Williams-Sonoma, Inc. ($WSM) Reports First Quarter 2024 Results

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Williams-Sonoma, Inc. (WSM) announced its first quarter 2024 results, showing a comparable brand revenue of -4.9% and an operating margin of 19.5%. The company's President and CEO, Laura Alber, expressed satisfaction with the results, citing improved top-line trends and continued profitability. The company's gross margin increased by 690bps compared to the LY GAAP basis, driven by higher merchandise margins and supply chain efficiencies. Occupancy costs increased by -3.2% to the LY GAAP basis.

The company's SG&A rate increased by 28.8% to +170bps due to higher advertising spend and incentive compensation. Operating income reached $324 million with an operating margin of 19.5%, and diluted EPS was $4.07 per share. The company maintained a strong liquidity position of $1.3 billion in cash and operating cash flow of $227 million, enabling it to deliver returns to stockholders of $107 million through dividends and stock repurchases.

The company over-recognized freight expense in fiscal years 2021, 2022, and 2023 for a cumulative amount of $49 million. The Condensed Consolidated Financial Statements for the thirteen weeks ended April 28, 2024, include an out-of-period adjustment of $49 million to reduce the cost of goods sold and accounts payable. The company is reiterating its guidance of annual net revenue growth in the range of -3% to +3% with comps in the range of -4.5% to +1.5% in fiscal 2024.

The company is raising its guidance on its operating margin for fiscal 2024, expecting an operating margin between 17.6% to 18.0%, including the impact of the out-of-period adjustment of 60bps. Without this adjustment, the company expects an operating margin between 17.0% to 17.4% in fiscal 2024.

Fiscal 2024 is a 53-week year, with financial statements prepared on a 53-week basis in fiscal 2024 and a 52-week basis in fiscal 2023. The additional week in fiscal 2024 is expected to contribute 150bps to net revenue growth and 10bps to operating margin. 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.

Technical Outlook
Williams-Sonoma stock (WSM) is up 23% in Wednesday's Pre-market trading previously closing with a Relative Strength Index (RSI) of 60.37. The stock has formed a mini double-shoulder top pattern.