Why Shares of Williams-Sonoma Inc. Popped

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  were dazzling investors today, gaining as much as 12% after a strong fourth-quarter earnings report.

So what: The maker of specialty home products said that even-calendar sales increased 10%, to $1.47 billion, beating estimates of $1.43 billion, on a 10.4% spike in comparable brand sales. Earnings, meanwhile, improved to $1.38, topping the consensus at $1.36. CEO Laura Alber said the company "outperformed the retail industry over the holiday season, gaining market share, and demonstrating the structural advantage" of Williams-Sonoma's model.  

Now what: Sales at Pottery Barn and West Elm were particularly strong, growing by 14.6% to 18.3%, respectively. Revenue guidance for the current year was also impressive as the company sees full-year sales of $4.63-$4.71 billion against the consensus of $4.64 billion. Separately, the company raised its dividend 6% to $0.33, giving the stock a dividend yield of 2%. While comparable-brand sales are expected to moderate to 5%-7% this year, Williams-Sonoma's brand strength should ensure solid shareholder returns and continued outperformance.