What Happened?
Shares of kitchenware and home goods retailer Williams-Sonoma (NYSE: WSM) fell 12.1% in the morning session after the company reported weak fourth-quarter 2024 results as it initiated full-year 2025 guidance which was less exciting. Guidance called for flat sales growth year-on-year and operating margins fell below expectations.
On the other hand, Williams-Sonoma beat on revenue and EPS in the quarter. In addition, operating margin improved significantly, a sign of strong profitability despite a challenging retail environment. However, the outlook of no growth and margins below Wall Street's estimates weighed on shares.
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What The Market Is Telling Us
Williams-Sonoma’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Williams-Sonoma and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 30.5% on the news that the company reported impressive third-quarter 2024 results. Revenue beat slightly, and gross margin improved relative to the previous year, enabling the company to deliver a solid earnings beat. The rate of growth decline moderated relative to the previous year as the company observed improved sales trends and market-share gains.
Given the improved momentum and optimistic trends, management raised full-year revenue and operating profit guidance. The Board of Directors also approved a new $1 billion stock repurchase program to demonstrate the company's focus on returning value to shareholders. Overall, we think this was a strong quarter.
Williams-Sonoma is down 13.6% since the beginning of the year, and at $161.97 per share, it is trading 25.6% below its 52-week high of $217.71 from February 2025. Investors who bought $1,000 worth of Williams-Sonoma’s shares 5 years ago would now be looking at an investment worth $8,467.
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