Here's What Investors Must Know Ahead of Williams-Sonoma's Q2 Release

Williams-Sonoma, Inc. WSM is scheduled to release second-quarter fiscal 2025 results on Aug. 27, before market open.

In the last reported quarter, the company’s earnings and net revenues topped the Zacks Consensus Estimate by 5.1% and 3.7%, respectively. Year over year, the top line grew 4.2% while the bottom line tumbled 7%.

Williams-Sonoma reported better-than-expected earnings in each of the last four quarters, the average surprise being 8.8%.

How are Estimates Placed for WSM’s Q2?

For the fiscal quarter to be reported, the Zacks Consensus Estimate for earnings per share (EPS) has moved up to $1.79 from $1.78 in the past seven days. The newly estimated figure indicates an increase of 2.9% from $1.74 per share reported in the year-ago quarter.

Williams-Sonoma, Inc. Price and EPS Surprise

Williams-Sonoma, Inc. price-eps-surprise | Williams-Sonoma, Inc. Quote

The consensus mark for revenues is pegged at $1.82 billion, indicating growth of 1.6% from the year-ago figure of $1.79 billion.

Factors That Might Have Shaped WSM’s Q2 Performance

Revenues

Williams-Sonoma’s top line is expected to have increased year over year in the fiscal second quarter, driven by elevated non-furniture sales, an improvement in furniture sales and effective collaborations. Moreover, the company’s continued focus on product innovation, solid execution of strategic initiatives and customer service enhancements is expected to have catalyzed the uptrend. Besides this, WSM’s efforts to enhance its digital capabilities and global expansion are commendable. The introduction of new design tools in stores and online to support space planning and integrating AI across digital platforms is expected to support growth in the upcoming period. 

Although the challenging sales environment for home furnishings due to the continued weakness in the U.S. housing market, alongside macroeconomic and geopolitical uncertainties, is concerning, WSM’s in-house capabilities have been more than offsetting these headwinds. 

Segment-wise, our model predicts fiscal second-quarter revenues in the Pottery Barn brand (which represented 40.2% of the first quarter of fiscal 2025 net revenues) to be $730.2 million, indicating an inch up of 0.7% year over year. Revenues from the West Elm brand (25.3% of the first quarter of fiscal 2025 net revenues) are projected at $472.2 million, up 2.9% from the prior-year quarter level.

We expect the namesake brand’s (14.9% of the first quarter of fiscal 2025 net revenues) revenues to be $247.4 million, indicating an increase of 3.2% year over year. Revenues from the Pottery Barn Kids and Teen brand (13.3% of the first quarter of fiscal 2025 net revenues) are projected to be $268.2 million, up 3.4% year over year.

Margins

In the fiscal second quarter, WSM’s bottom line and margins are expected to have improved year over year because of its ongoing efforts in optimizing its supply chain and ensuring operational efficiency amid inflationary challenges. Williams-Sonoma has been actively working on resourcing goods to lower-tariff countries, including further reductions from China, alongside maintaining tight cost control and financial discipline.

Our model expects selling, general and administrative expenses (as a percentage of net revenues) to contract 40 basis points year over year to 29% during the quarter to be reported. We expect gross profit to increase 1% year over year to $812.4 million.

Comps

Favorable impact from diversified product lines, new product introductions and collaborations are expected to have boosted the comps growth across all WSM’s key brands.

Our model expects Pottery Barn Kids and Teen’s comps growth to be 3.4%. The metric witnessed a 1.5% increase a year ago and a rise of 3.8% in the previously reported quarter. We expect Pottery Barn’s comps to grow 1% year over year. The same declined 7.1% a year ago, but grew 2% in the previously reported quarter.

Our model predicts West Elm’s comps to increase 2.1%. The metric witnessed a 4.8% decline a year ago, but inched up 0.2% in the last reported quarter. We expect the namesake brand’s comps to be up 2.9%. The metric witnessed a 0.8% decline a year ago but a rise of 7.3% in the previously reported quarter.

What Our Model Says for Williams-Sonoma

Our proven model predicts an earnings beat for Williams-Sonoma this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

WSM’s Earnings ESP: The company has an Earnings ESP of +1.33%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

WSM’s Zacks Rank: It currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Recent Retail-Wholesale Releases

Lowe’s Companies, Inc. LOW posted second-quarter fiscal 2025 results with year-over-year growth in both the top and bottom lines. While revenues came in just shy of the Zacks Consensus Estimate, earnings surpassed the same.
 
The Mooresville, NC-based home improvement retailer returned to positive comparable sales during the quarter, with a 1.1% increase in comparable sales as both Pro and DIY customers contributed despite a challenging start to the quarter from the weather. Management of Lowe’s also updated its full-year outlook following the completion of the Artisan Design Group (“ADG”) acquisition. Total sales are now projected between $84.5 billion and $85.5 billion, up from the prior range of $83.5-$84.5 billion.
 
The Home Depot Inc. HD has reported second-quarter fiscal 2025 results, wherein both the sales and earnings missed the Zacks Consensus Estimate. However, both metrics improved year over year. Also, comparable sales increased year over year.
 
Home Depot is confident about its initiatives to strengthen the business. Management highlighted continued momentum in smaller home-improvement projects and reiterated its focus on building the best interconnected experience for customers and growing share, while reaffirming fiscal 2025 guidance. It anticipates sales to increase 2.8% year over year, with adjusted earnings per share expected to fall 2%.
 
Brinker International, Inc. EAT reported fourth-quarter fiscal 2025 results, with both earnings and revenues surpassing the Zacks Consensus Estimate and also increasing on a year-over-year basis. Revenues beat the consensus estimate for the sixth consecutive quarter.
 
Chili's performance served as a catalyst for the company's quarterly results. The growth was driven by the strong marketing ideas, simpler menu items and increased traffic. A key factor in Chili’s revival was focusing on the core elements that originally made the brand great and finding ways to make those strengths relevant for today’s customers. In fiscal 2026, Brinker anticipates total revenues to be in the range of $5.60-$5.70 billion, with adjusted EPS in the range of $9.90-$10.50.

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This article originally published on Zacks Investment Research (zacks.com).

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