Williams-Sonoma profit tops view; losses seen
Williams-Sonoma Inc
The company, which operates the Williams-Sonoma, Pottery Barn and West Elm chains, said the latest quarter ended better than it expected, although the overall retail environment overall was very weak.
Net earnings tumbled 90 percent to $12.2 million, or 12 cents per share, in the fourth quarter ended February 1 from $124.6 million, or $1.15 per share, a year earlier.
Excluding an asset impairment charge and costs for closing stores and cutting jobs, profit was 31 cents per share. Analysts on average were expecting 16 cents, according to Reuters Estimates.
Several analysts said their estimates compared with earnings of 23 cents a share, which exclude the impairment charge but include severance and lease termination costs, since some see those as part of doing business in a recession.
Net revenue fell nearly 27 percent to $1.01 billion, as sales at stores open at least a year dropped 22.3 percent, hurt by the ongoing housing slump and recession.
Williams-Sonoma said it expected losses for the first three quarters of this fiscal year and a profit in the fourth quarter. As a result, it forecast full-year results to range from a loss of 15 cents per share to a profit of 5 cents, which is below the analysts' average outlook for a profit of 6 cents, according to Reuters Estimates.
We are not intending to signal any type of insight into which direction the economy is headed -- but only that if our trends continue as they are today; this is how we would expect the year to unfold, Chief Executive Howard Lester said in a statement.
Williams-Sonoma said its outlook assumed that current sales trends would continue and that it delivers on plans such as offering more lower-priced items, making its supply chain more efficient, keeping inventories tight, reducing capital spending and renegotiating retail leases.
Despite the better-than-expected quarterly profit, which was driven by increased promotions and expense management, Cowen & Co analyst Laura Champine said she was concerned about the company's dependence this year on the fourth quarter, when holiday gift-giving usually boosts sales.
They need to hit a home run in Q4 and that's obviously a ways out from here and a little scary, Champine said.
Williams-Sonoma shares were up 35 cents, or 3.1 percent, at $11.54 on the New York Stock Exchange.
(Reporting by Martinne Geller; Editing by Steve Orlofsky and Lisa Von Ahn)
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