Williams-Sonoma, Inc. WSM reported a Q4 comps miss and announced its guidance below expectations.
“We remain concerned by WSM’s inability to increase EBIT margins despite rising e-comm penetration where margins are 1350 bp [basis points] above retail,” BTIG’s Alan Rifkin said in a report.
While maintaining a Sell rating and price target of $41, Rifkin lowered the EPS estimates for 2017 and 2018 from $3.70 to $3.50 and from $4.00 to $3.75, respectively.
Q4 Results
Williams-Sonoma reported operating EPS of $1.55, below BTIG’s estimate of $1.50, and a comps decline of 0.9 percent, versus expectations of comps growth of 1.5 percent. On a two-year basis, Williams-Sonoma’s comps have declined every quarter in 2016, Rifkin noted.
Related Link: Sell-Side Sour On Williams-Sonoma Leading Into Q4 Print
Guidance
The company guided to EPS of $3.45-$3.65 for 2017, below BTIG’s previous estimate. The guidance reflects merely 3 percent EPS growth at the midpoint, the analyst pointed out. He added that although Williams-Sonoma had guided to 2017 comp of 1-3 percent, the company’s initial 2016 guidance was +3-6 percent and it had achieved merely 0.7 percent.
In view of limited visibility, management withdrew the 3-year targets for mid-single-digit to high-single-digit sales growth and low-double-digit to mid-teens EPS growth that it had provided in September.
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