Competitor Analysis: Evaluating Williams-Sonoma And Competitors In Specialty Retail Industry

In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Williams-Sonoma WSM in comparison to its major competitors within the Specialty Retail industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.

Williams-Sonoma Background

With a retail and direct-to-consumer presence, Williams-Sonoma is a player in the $300 billion domestic home category and $450 billion international home market, focused on expanding its exposure in the B2B ($80 billion total addressable market), marketplace, and franchise areas. Namesake Williams-Sonoma (160 stores) offers high-end cooking essentials, while Pottery Barn (186) provides casual home accessories. West Elm (122) is an emerging concept for young professionals, and Rejuvenation (11) offers lighting and house parts. Brand extensions include Pottery Barn Kids and PBteen (46) as well as Mark & Graham and Greenrow. Williams-Sonoma also has a business-to-business team that supports projects that range from residential to large-scale commercial.

Through an analysis of Williams-Sonoma, we can infer the following trends:

• The current Price to Earnings ratio of 23.55 is 1.37x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 12.86 which exceeds the industry average by 4.15x.

• The Price to Sales ratio of 3.42, which is 3.84x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The company has a higher Return on Equity (ROE) of 11.98%, which is 9.6% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

• The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $380 Million, which is 19.0x above the industry average, indicating stronger profitability and robust cash flow generation.

• The company has higher gross profit of $840 Million, which indicates 7.64x above the industry average, indicating stronger profitability and higher earnings from its core operations.

• The company's revenue growth of -2.86% is notably higher compared to the industry average of -11.18%, showcasing exceptional sales performance and strong demand for its products or services.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

By analyzing Williams-Sonoma in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:

• When compared to its top 4 peers, Williams-Sonoma has a moderate debt-to-equity ratio of 0.69.

• This implies that the company maintains a balanced financial structure with a reasonable level of debt and an appropriate reliance on equity financing.

Key Takeaways

For Williams-Sonoma, the PE, PB, and PS ratios are all high compared to its peers in the Specialty Retail industry, indicating potential overvaluation. On the other hand, Williams-Sonoma's high ROE, EBITDA, gross profit, and revenue growth suggest strong operational performance and growth prospects relative to industry competitors.

This article was generated by Benzinga's automated content engine and reviewed by an editor.