Analyst Applauds Williams-Sonoma's SG&A Management Amid Sluggish 1Q23 Sales

Telsey Advisory analyst Cristina Fernandez reiterated an Outperform rating on the shares of Williams-Sonoma Inc WSM with a price target of $135.
1Q EPS came in at $2.64 versus the analyst's estimate at $2.40 and Factset estimate of $2.38; comparable brand sales was (6.0%) versus the analyst's estimate of (5.0%) and FS at (4.5%).
Williams-Sonoma saw demand deteriorate as 1Q23 progressed, with comparable brand sales coming in short, said the analyst.
However, the company managed SG&A costs very tightly in 1Q23 through lower advertising and a workforce reduction to exceed operating margin and EPS expectations, added the analyst.
According to the analyst, the result demonstrates the company's ability to adjust quickly as demand slowed. The slowdown was broad-based, with all brands down Y/Y said the analyst.
The analyst noted that the workforce reduction in non-customer facing roles is expected to result in annual savings of $40 million or 50 basis points to the operating margin at the mid-point of the sales guidance.
The analyst believes there is risk that sales fall short of the guidance, but more comfort on the ability to hit the operating margin target.
Price Action: WSM shares are trading higher by 1.47% at $113.81 on the last check Tuesday.