Williams-Sonoma Shares Spike On Heels Of Earnings Report, $1 Billion Buyback Plan

Williams-Sonoma, Inc. WSM shares skyrocketed after the company reported better-than-expected third-quarter 2024 results, announced a new $1 billion buyback program, and raised its outlook.

The company reported third-quarter adjusted earnings per share of $1.96, beating the analyst consensus of $1.78.

Quarterly sales declined by 2.9% year-over-year to $1.8 billion, beating the street view of $1.79 billion. Comparable brand revenue was down 2.9% year-over-year.

The quarter showed continued improvement in the company’s sales trend and market-share gains.

Williams-Sonoma CEO Laura Alber said “comp came in at -2.9%, with an operating margin of 17.8%, delivering a 7.1% increase in earnings per share to $1.96.”

The gross margin expanded by 238 basis points to 46.7% from last year, driven by higher merchandise margins of +130bps and supply chain efficiencies of +100bps.

Q3 operating income was $320.64 million (+1.8% YoY), and the margin rose 80 bps to 17.8%. Merchandise inventories grew 3.8% YoY to $1.45 billion.

The company maintained a liquidity position of $827 million in cash and operating cash flow of $254 million. It returned $606 million to stockholders through $533 million in stock repurchases and $73 million in dividends.

Buyback: In September 2024, the board approved a $1 billion stock repurchase. The plan is effective after the $293 million remaining from the March 2024 program is utilized. Repurchases will occur via open market or private transactions based on market conditions.

2024 Outlook, raised: Williams-Sonoma now expects a net revenue decline of -3.0% to -1.5% (prior view -4.0% to -1.5%) with comps of -4.5% to -3.0% (prior view -5.5% to -3.0%).

WSM raised operating margin guidance to 18.4%-18.8% (17.8%-18.2% excluding a 60bps first-quarter adjustment).

Over the long term, the company continues to expect mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.

Price Action: Williams-Sonoma shares are trading higher by 25% at $171.55 at the last check Wednesday.

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