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March 19, 2021, 6:58 a.m. EDT

Williams-Sonoma reaches a record close, though analysts question how long the good news will last

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Tonya Garcia

Williams-Sonoma Inc. /zigman2/quotes/202067350/composite WSM +0.20% stock soared 18.5% on Thursday, closing at a record $161.57 after the furniture and home goods retailer reported fourth-quarter earnings and sales that beat expectations.

Williams-Sonoma also announced an 11.3% quarterly dividend increase to 59 cents per share, payable on May 28 to shareholders of record as of the close of business on April 23.

And the board approved a new $1 billion share repurchase program. The company also announced that it repaid its $300 million term loan early and in full.

But some analysts say COVID-19 stay-at-home orders drove business to new heights, and express concerns about what lies ahead when shoppers begin spending on vacations, dining out and other activities once again.

Williams-Sonoma shares have skyrocketed to start 2021, reaching a previous record of $147.60 on Jan. 27.

The stock has rallied 47.4% over the past three months, and has surged a whopping 322.3% over the past year. The benchmark S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.03% has gained 62.5% over the past 12 months.

Read: Home Depot is focused on eco-friendly cordless power tools for spring

Williams-Sonoma joins a number of other home retailers, including At Home Inc. (up more than 2,000% over the last year), RH /zigman2/quotes/200286355/composite RH +0.07% (up nearly 516%) and Wayfair Inc. /zigman2/quotes/201071690/composite W +0.34% (up more than 1,240%) that have seen their businesses skyrocket as shoppers move their spending to goods for the home during the COVID-19 pandemic.

Williams-Sonoma executives expressed confidence that its business will continue its upward trajectory throughout 2021.

Williams-Sonoma brands include the namesake, Pottery Barn and West Elm.

‘We expect this strong demand to continue through 2021 and beyond based on a number of factors,” said Laura Alber, chief executive of Williams-Sonoma, on the earnings call, according to FactSet.

Among those factors are retail traffic recovery; replenished inventory levels, which have been impacted by COVID-related and weather-related delays; and a continued work-from-home environment; and the shift to e-commerce. Williams-Sonoma digital business experienced 47.9% growth in the fourth quarter.

But JPMorgan analysts maintained their underweight stock rating in a post-earnings note.

“New stimulus, the lag of strong housing (which is starting to decelerate), and backorders should drive a strong first half (with Williams-Sonoma’s 1Q compare benefitting from closed stores last spring). That said, we continue to believe it is all about 2022 earnings,” JPMorgan wrote.

See: Smucker is betting that continued work-from-home will benefit its coffee and peanut-butter business

JPMorgan raised its price target to $115 from $98.

“Ultimately, however, we believe that this is the best of times and the structural headwinds (mall-based, charging for UPS-shippable items, competition from Wayfair to Home Depot to Walmart and Target, perhaps housing being less supportive) will become more apparent as we look into 2022.”

$ 157.38
+0.32 +0.20%
Volume: 32,086
July 26, 2021 10:06a
P/E Ratio
Dividend Yield
Market Cap
$11.80 billion
Rev. per Employee
+1.15 +0.03%
Volume: 316.26M
July 26, 2021 10:06a
$ 685.50
+0.50 +0.07%
Volume: 16,393
July 26, 2021 10:02a
P/E Ratio
Dividend Yield
Market Cap
$14.41 billion
Rev. per Employee
$ 286.49
+0.98 +0.34%
Volume: 55,580
July 26, 2021 10:05a
P/E Ratio
Dividend Yield
Market Cap
$29.75 billion
Rev. per Employee
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