Pottery Barn Follows Furnishing Industry Slump; Williams-Sonoma Misses Estimates And Weak Forecasts

Williams-Sonoma, Inc WSM released its Q2 results after market close on Wednesday. Earnings per share came in in-line Wall Street consensus expectations, however, the company missed on sales estimates.

Williams-Sonoma reported EPS of $0.58 and revenues of $1.159 billion. Analyst consensus had an EPS estimate of $0.58 and revenues of $1.17 billion. The company reported Q2 total comparable same store sales up 0.6 percent.

Williams-Sonoma saw Q3 EPS at $0.75-$0.80 vs. estimates of $0.81 and Q3 revenues of $1.235-$1.285 billion vs. estimates of $1.28 billion. Additionally, the company saw FY16 EPS of $3.35-3.55 vs. estimates of $3.57. Additionally, management forecasted FY16 sales between $5.075-$5.225 billion vs. estimates of $5.22 billion.

"Despite the progress that we have made against our strategic initiatives, the overall retail environment has softened and we are being impacted by a more cautious consumer. As a result, we have revised our outlook for the remainder of the year to reflect this change in t rend. We remain focused on what we can cont rol to drive growth and continuous improvements in our operations, including strengthening and growing our brands, further differentiating our product offering, innovating our marketing and digital st rategies and enhancing the retail experience," stated Laura Alber, President and CEO.

Sonoma's Weakness Confirms Overall Home Furnishing Industry Slump

According to Barclay's Matthew McClintock, "Census data indicate the Furniture & Home Furnishings industry was up 2.7% y/y for May-July, marking the worst quarterly performance since 4Q13 and a substantial sequential deceleration from 6.6% in 1Q16. We believe there is an industry shift to the value channel."

The analyst was worried the low growth would effect Williams-Sonoma negatively and had an Underweight rating on the stock partly due to the trend.

Diverse Brand Performance

The company reported the following for brand revenue growth:

• Pottery Barn +6.4%
• Williams-Sonoma -0.3%
• West Elm +15.7%
• Pottery Barn Kids +3.3%
• PBteen +3.9%
• Total +6.3%