It’s becoming an increasing fact of life that the consumer is getting weak. However, Williams-Sonoma (NYSE:WSM) shoppers are proving much more resilient. That much is clear from the over 12% increase in Williams-Sonoma stock in Wednesday afternoon’s trading session as the retailer’s earnings report proved to be much better than expected.
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Interestingly, the report itself turned out to be mixed, which is normally all the impetus investors need to start panicking and racing for the nearest sell button like the Duke Brothers did with orange juice in “Trading Places.” Williams-Sonoma turned in a hefty earnings win, coming in at $3.12 per share instead of the $2.72 per share analysts expected. However, revenue was a much bigger failure. Not only did Williams-Sonoma fail to match projections, coming in at $1.86 billion instead of the $1.96 billion analysts projected, that number also faltered against second quarter 2022 numbers, coming in 13.1% lower.
Williams-Sonoma also revised its own projections for Fiscal Year 2023. It looks for lower net revenue, but a higher operating margin to soften the blow. Net revenue will drop between 5% and 10%, but with an operating margin between 15% and 16%, that should make little net change overall. There was some further good news that likely helped here, as Williams-Sonoma’s performance was actually around 40% better than pre-COVID levels. In addition, when considering what’s been happening to other retailers, it seems like Williams-Sonoma has that little extra edge to keep investors in the fold.
Analysts, meanwhile, are a bit more skeptical. Williams-Sonoma stock is currently rated a Hold by analyst consensus, with four Buy ratings, four Holds, and five Sells. Further, the recent price action has shot Williams-Sonoma stock in the foot, in a sense, as it now carries 9.36% downside risk thanks to its average price target of $127.85.
