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Weak comps, downtick in sales/inventory spread, and lower guidance. Not good. But the stock is hated, comps are getting easier, and key businesses are stabilizing.

  • 2Q print was negative on the margin for WSM. But interesting dynamics shaping up.
  • Missed 2-4% comp guidance with a 1.4%. Guided down 3Q down by a point to 1-3%, and 4Q by 1.5pts to 2%-3.5%.
  • Even though WSM is higher end, the weak comps in company-retail were not a big surprise given the weakness we’ve heard from the Target’s and JC Penney’s of the world.  While Kohl’s noted strength in Home two weeks back, it was due to Electronics and Bedding – areas where WSM doesn’t play too heavily.
  • Financials looked relatively clean for WSM.
  • Nothing looked funny in SG&A
  • Tax rate Ok
  • WSM amped-up its guidance for pulling back on its catalogue business. 3Q guidance there for (-8-9%) vs prior of (-2-3%). This is great to see.
  • E-commerce business still very healthy, and a recent flattening in growth appears to have bottomed.

Sentiment on this name is still relatively poor (1 out of 22 analysts have a ‘Buy), though not quite as weak on the buy side. See our Sentiment Indicator below.

 

WSM: Quick Take  - WSM Top1 8 11

 

WSM: Quick Take  - WSM 2 8 11

 

WSM: Quick Take  - WSM 3 8 11

 

WSM: Quick Take  - WSM 4 8 11

 

WSM: Quick Take  - WSM Guid 8 11