Williams-Sonoma Profit Rises, Stock Up - Update

(RTTNews) - Williams-Sonoma Inc. (WSM) Wednesday reported an increase in profit for the third quarter, due mainly to higher revenues and improved operating margins, with both earnings and revenues trumping Wall Street estimates.

Williams-Sonoma shares gained seven percent in the after-hours trade, following the news.

San Francisco, California-based William-Sonoma's third-quarter profit rose to $64.9 million or $0.68 per share from $56.7 million or $0.58 per share a year ago. On average, 29 analysts polled by Thomson Reuters expected earnings of $0.63 per share for the third quarter. Analysts' estimates typically exclude one-time items.

Williams-Sonoma, the owner of the namesake, Pottery Barn and West Elm home-goods chains, said sales for the third quarter grew 8.7 percent to $1.14 billion from $1.05 billion a year ago. Analysts had a consensus revenue estimate of $1.12 billion for the quarter.

Chief Executive Laura Alber said, "Solid performance across our brands allowed us to deliver these results with revenue growth of 8.7 percent, operating margin expansion, and earnings per share growth of 17.2 percent. These achievements reflect our product leadership, lifestyle merchandising, iconic brands and strong execution."

The company's comparable brand revenue growth for the quarter increased 8.7 percent compared to an 8.2 percent increase last year, with namesake-brand up 4.3 percent, Potter Barn brand up 7.0 percent, and Pottery Barn Kids up 8.6 percent. West Elm grew 17.4, while PBteen rose 11.7 percent.

E-commerce revenues rose 14.7 percent to $587 million, while retail net revenues increased 3.1 percent to $556 million from a year ago.

Gross margin in the third quarter dropped to 37.7 percent from 38.6 percent last year. Operating margin improved to 9.2 percent from 8.8 percent last year, as selling, general and administrative expenses declined as a percent of sales.

Looking forward to the fourth quarter, the company expects earnings of $1.42 to $1.50 per share and revenues of $1.53 billion to $1.58 billion. Analysts currently expect earnings of $1.53 per share on revenues of $1.57 billion for the quarter.

For the fiscal year 2014, the company now expect earnings of $3.11 to $3.19 per share and revenues of $4.68 billion to $4.73 billion. Analysts currently expect earnings of $3.18 per share on revenues of $4.70 billion for 2014.

Previously, the company expected earnings of $3.07 to $3.17 per share and revenues of $4.65 billion to $4.73 billion.

WSM closed Wednesday's trading at $69.42, down $0.18 or 0.26%, on the NYSE. The stock further gained $4.68 or 6.74% in the after-hours trade.