Williams-Sonoma Inc reported a higher-than-expected quarterly profit on lower costs and strong holiday sales, prompting the home goods chain to forecast strong results in the current quarter and the full year.

The operator of the Pottery Barn, West Elm and Williams-Sonoma chains also raised its quarterly dividend by 8.3 percent to 13 cents a share, and expects same-store sales to rise 8 percent to 11 percent in the current quarter.

It expects net revenue in the current year to rise by 3 percent to 6 percent and earnings per share, before items, to rise by 22 percent to 33 percent.

Williams-Sonoma won many shoppers in the holiday season by offering more lower-priced home decor items.

Sales at home goods chains had crumbled in the housing downturn, but changes in pricing and merchandising, including the introduction of less expensive items, and pent-up demand for home goods are finally bringing shoppers back to their stores.

Earlier this year, Bed Bath & Beyond forecast better-than-expected full-year results and Pier 1 Imports
said it expected strong merchandise margins in the fourth quarter.

Williams-Sonoma's earnings rose to $88.4 million, or 81 cents a share, in the fourth quarter ended January 31 from $12.2 million, or 12 cents a share, a year earlier.

Excluding one-time items, the company earned 86 cents a share. On that basis, analysts on average had expected 74 cents, according to Thomson Reuters I/B/E/S.

Net sales rose 8.1 percent to $1.09 billion, beating the analysts' average forecast of $1.07 billion. Sales at stores open at least a year rose 7.6 percent.

Williams-Sonoma also gained from trimming its advertising budget and kept inventories tight.

Its shares, which have risen about 21 percent in the past month, were up 2 percent at $24.65 in premarket trading.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn and Derek Caney)