Williams-Sonoma Profit Rises, But Shares Down On Weak Outlook

(RTTNews) - Williams-Sonoma Inc. (WSM) on Wednesday reported an increase in profit for the second quarter, due mainly to higher revenues and improved operating margins. Earnings for the quarter were in line with Wall Street estimates while revenues trumped expectations.

Moving ahead, the company detailed a weak outlook for the third quarter, sending its shares down about 6 percent in after-hours trade.

San Francisco, California-based William-Sonoma's second-quarter profit rose to $53.7 million or $0.58 per share from $50.7 million or $0.53 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.

Williams-Sonoma, the owner of the namesake, Pottery Barn and West Elm home-goods chains, said sales for the quarter rose 8.5 percent to $1.13 billion from $1.04 billion a year ago. Analysts had a consensus revenue estimate of $1.11 billion for the quarter.

The company's comparable brand revenue growth for the quarter increased 6.3 percent compared to a 5.7 percent increase last year, with namesake-brand down 0.3 percent, Pottery Barn brand up 6.4 percent, and Pottery Barn Kids up 3.3 percent. West Elm grew 15.7 percent, while PBteen rose 3.9 percent.

E-commerce revenues rose 9.1 percent to $570 million, while retail net revenues increased 7.9 percent to $557 million from a year ago.

Gross margin for the quarter dropped to 36.1 percent from 36.6 percent last year. Operating margin improved to 7.4 percent from 8.2 percent last year.

Looking forward to the third quarter, the company expects earnings of $0.68 to $0.73 per share and revenue of $1.19 billion to $1.22 billion. Analysts currently expect earnings of $0.75 per share on revenue of $1.22 billion for the quarter.

For the fiscal year 2015, the company continues to see earnings of $3.35 to $3.45 per share and revenue of $4.95 billion to $5.02 billion. Analysts currently expect earnings of $3.48 per share on revenues of $5.01 billion for 2015.

WSM closed Wednesday's trading at $83.12, up $2.05 or 2.53%, on the NYSE. The stock, however, slipped $4.72 or 5.68% in the after-hours trade.