Williams-Sonoma, Inc. (NYSE:WSM), the world’s largest digital-first, design-led and sustainable home retailer, stock rose 2.38% (As on August 25, 11:16:04 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the second quarter of FY 22. Comparable brand revenue growth of 11.3%, including double-digit growth in both ecommerce and retail, Pottery Barn accelerating from the first quarter to 21.5%, West Elm growing 6.1% on top of last year’s 51.1%, Pottery Barn Kids and Teen accelerating from the first quarter to 5.3%, and Williams Sonoma accelerating from negative 2.2% in the first quarter to 0.5%. Gross margin was of 43.5%, 60bps below last year driven by higher shipping and freight costs, partially offset by merchandise margin expansion; occupancy rate was flat to last year. The merchandise margins remained strong with another consecutive quarter of merchandise margin expansion year-over-year as we continue to preserve our pricing integrity by remaining committed to our decision to no longer offer sitewide promotions. The gross margin decline was driven by higher freight costs from our strong furniture demand, higher back order fulfillment and global supply chain disruptions, driving freight rates higher for all. Operating income was of $366 million, increasing 12.2% on a non-GAAP basis over last year. Operating margin of 17.1 with non-GAAP operating margin expansion of 40bps. The company maintained a strong liquidity position of $125 million in cash and generated $199 million in operating cash flow, enabling the company to repurchase over $265 million in shares and to pay over $54 million in dividends in the second quarter. Merchandise inventories, which include in-transit inventory, were $1.542 billion, increasing 32% over the reduced levels last year. Inventory on hand increased 28% over last year, but was only up 1% to 2019 versus sales up 56% over the same time frame. In the quarter, back order levels decreased.

WSM in the second quarter of FY 22 has reported the adjusted earnings per share of $3.87, beating the analysts’ estimates for the adjusted earnings per share of $3.54, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $2.14 billion in the second quarter of FY 22, beating the analysts’ estimates for revenue by 5.24%.

The company has reiterated the fiscal year 2022 and long-term financial outlook of mid-to-high single digit annual net revenue growth, increasing revenues to $10 billion by fiscal year 2024, and operating margins relatively in-line with the fiscal year 2021 operating margin.