Williams-Sonoma (WSM) 2Q16 RESULTS: REVENUE MISS, DOWNBEAT GUIDANCE CITES “CAUTIOUS” SHOPPER

Executive Summary

• Williams-Sonoma reported 2Q16 EPS of $0.58, in line with the consensus estimate and flat year over year. Revenues were $1.16 billion, up 2.8% year over year and slightly below the consensus estimate of $1.17 billion.
• Comps increased 0.6% year over year, below consensus of 2.8%, based on 15.8% growth at West Elm that was partially offset by a 4.8% decline at Pottery Barn and a 5.2% decline at Pottery Barn Teen.
• Management lowered its full-year guidance for EPS of $3.35–$3.55 compared to prior guidance of $3.50–$3.65 and the consensus of $3.57. That is based on expected revenue growth of 2%–5%, which implies sales of $5.08–$5.23 billion versus the consensus of $5.22 billion. Comps are expected to increase in the 1%–4% range versus prior guidance of 3%–6% and consensus estimate of 3.9%.