Morningstar

Williams Sonoma Boosts Market Share

Efficient marketing, tactical promotions, and smart partnerships have motivated consumers to participate in the narrow-moat firm's umbrella of brands.

Securities In This Article
Williams-Sonoma Inc
(WSM)

Bolting on its fourth consecutive quarter of positive brand comp gains despite operating in the fragmented and competitive home furnishing industry, narrow-moat

We don't believe Williams-Sonoma will take its foot off the innovation pedal, offering products that pivot with evolving consumer demands. However, this implies that spending in SG&A could remain inflated from recent levels (27.7% in 2017) as Williams-Sonoma invests to protect its brand. This also underlies our long-term outlook, which calls for top line growth that averages around 3.5% and operating margin that remains constrained to around 10% over the next decade, supporting high-single-digit earnings per share growth throughout our forecast. We don't plan any material change to our $68 fair value estimate and view shares as fairly valued, trading around 16 times our 2018 earnings per share estimate.

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About the Author

Jaime M. Katz, CFA

Senior Equity Analyst
More from Author

Jaime M. Katz, CFA, is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers home improvement retailers and travel and leisure.

Before joining Morningstar in 2011, Katz was an associate for Credit Agricole Corporate and Investment Bank. She also worked in equity research for William Blair for three years and spent three years in asset management at Mesirow Financial.

Katz holds a bachelor’s degree in economics from the University of Wisconsin and a master’s degree in business administration from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. She ranked first in the leisure goods and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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