Home-products retailer Williams-Sonoma (NYSE: WSM), which runs such retail brands as Pottery Barn and West Elm in addition to its namesake chain, issued Q4 numbers on Tuesday. Well, they weren't spectacular. Surprised? No, I'm sure you weren't. I mean, when you sell stuff for homes, you've got to expect that you're going to see some weakness. And there's plenty of it here.
Revenues decreased almost 27% during the quarter, and earnings per share on an adjusted basis dropped over 70% to 31 cents. That beat estimates of 16 cents per share, according to Reuters' analysts, but forgive me if I don't jump up and down over that performance. And what about same-store sales? They were mighty bad. On an overall basis, they went down by over 22%.
Of course, one might expect to see a stock near its 52-week low with this quality of data set. However, that's not the case. Shares of Williams-Sonoma closed yesterday at $11.19. The 52-week low is roughly $7 less, believe it or not.
You're seeing this sort of thing in a lot of retail stocks. For instance, related companies Bed Bath & Beyond (NASDAQ: BBBY), Home Depot (NYSE: HD), and Lowe's (NYSE: LOW) are all comfortably above their lows for the year.
Perhaps the market is telling us something. Perhaps investors are discounting better days ahead for these major brands, believing that managements will succeed in capturing market share and improving the underlying fundamentals of their respective businesses, and that they will come out of the recession stronger for it.
Well, I certainly wouldn't fight the tape when it comes to Williams-Sonoma. Have you checked out the stock's performance? WSM is up over 40% year-to-date.
Still, I don't think I'll be investing in the company. I suppose it might make an interesting trade considering momentum factors, but on a more fundamental basis, I just don't see anything that makes me want to take a risk here. If you do decide to make a trade of Williams-Sonoma, consider waiting for the proverbial pullback.
Disclosure: I don't own any company mentioned here; positions can change without notice.
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