Why Williams-Sonoma Shares Jumped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Williams-Sonoma jumped as much as 12% today, after the high-end retailer delivered a strong fourth quarter and a dividend increase.

So what: Net income at the Pottery Barn and West Elm parent increased 9% to $1.34 a share, which beat estimates by $0.05, and revenue rose 11% to $1.41 billion with gains in all channels. The retail chain did benefit from an extra week in the calendar. Williams-Sonoma surprised investors by hiking its quarterly dividend to 41 cents from 31 cents a year ago, and announcing a $750 million share buyback program, or 13% of the company's market cap, to be carried out over the next three years.

Now what:The company's guidance for the year was disappointing as it said it expects an EPS of $2.65-$2.75 for the year against the analyst consensus of $2.82, but the market didn't seem concerned. This is a strong upscale brand that should improve along with the overall economy, and its commitment to returning capital to shareholders is a definite bonus. I'd expect shares to continue to move higher from here.

Want more on Williams-Sonoma? Add Williams-Sonoma to My Watchlist.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of the last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

The article Why Williams-Sonoma Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Williams-Sonoma. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.