What Happened?
Shares of kitchenware and home goods retailer Williams-Sonoma (NYSE:WSM) fell 12.1% in the morning session after the company reported weak fourth-quarter 2024 results as it initiated full-year 2025 guidance which was less exciting. Guidance called for flat sales growth year-on-year and operating margins fell below expectations.
On the other hand, Williams-Sonoma beat on revenue and EPS in the quarter. In addition, operating margin improved significantly, a sign of strong profitability despite a challenging retail environment. However, the outlook of no growth and margins below Wall Street's estimates weighed on shares.
The shares closed the day at $166.27, down 3.5% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Williams-Sonoma? Access our full analysis report here, it’s free .
What The Market Is Telling Us
Williams-Sonoma’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Williams-Sonoma and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 30.5% on the news that the company reported impressive third-quarter 2024 results. Revenue beat slightly, and gross margin improved relative to the previous year, enabling the company to deliver a solid earnings beat. The rate of growth decline moderated relative to the previous year as the company observed improved sales trends and market-share gains.
Given the improved momentum and optimistic trends, management raised full-year revenue and operating profit guidance. The Board of Directors also approved a new $1 billion stock repurchase program to demonstrate the company's focus on returning value to shareholders. Overall, we think this was a strong quarter.
Williams-Sonoma is down 11.3% since the beginning of the year, and at $166.27 per share, it is trading 23.6% below its 52-week high of $217.71 from February 2025. Investors who bought $1,000 worth of Williams-Sonoma’s shares 5 years ago would now be looking at an investment worth $8,692.
Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next .
