Williams-Sonoma posts strong earnings amid home furnishings growth

Yahoo Finance Live anchors discuss first-quarter earnings for Williams-Sonoma.

Video Transcript

JULIE HYMAN: But another mover that we're watching this morning is Williams-Sonoma. And this is an important part of the retail picture as well because it reflects both higher income consumers, as well as what's happening in the home products business. So the company's numbers beating estimates here, first quarter sales, in particular. Comps up 9 and 1/2%, which is a lot better than estimated. Earnings per shares, you can see ad revenue better than estimated, too.

I was looking at the comps by segment. Pottery Barn comps up 14.6%, Williams-Sonoma itself, the branded store, down 2.2%, West Elm continuing strength, up 12.8%, and Pottery Barn Kids and Teen up 3.1%. So by and large, we're still seeing the furniture and furnishings business strong, even as Williams-Sonoma, which is more towards sort of cooking stuff, is a little bit weaker here. Gross margin, by the way, also expanding to 43.8%. Analysts questioning a little bit the sustainability of all of this, given the macro environment.

JARED BLIKRE: Yeah, I'm glad you brought that up. I was just reading a note-- the notes are trickling in here-- from Morgan Stanley. They rate the stock equal weight. Price target is now cut to $160 from $170, so $10 shaved off there. They say the results continue to challenge the narrative of sales and margin reversion and saying, however, the broker is stuck in the middle on whether sales and margin are sustainable. So Morgan Stanley kind of on the fence there.

Here's another one, quickly, from KeyBank. Bradley Thomas noting that Williams-Sonoma reiterates its guidance, even though the second quarter demand has slowed slightly, and there's risk of consumer deterioration. So we've been talking about, in the retail, maybe some shadow changes that we haven't picked up in the macro data because it's not up yet. Maybe there's something in here. There's some more tea leaves. You see any tea leaves in here?

JULIE HYMAN: I see tea leaves everywhere, but they're not all adding up to the same thing. So that's kind of what's tricky.

JARED BLIKRE: Yeah, we're getting a different read on a lot of these stocks today.

JULIE HYMAN: Yes, exactly.