Williams-Sonoma Profit Rises, But Stock Down On Outlook

(RTTNews) - Williams-Sonoma Inc. (WSM) Wednesday reported an increase in profit for the second quarter, driven largely by growth in revenues and lower expenses with earnings in line with expectations. Nonetheless, revenues for the quarter fell short of estimates, as same-store sales slowed.

Moving ahead, the home products retailer detailed a weak outlook for the third quarter, dragging its shares down 12 percent in after-hours trade.

San Francisco, California-based William-Sonoma's second-quarter profit improved to $50.7 million or $0.53 per share from $48.9 million or $0.49 per share last year. On average, 27 analysts polled by Thomson Reuters expected earnings of $0.53 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 second quarter grew 5.8 percent to $1.04 billion from $982.2 million last year. Analysts had a consensus revenue estimate of $1.05 billion for the quarter.

Chief Executive Laura Alber said, "We are pleased to have delivered another quarter of solid performance, once again demonstrating the competitive advantages resulting from our multi-brand, multi-channel business model."

The company's comparable brand revenue growth for the quarter increased 5.7 percent compared to an 8.4 percent increase last year, with namesake-brand up 3.4 percent, Potter Barn brand climbed 4.4 percent, and Pottery Barn Kids rose 5.6 percent. West Elm was up 16.7, while PBteen declined 1.0 percent.

Direct-to-customer revenues rose 9.4 percent to $523 million, while retail net revenues improved 2.4 percent to $517 million from a year ago.

Gross margin for the second quarter dropped to 36.8 percent from 37.6 percent last year, while selling, general and administrative expenses, as a percent of sales, declined to 28.6 percent from 29.6 percent.

Looking forward to the third quarter, the company expects earnings of $0.58 to $0.63 per share and revenues of $1.10 billion to $1.13 billion. Analysts currently estimate earnings of $0.66 per share on revenues of $1.13 billion for the quarter.

For the fiscal year 2014, the company continues to expect earnings of $3.07 to $3.17 per share and revenues of $4.645 billion to $4.725 billion. Analysts currently estimate earnings of $3.20 per share and revenues of $4.72 billion for the year.

WSM closed Tuesday's trading at $74.89, up $0.04 or 0.05%, on the NYSE. However, the stock slipped $9.01 or 12.03% in after-hours trade.