Williams-Sonoma Profit Falls 7%
Upscale home furnishings retailer Williams-Sonoma posted lower quarterly profit Thursday as the weak housing market weighed on sales of home goods, but the results beat analysts' expectations.
The company also said it was looking at the current quarter with "a heightened sense of caution" since it believes the overall weakness in the macro environment is having a greater impact on consumers.
Net income in the fiscal third quarter ended Oct. 28 fell to $27.1 million, or 25 cents a share, from $29.1 million, or 25 cents a share, a year earlier. Analysts, on average, expected 24 cents a share, according to Reuters Estimates.
Quarterly sales at the company, which operates the Pottery Barn, West Elm and its namesake chains, rose 5 percent to $895.1 million.
The home furnishings environment was "very challenging" in the quarter, particularly in areas hit hard by housing market concerns, Chief Executive Howard Lester said in a statement.
However, sales at stores open at least a year rose marginally at its namesake and Pottery Barn stores, and increased 4.5 percent at Pottery Barn Kids, leading to an overall same-store sales increase of 1.1 percent.
The company said it was on track for fourth-quarter earnings of $1.20 to $1.26 per share on revenue of $1.387 billion to $1.417 billion.
However, Lester warned that earnings and sales could come in at the lower end of the forecast if the macro environment remains under pressure.
"We believe that the macro environment is weakening and that retail traffic is slower than we would have expected at this time in November," he said.
Analysts expect the company to earn $1.22 per share in the fourth quarter.
Williams-Sonoma stood by its forecast that same-store sales would grow 0.5 percent to 2.5 percent in the fourth quarter.
For the full year, it raised the lower end of its earnings forecast slightly. It now expects to earn $1.84 to $1.90 per share excluding one-time items, up from a previous forecast of $1.82 to $1.90.
Williams-Sonoma also revised its full-year sales forecast to a range of $3.96 billion to $3.99 billion, from its previous forecast of $3.95 billion to $4 billion. Analysts expect $3.97 billion.
The company said same-store sales would be flat to up 1 percent for the year, compared with its previous forecast of flat to up 1.5 percent.
Williams-Sonoma shares were at $30 in pre-market trading, down from a Wednesday close at $30.26 on the New York Stock Exchange.