Williams-Sonoma returns to 3rd-quarter profit

posted: 82 DAYS 21 HOURS AGO

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SAN FRANCISCO -Williams-Sonoma Inc. on Thursday said it returned to a third-quarter profit, helped by reduced expenses and better margins.

Chairman and Chief Executive Howard Lester said in a statement that shoppers responded well to its products during the quarter, which helped support margins.

The home decor retailer raised its profit and revenue forecasts for the fourth quarter and year.

Williams-Sonoma, whose stores include Pottery Barn and its namesake locations, earned $7.3 million, or 7 cents per share, compared with a loss of $11 million, or 10 cents per share, during the same quarter a year earlier.

Excluding asset impairment and early lease termination charges and other items, profit in the latest quarter was 16 cents per share.

Analysts polled by Thomson Reuters expected profit of 5 cents per share. Analyst estimates usually exclude one-time items.

Sales slipped 3 percent to $729.3 million from $752.1 million. Analysts expected revenue of $686.1 million.

Williams-Sonoma was able to bolster its quarterly performance in part by cutting its selling, general and administrative expenses to $243.4 million from $259.9 million. That helped gross margins improve to 34.7 percent from 32 percent.

There were some other encouraging signs as well, as sales at stores open at least a year climbed 1.7 percent during the quarter. Its Pottery Barn and West Elms brands reported sales increases at stores open at least a year, while Pottery Barn Kids, Williams-Sonoma and Williams-Sonoma Home posted declines.

Sales at stores open at least a year are a key indicator of retailer performance, because they measure growth from existing stores rather than newly opened ones.

Williams-Sonoma lifted its full-year guidance to a range of 43 cents to 52 cents per share in profit on revenue of $2.98 billion to $3.04 billion. Its prior guidance was for profit of 19 cents to 31 cents per share on sales of $2.84 billion to $2.94 billion.

Analysts forecast full-year income of 33 cents per share on revenue of $2.92 billion.

For the fourth quarter, the company now anticipates adjusted earnings of 36 cents to 45 cents per share on sales of $970 million to $1.03 billion. The retailer previously predicted earnings of 27 cents to 36 cents per share on revenue of $900 million to $960 million.

Analysts expect fourth-quarter earnings of 38 cents per share on sales of $949.9 million.

Williams-Sonoma has 630 stores and seven direct mail catalogs along with six online properties. Its stock climbed 76 cents, or 3.6 percent, to $21.79 in premarket activity.

2009-11-19 08:17:11