Headquartered in San Francisco, Williams-Sonoma Inc. (WSM - Free Report) is a specialty home goods and furniture retailer founded in 1973.

The company has five core operating segments, each of which makes up its brand portfolio: Pottery Barn, West Elm, the namesake Williams-Sonoma, Pottery Barn Kids & Teen, and Other, which includes Rejuvenation and Mark and Graham.

Q4 Earnings Recap

A few weeks ago, Williams-Sonoma crushed expectations for its fiscal 2021 fourth quarter.

Adjusted earnings per share came in at $5.42 while revenue hit $2.5 billion, up 9% year-over-year, easily beating top and bottom-line estimates.

Impressively, e-commerce now makes up 66% of the company’s total revenue.

Total comparable sales rose nearly 11% compared to the prior-year period. West Elm was a standout once again, reporting comps growth of 18.3% and Pottery Barn saw comps growth of 16.2%.

Gross margin expanded 290 basis points to 45%, driven higher by year-over-year merchandise margin gains. Operating margin expanded by 3.5 percentage points to 21%.

WSM’s liquidity position remains strong. The retailer ended 2021 with $850 million in cash and no debt, as well as $1.4 billion in operating cash flow. This allowed WSM to return almost $1.1 billion to shareholders via dividends and share repurchases.

Plus, Williams-Sonoma just announced a 10% dividend increase; the upcoming dividend of $0.78 will be paid out on May 27 to investors of record as of April 22. Shares currently yield about 1.9% on an annual basis. This is in addition to a newly authorized $1.5 billion share buyback program.

Can WSM Surge Higher?

Year-to-date, shares of WSM have fallen about 12% compared to the S&P 500’s loss of 4%, but earnings estimates are on the climb, making the home-focused retailer a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, nine analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $14.35 per share to $15.56 per share. Earnings and sales are expected to notch modest gains for 2022, with 2023 continuing the positive earnings growth trend.

"[Last quarter’s] results reflect the resilience in our business model, as we successfully navigated unprecedented challenges within the supply chain, material and labor shortages, and capacity limitations from our incredible consumer demand," CEO Laura Alber said in a press release.

Williams-Sonoma’s growth initiatives are clearly paying off faster than expected.

The company now anticipates full-year 2022 revenue growth to be in the “mid-to-high single-digit” range. Additionally, management believes it will now reach its goal of $10 billion in annual sales by 2024.

If you’re an investor searching for a retail stock that offers both future growth and a well-covered dividend, make sure to keep WSM on your shortlist.