Williams-Sonoma Profit Drops 21% But Tops Forecasts

Williams-Sonoma , the upscale home furnishings retailer, Wednesday reported lower quarterly profit, citing challenging sales in its core brands, but still beat Wall Street estimates.

First-quarter net income fell to $18.2 million, or 16 cents a share, from $23.1 million, or 20 cents, a year ago.

Analysts, on average, were expecting earnings of 13 cents per share, according to Reuters Estimates.

Sales in the quarter rose 2.7 percent to $816.1 million.

Chief Executive Howard Lester said the company would remain cautious in its guidance, particularly in the short term.

"We continue to see higher inventory levels among our competition and we are concerned about the ongoing pressure of industry-wide markdowns and rising raw material costs," Lester said.

The company cut the current quarter's earnings forecast, but reaffirmed fiscal 2007 earnings outlook in the range of $1.76 to $1.84 per share, citing a stronger-than-expected start to the year.