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Williams-Sonoma Hikes Dividend and Bolsters Buyback

Williams-Sonoma Inc. (WSM) is an omni-channel specialty retailer of high-quality products for the home. The company’s iconic brands include Williams Sonoma, Pottery Barn, West Elm, and others.

The company generated 38% of its revenue from Pottery Barn, 25% from West Elm, 18% from Williams Sonoma, and the remainder from Pottery Barn Kids and Teen and other segments in 2019.

Strong Growth in 2021

Williams-Sonoma reported fourth quarter revenue that rose 24.5% to $2.29 billion, beating consensus estimates by $110 million, with non-GAAP earnings of $3.95 per share, beating consensus estimates by 65 cents. Gross margins expanded 450 basis points to 42.1%, supporting GAAP operating margins of 17.5% for the quarter.

Analysts have been bullish on the stock over the past few weeks. For instance, Cowen & Co. believes that the buybacks should further support earnings growth per share while the sales growth track remains positive. The analyst believes that the market under-appreciates the company’s ability to sustain mid- to high-single digit revenue growth through FY 2025.

The company raised its quarterly dividend by 11.3% to $0.59 per share, which represents a 1.26% forward yield. The dividend is payable on May 28, 2021 to shareholders on record as of April 23, 2021.

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