Argus Calls Williams-Sonoma The Best Positioned In Its Coverage Universe To Capitalize On Online Shoppers

Williams-Sonoma, Inc. WSM reported flat Q2 EPS. Although the company is improving its supply chain and its inventories are “in good shape,” consumer trends and mall traffic remain weak, Argus’s Chris Graja said in a report. He maintained a Buy rating on Williams-Sonoma, with a price target of $75.

Williams-Sonoma reported its quarterly EPS at $0.58, unchanged from a year earlier. The result came within the guidance range of $0.54-$0.60 and in-line with the Street estimate of $0.58, albeit marginally missing the Argus estimate of $0.59.

Management reduced the top-end of the guidance by $0.10, revising the range to $3.35-$3.55. Analyst Graja reduced the EPS estimates for FY17 and FY18 from $3.57 to $3.50 and from $4.00 to $3.90, respectively, to mostly reflect a slightly lower sales outlook.

Online Shopping Prospects

“The most important recent trend in the retail sector has been the accelerating importance of internet sales as more consumers demand the convenience of shopping online,” Graja commented. He added that Williams-Sonoma had generated more than half of its FY16 revenue from its high-margin direct-to-consumer business [now called the e-commerce division].

“Based on its well-developed and rapidly growing e-commerce presence, its expertise in targeted digital marketing, and its track record of developing unique products and brands, we believe that Williams-Sonoma is the retailer in our coverage universe best positioned to take advantage of consumers’ growing preference for online shopping,” the analyst stated.

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