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.
Pier 1 wants to be tier 1
Pier 1 Imports Inc (NYSE:PIR) is a smaller home furnishing company that has big plans for the future. It is currently going through a three year enhancement plan. The plan will invest $100 million to improve the quality of Pier 1 Imports Inc (NYSE:PIR)’s real estate through new store openings, relocations, remodels, and refurbishments. So far, they have refurbished 253 stores which has improved sales per square foot from $184 to $198.
Pier 1 Imports Inc (NYSE:PIR) has also made improvements in its technology systems and launched an e-commerce website. In addition, it has formed a partnership with Alliance Data to create a rewards system. 25% of total U.S. store sales are attributed to this system. While these new improvements have helped revenue grow 15.70%, they have been expensive. Pier 1 recently posted a quarterly earnings drop of 46.40%.
Currently trading at $23.34 with a market cap of $2.43 billion, Pier 1 Imports Inc (NYSE:PIR) is using the $124 million of cash flow it generated to reinvest in the company so it can continue with its growth plans. Pier 1 has announced a $0.05 per share cash dividend and a $100 million share repurchase program to return value to shareholders. Pier 1 Imports Inc (NYSE:PIR) has a long way to go before it’s the size of Williams-Sonoma or Bed Bath & Beyond. But, if Pier 1 continues to grow revenue through store improvements, promotions, and e-commerce, then the company could see new heights.
Conclusion
With the housing market growing, Williams-Sonoma, Inc. (NYSE:WSM), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and Pier 1 Imports Inc (NYSE:PIR) can expect to have higher sales and increased profits. Of these companies, I like Williams-Sonoma and Pier 1 as buys. Williams-Sonoma has strong brands and is working on international expansion to grow revenue, and Pier 1 has a plan to grow its business across America. Both companies have solid strategies for growth and I think they’ll achieve it if the economy continues to improve. In the end, these stocks might look better than the tasteful furniture they sell.
The article 3 Stocks You Might Want to Buy originally appeared on Fool.com and is written by Ben Popkin.
Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Bed Bath & Beyond and Williams-Sonoma. Ben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
