Q1 2018 performance
Williams-Sonoma (WSM) posted a gross margin, EBITDA margin, and net margin of 36.0%, 10.2%, and 4.7%, respectively. These margins were at 35.6%, 10.2%, and 4.0%, respectively, in the corresponding quarter of the previous year.
During the quarter, WSM’s adjusted gross margin improved by 0.4% due to a new revenue recognition standard, and it also benefitted from improved supply chain efficiencies and lower occupancy expenses. Selling, general, and administrative expenses increased from 29.5% in the corresponding quarter of the previous year to 29.7% due to the new accounting standard, which was partially offset by a decline in labor and advertising expenses.
The lower effective income tax rate benefitted the company’s net margins. The company’s effective tax rate stood at 23.8% during the quarter, compared to 34.5% in the corresponding quarter of the previous year due to tax reforms in December 2017.
For the next four quarters, analysts expect WSM to post a gross margin, EBITDA margin, and net margin of 36.6%, 11.8%, and 6.3%, respectively. The margins were at 36.6%, 12.3%, and 6.0%, respectively, in the corresponding four quarters of the previous year.
Next in this series, we’ll look at WSM’s EPS for the first quarter.