With the housing market on the rise, new home owners are looking to fill their new abodes with beds, lamps, hand towels, and other tasteful decorations. With this happening, home furnishing companies stand to see an increase in sales. When this is paired with good management and corporate strategy, good stocks can turn into great stocks and competitors can be left behind.
Williams-Sonoma noma yay!
Williams-Sonoma, Inc. (NYSE:WSM) is a specialty retailer of home products that range from cookware, tools, home furniture, and just about anything else you could want to decorate your home. They operate Pottery Barn, Williams Sonoma, and West Elm stores across America and the world. It is also my “go to” for Mother’s Day shopping.
Williams-Sonoma, Inc. (NYSE:WSM) has been constantly searching for new locations to open stores in America and overseas. It opened retail locations and e-commerce sites in Australia and London. It will continue to expand its foot print by opening another West Elm location in Melbourne later this year. Williams-Sonoma is aware that its profitability is linked directly to real estate economics and it take this into account when deciding where to expand.
Williams-Sonoma, Inc. (NYSE:WSM) is also taking advantage of emerging technologies. It has invested in internet and e-commerce sites. It also re-launched the Williams-Sonoma, Inc. (NYSE:WSM) registry, making it easier to buy those wonderful, pre-selected wedding gifts.
All of the brands under Williams-Sonoma have seen positive revenue growth with the highest being West Elm. West Elm had 11.8% revenue growth, which is the 13th quarter in a row the brand has had double-digit revenue growth. Williams-Sonoma is using its international expansion to turn West Elm into a “billion dollar brand.”
Williams-Sonoma, Inc. (NYSE:WSM) has had 28.50% quarterly earnings growth and expects to continue this growth through supply chain and technology investments. It is also planning a three-year $750 million share repurchase and a $0.31 dividend to return value to shareholders. I expect this company’s value to increase with its international expansion, growing brands, and use of technology.
To infinity Bed Bath and Beyond
Bed Bath & Beyond Inc. (NASDAQ:BBBY) owns and operates a chain of home furnishing stores such as Bed Bath & Beyond Inc. (NASDAQ:BBBY), Christmas Tree Shops, World Market, and buybuy Baby. They pride themselves on having a large selection at low prices. Recent sales increased 24.5% thanks to further integration of World Market and Linen Holdings, two companies that were acquired in 2012. A new internet fulfillment center has also recently been opened in Georgia to help distribution.
Bed Bath & Beyond Inc. (NASDAQ:BBBY) has had good performance with revenue of $10.91 billion, yielding a net income of $1.04 billion and earnings per share of $4.56. The home furnishing company definitely knows how to make a profit. Despite that, I don’t think that Bed Bath & Beyond Inc. (NASDAQ:BBBY) has great organic growth. Its revenue growth was 24.50% last quarter but over half of that was a result of acquisitions.
Earnings growth was only 6.50%. Bed Bath & Beyond Inc. (NASDAQ:BBBY) has returned 90% of its cash flow from operations to shareholders through share repurchases and is in the middle of a $2.5 billion repurchase program that is scheduled to be completed by 2015. It’s a solid company, but I think there are better investments you can make.