Williams-Sonoma falls sharply after pulling FY24 guidance

Daniel Boczarski

Williams-Sonoma (NYSE:WSM) swung lower after a slight miss with Q3 EPS and an update on guidance that disappointed investors.

Comparable brand revenue growth was up 8.1% during the quarter vs. +6.7% consensus and was 25% higher on a two-year comparison. Comparable brand revenue was up 4.2% at West Elm, rose 19.6% at Pottery Barn, fell 4.8% at Pottery Barn Kids and Teen and was down 1.5% for the Williams Sonoma brand. CEO Laura Alber said the quarterly results reflected the continuation of backlog order fulfillment, strong product margins and disciplined cost control.

The retailer reported a non-GAAP operating margin fell 60 bps to 15.5% of sales. During the quarter, WSM saw higher shipping and freight costs while merchandise margin was flat compared to last year with occupancy deleverage of 30 bps.

Williams-Sonoma (WSM) reiterated its FY22 guidance of mid-to-high single digit annual net revenue growth and said it expected operating margins to be relatively in-line with the FY21 operating margin. Due to the macro uncertainty, WSM said it will not reiterate or update guidance through FY24.

Shares of Williams-Sonoma (WSM) shed 10.66% in after-hours trading to $116.25.

The Seeking Alpha Quant Rating on Williams-Sonoma jumped to Strong Buy from Hold on November 14.