable at around 70% of revenues. Adjusted earnings, meanwhile, came in at $3.95 per share, up 85% from the prior year and 16.5% above analyst expectations. Investors were clearly and rightly pleased with this news.
However, there was more good news to be had here. In a separate news release, Williams-Sonoma announced that it would be increasing the dividend by 11%. That’s a pretty big hike. And on top of that, the company announced a $1 billion stock buyback plan. Not quite finished with the positives, management also reported that it had repaid a $300 million term loan. Commenting on these moves, CEO Laura Alber said they “reflect our confidence in the long-term outlook of our company, and our commitment to maximizing returns for our shareholders.” Investors were pleased with the earnings, but these moves and the CEO’s confidence probably helped augment the positive mood, too.
Williams-Sonoma managed to navigate the coronavirus pandemic in an extremely strong fashion. The fourth quarter proves that, and investors should be pleased with the results. That said, the onus now is to work through the economic reopening, which, thanks to vaccines, will likely include people spending less time at home as they feel confident enough to get back to a more normal life. In other words, don’t be surprised if 2021 isn’t quite as good as 2020, particularly given the hard comparisons on tap.
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