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What’s Been Driving Williams-Sonoma Stock?

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Oct. 4 2018, Published 12:44 p.m. ET

Stock performance

Year-to-date, Williams-Sonoma (WSM) has returned 22.1%, driven by strong performances in both the first and second quarters of 2018. In the first half of 2018, WSM’s revenue grew 7%, and its EPS increased 28.6%.

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Revenue growth

In the first half of 2018, Williams-Sonoma posted revenue of $2.48 billion compared to $2.31 billion in the first half of 2017. Revenue growth was driven by the adoption of a new accounting standard and growth in e-commerce and retail sales.

During the same period, its e-commerce sales increased 10.1%, while its retail sales increased 3.9%. Its investments in digital advertising and product innovation strategies helped it post comparable brand revenue growth of 5.1% in the first half of 2018.

However, some of the revenue growth was offset by a decline in store count. It operated 632 stores at the end of the first half of 2018 compared to 635 stores in the first half of 2017.

EPS growth

In the same period, Williams-Sonoma’s adjusted EPS grew 28.6% to $1.44. EPS growth was steered by revenue growth, expansion of net margins, and share repurchases. The improvement in its gross margin and a lower effective tax rate improved its net margins from 4.2% to 4.9%. Due to share repurchases, the number of shares outstanding declined to 83.5 million compared to 87.2 million in the first half of 2017.

Outlook

For 2018, management’s revenue guidance is $5.57 billion–$5.67 billion, which is a growth of 5.2%–7.1% from $5.29 billion in 2017. For 2018, management expects EPS to be $4.26–$4.36, which represents a growth of 18%–20.8% from $3.61 in 2017.

For 2018, analysts expect Williams-Sonoma’s revenue to rise 6.8% to $5.65 billion. They expect its EPS to increase 20.3% to $4.34.

Next, we’ll look at the performance of Lowe’s stock in the first half of 2018.

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