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Williams-Sonoma & Miraval Partner to Offer Culinary Products

Zacks Equity Research

Williams-Sonoma, Inc. WSM is set to offer a new set of kitchen culinary products in partnership with Miraval, the global leader in wellness resorts and spas. The partnership will unveil two Life in Balance Culinary Kitchens at Miraval’s flagship resort based in Arizona and Miraval Austin.

Williams Sonoma will provide different culinary tools that will help Miraval's guests in conducting healthy cooking classes and workshops. Each of these products, that are best suited for the new kitchens, will be handpicked by Miraval's chefs. Post culinary class and workshop, each guest will have the opportunity to purchase new products from Williams Sonoma's website and Miraval's onsite retail stores.

This move underscores Williams-Sonoma’s focus on engaging customers to drive brand awareness. Via collaborations like this, the company aims to attract new customers, invent new trends in home furnishing and widen its social media reach. Backed by a strong brand presence, shares of Williams-Sonoma have gained 8.5% over the past year, outperforming the industry’s 2.6% growth.

Initiatives to Drive Top Line

Williams-Sonoma is one of the largest e-commerce retailers in the United States. Its innovative efforts helped it drive e-commerce growth to an all-time high of 54.3% of total revenues in fiscal 2018.

The company keeps on collaborating with celebrated brands and designers to offer exclusive home furnishing products, in order to meet consumers’ changing preferences. It believes that collaborations with designers and brands attract new customers, invent new trends in home furnishing, and widen its social media reach.

In fiscal 2018, the company’s total revenues increased 7.2% from a year ago to $5.67 billion. Also, comps grew 50 basis points (bps) to 3.7%. The upside was driven by improvement in e-commerce business and growth across all its brands.

In fiscal 2019, the company expects total revenues within $5.670-$5.840 billion, reflecting growth of flat to up 3% from the year-ago period. Also, comps are anticipated to grow 2-5%.

Our Take

We believe that the above move will help Williams-Sonoma to retain its competitive position in the retail landscape. The company has undertaken initiatives to achieve retail transformation and excellence by offloading the fleet of underperforming stores, and selectively investing in new stores, remodels and relocations, while elevating the store experience.

However, increased spending on digital advertising and higher employment-related costs have been pressurizing the company’s margins of late. It has been facing higher costs owing to continuous investments in e-commerce. In fiscal 2018, non-GAAP operating margin contracted 40 bps to 8.5%.

Zacks Rank & Other Stocks to Consider

Williams-Sonoma currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the Retail-Wholesale sector include RH RH, Haverty Furniture Companies, Inc. HVT and Darden Restaurants, Inc. DRI, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RH’s earnings for fiscal 2019 are expected to increase 175.1% year over year.

Haverty surpassed earnings estimates in each of the trailing four quarters, with the average positive surprise being 19.3%.

Darden Restaurants’ earnings for the current year are expected to increase 20.2% from a year ago.

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