U.S. home goods retailer Williams-Sonoma Inc (WSM.N) beat quarterly profit estimates and raised its full-year forecast on strong online sales, but some worried if the momentum in sales and margins was sustainable.
Shares of the operator of Williams-Sonoma cookware stores and the Pottery Barn furnishings chain fell 4 percent on Thursday morning. The company's shares have risen about 52 percent in the past year.
"Williams-Sonoma reports a solid quarter, but the results along with the guidance, in our opinion, do not justify high valuation," Janney Capital Markets analyst David Strasser said.
While the company is benefiting from the high-end sales recovery, the shift to online, and strong merchandising in its stores, its margins seem to be declining, he said.
"Merchandise margins have peaked, and appear to be declining, sales growth is moderating, and the company's guidance is realistic, not conservative," Strasser added.
"As we have learned from other Internet retailers, such as Amazon.com (AMZN.O), the profitability equation online remains a question mark," Strasser said.
The company's net profit rose to $31.6 million, or 29 cents a share, in the three months ended May 1, from $19.5 million, or 18 cents a share, a year earlier.
Excluding items, the company earned 30 cents a share, beating the analysts' average estimate of 28 cents, according to Thomson Reuters I/B/E/S.
The operator of Williams-Sonoma cookware stores and the Pottery Barn furnishings chain said on Thursday its e-commerce revenue rose 21 percent in the first quarter.
Americans are increasingly shopping online for everything from furniture to books as they try to cut back on trips to the mall amid rising gas prices.
Net sales rose 7.4 percent to $771 million, while analysts expected $765.4 million.
For the current year, the chain sees earnings of $2.13 to $2.21 a share, excluding items, up from its prior outlook of $2.11 to $2.19 a share.
Shares of the operator of Williams-Sonoma cookware stores and the Pottery Barn furnishings chain fell 4 percent on Thursday morning. The company's shares have risen about 52 percent in the past year.
"Williams-Sonoma reports a solid quarter, but the results along with the guidance, in our opinion, do not justify high valuation," Janney Capital Markets analyst David Strasser said.
While the company is benefiting from the high-end sales recovery, the shift to online, and strong merchandising in its stores, its margins seem to be declining, he said.
"Merchandise margins have peaked, and appear to be declining, sales growth is moderating, and the company's guidance is realistic, not conservative," Strasser added.
"As we have learned from other Internet retailers, such as Amazon.com (AMZN.O), the profitability equation online remains a question mark," Strasser said.
The company's net profit rose to $31.6 million, or 29 cents a share, in the three months ended May 1, from $19.5 million, or 18 cents a share, a year earlier.
Excluding items, the company earned 30 cents a share, beating the analysts' average estimate of 28 cents, according to Thomson Reuters I/B/E/S.
The operator of Williams-Sonoma cookware stores and the Pottery Barn furnishings chain said on Thursday its e-commerce revenue rose 21 percent in the first quarter.
Net sales rose 7.4 percent to $771 million, while analysts expected $765.4 million.
For the current year, the chain sees earnings of $2.13 to $2.21 a share, excluding items, up from its prior outlook of $2.11 to $2.19 a share.
