Unpacking Q2 Earnings: Williams-Sonoma (NYSE:WSM) In The Context Of Other Home Furniture Retailer Stocks

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Williams-Sonoma (NYSE:WSM) and the rest of the home furniture retailer stocks fared in Q2.

Furniture retailers understand that ‘home is where the heart is’ but that no home is complete without that comfy sofa to kick back on or a dreamy bed to rest in. These stores focus on providing not only what is practically needed in a house but also aesthetics, style, and charm in the form of tables, lamps, and mirrors. Decades ago, it was thought that furniture would resist e-commerce because of the logistical challenges of shipping large furniture, but now you can buy a mattress online and get it in a box a few days later; so just like other retailers, furniture stores need to adapt to new realities and consumer behaviors.

The 4 home furniture retailer stocks we track reported a strong Q2. As a group, revenues missed analysts’ consensus estimates by 1% while next quarter’s revenue guidance was 7.2% below.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Williams-Sonoma (NYSE:WSM)

Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE:WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.

Williams-Sonoma reported revenues of $1.79 billion, down 4% year on year. This print fell short of analysts’ expectations by 1.2%, but it was still a very strong quarter for the company with an impressive beat of analysts’ gross margin and EBITDA estimates.

“Today we are reporting strong results for the second quarter of 2024, which were driven by our Q2 improved top-line trend, market-share gains, and continued delivery on our commitment to profitability. In Q2, our comp came in at -3.3%, and we exceeded profitability estimates with an operating margin of 16.2% and earnings per share of $1.74, reflecting the 2-for-1 stock split we completed in July,” said Laura Alber, President and Chief Executive Officer.

Unsurprisingly, the stock is down 6.5% since reporting and currently trades at $134.47.

Is now the time to buy Williams-Sonoma? Access our full analysis of the earnings results here, it’s free.

Best Q2: Sleep Number (NASDAQ:SNBR)

Known for mattresses that can be adjusted with regards to firmness, Sleep Number (NASDAQ:SNBR) manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.

Sleep Number reported revenues of $408.4 million, down 11% year on year, falling short of analysts’ expectations by 1.9%. However, the business still had a very strong quarter with an impressive beat of analysts’ earnings and EBITDA estimates.

The market seems happy with the results as the stock is up 14.1% since reporting. It currently trades at $13.50.

Is now the time to buy Sleep Number? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Arhaus (NASDAQ:ARHS)

With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ:ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.

Arhaus reported revenues of $309.8 million, flat year on year, falling short of analysts’ expectations by 1.4%. It was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations.

As expected, the stock is down 36.6% since the results and currently trades at $8.78.

Read our full analysis of Arhaus’s results here.

RH (NYSE:RH)

Formerly known as Restoration Hardware, RH (NYSE:RH) is a specialty retailer that exclusively sells its own brand of of high-end furniture and home decor.

RH reported revenues of $829.7 million, up 3.6% year on year. This result was in line with analysts’ expectations. Overall, it was a strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ gross margin estimates.

RH delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 26.6% since reporting and currently trades at $324.99.

Read our full, actionable report on RH here, it’s free.

Market Update

The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and them to your watchlist. These companies are posied for grow regardless of the political or macroeconomic climate.

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