Williams-Sonoma tumbles after cutting outlook

SAN FRANCISCO - Shares of home decor chain Williams-Sonoma Inc. sank Wednesday after the retailer said it expects to lose at least 10 cents per share in the third quarter as revenue tumbles amid a dour retail environment.

Shares of the San Francisco-based company closed down $2.49, or 23.7 percent, at $8.01. The shares had bottomed at $7.26 earlier in the session, an 11-year low.

Earlier in the day the company, which owns Williams-Sonoma, Pottery Barn, Pottery Barn Kids and Hold Everything brands, said it would likely lose between 10 and 12 cents per share in the third quarter, down from its previous guidance of a break even profit to earnings of 4 cents per share. It also predicted revenue would be between $732 million and $742 million, down from its earlier estimate of $802 million to $820 million.

It also reduced its fourth-quarter forecast, saying it expected to earn 10 cents to 30 cents per share instead of a prior forecast of 76 cents to 86 cents per share. It now predicts revenue between $940 million and $1 billion, compared with its earlier outlook for sales of $1.17 billion to $1.22 billion.

Standard & Poor's Equity Research analyst Michael Souers told investors he was retaining his "Hold" rating on the stock.

"While we continue to think (Williams-Sonoma) has tremendous brand relevance and modest long-term growth potential, we don't foresee a rebound in the purchase of big-ticket furniture items until after the housing market shows signs of a recovery," he wrote in a research note, cutting his price target on the stock in half to $10.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.