Williams-Sonoma profit falls 42 percent
Wednesday June 4, 10:32 am ET
ATLANTA (Reuters) - Williams-Sonoma Inc (NYSE:WSM - News) posted a 42 percent drop in quarterly profit on Wednesday and lowered its 2008 revenue forecast, sending its shares down as the soft U.S. economy and weak housing market hurt sales.
"While we continue to favor Williams-Sonoma's strong brands and longer-term growth potential, we remain concerned by deteriorating housing market and soft consumer-spending trends," Standard & Poor's Equity analysts Ken Leon and Michael Souers said in a research note.
The operator of Williams-Sonoma cookware stores and Pottery Barn home goods stores said earnings were $10.4 million, or 10 cents a share, for the first quarter ended May 4, down from $18.2 million, or 16 cents a share, a year earlier.
Excluding a benefit of 5 cents a share tied to the termination of a store lease, the company earned 5 cents a share. Analysts had expected 1 cent a share, according to Reuters Estimates.
Revenue fell 4 percent to $781.8 million. Sales at stores open at least 12 straight months, or same-store sales, fell 9 percent, hurt by weakness at outlet stores and Pottery Barn.
Selling, general and administrative expenses fell to $259.3 million from $273.5 million.
Plummeting home sales and values and tighter credit have compounded troubles for home-goods retailers as higher gasoline and food costs stem consumer spending. Linens 'n Things filed for bankruptcy protection last month, and Sears Holdings Corp (NasdaqGS:SHLD - News) posted a first-quarter loss last week.
Williams-Sonoma said it now expects 2008 revenue of $3.74 billion to $3.80 billion, down from a previous forecast of $3.79 billion to $3.88 billion. Same-store sales are expected to fall as much as 8.3 percent, it said.
The retailer forecast 2008 profit of $1.45 to $1.58 a share, compared with a previous outlook of $1.42 to $1.56. It said cost reductions and a gain from the sale of a corporate aircraft would help earnings.
But excluding the 9 cents a share gain tied to the aircraft sale, Goldman Sachs analyst Matthew Fassler said Williams-Sonoma effectively cut its year forecast.
For the second quarter, Williams-Sonoma expects earnings of 15 cents to 19 cents a share as same-store sales fall as much as 10 percent. A year earlier, it earned 23 cents a share.
Analysts' average profit forecasts are $1.45 a share for the year and 16 cents a share for the second quarter, according to Reuters Estimates.
Williams-Sonoma shares were down $1.16, or 4.6 percent, to $23.83 in morning New York Stock Exchange trading.
(Reporting by Karen Jacobs) |
