Williams-Sonoma shows people are spending

The retailer's earnings call revealed that the housing turnover is leading to an accelerated spending wave.

By Jim Cramer Mar 23, 2010 6:57AM
Jim Cramer

By Jim Cramer, TheStreet


Nothing was more important than health care in Monday's session. Can't take away from it. But the eye-opening, I should say eye-popping, Williams-Sonoma (WSM) call may have been more of a catalyst than anyone who wasn't on it might have realized.


WSM basically said the public is spending again for everything from high-end bedding and nice cookware to expensive furniture and glassware. It was like something you would have heard not only before the Great Recession but maybe in the midst of the housing boom.


You could learn so much from it. First, you recognized that, like Bed Bath & Beyond (BBBY), when Linens 'n Things went under, WSM picked up great share when Smith & Hawken -- a unit of Scotts Miracle-Gro (SMG) -- closed its retail arm. (That was a two-birds-with-one-stone call because SMG moved up huge, too, on it).


Second, you could make the case that if people are spending $300 on housewares at WSM -- not an unreasonable assumption listening to that call -- they might be shelling out lots of bucks to Sears (SHLD), Home Depot (HD) and Lowe's (LOW), which also advanced.


Third, this call made me realize that we are seeing the effects, at last, of all of the turnover in housing, particularly at the low- to mid-end, as we often forget that just the changing of a house can mean money spent. And they are spending. It isn't just new homes that put money into the economy, it is the changing of homes.


Bing: More on Williams-Sonoma


Given all the different divisions that were on fire for WSM -- online, catalog, teen, bedding, furniture -- the pin action made a lot of sense. The demand is there, pent-up, for sure. It was a very big call. It showed, convincingly, that the great housing turnover we are experiencing is leading to an accelerated wave of spending to make those homes better, and the wave is continuing well past the Christmas holiday season.


At the time of publication, Cramer was long Home Depot.


Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.


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