Williams-Sonoma's Q1 Earnings Beat Estimates, Revenues Up Y/Y

Core Insights - Williams-Sonoma Inc. (WSM) reported first-quarter fiscal 2025 results with earnings and net revenues exceeding the Zacks Consensus Estimate, showing a year-over-year increase in the top line and positive comparable sales [1][3] Financial Performance - Earnings per share (EPS) were reported at $1.85, surpassing the Zacks Consensus Estimate of $1.76 by 5.1%, although down from $1.99 in the prior-year quarter [3] - Net revenues reached $1.73 billion, exceeding the consensus mark of $1.67 billion by 3.7% and growing 4.2% year over year [3] - Comparable sales increased by 3.4%, a significant improvement from a negative 4.9% in the year-ago period [3] Segment Performance - Comparable sales at Williams-Sonoma increased by 7.3% compared to 0.9% in the year-ago quarter [4] - West Elm's comparable sales gained 0.2%, recovering from a 4.1% decline in the previous year [4] - Pottery Barn Kids and Teens saw a 3.8% increase in comparable sales, up from 2.8% in the year-ago quarter, while Pottery Barn's comparable sales inched up 2% from a 10.8% decline [4] Operating Metrics - Gross margin was reported at 44.3%, down from the projected 44.5%, and contracted 60 basis points year over year [5] - Selling, general and administrative expenses were 27.5% of net revenues, better than the projected 28.1%, reflecting a 130 basis points improvement year over year [6] - Operating margin expanded by 70 basis points to 16.8%, exceeding the model's prediction of 16.4% [6] Cash Flow and Shareholder Returns - As of May 4, 2025, cash and cash equivalents stood at $1.05 billion, down from $1.21 billion at the end of fiscal 2024 [7] - Net cash from operating activities totaled $118.9 million, compared to $226.8 million a year ago, allowing the company to return nearly $165 million to shareholders through stock repurchases and dividends [7] Future Guidance - For fiscal 2025, WSM projects annual net revenues to range from -1.5% to +1.5%, with comparable brand revenue growth expected to be flat to +3.0% [8] - Operating margin guidance is set between 17.4% and 17.8% [8] - Long-term expectations include mid-to-high single-digit revenue growth and operating margins in the mid-to-high teens [9]