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Williams-Sonoma hit hard by headwinds in tough 3Q 

San Fransisco – Although Williams-Sonoma posted an earnings loss of $11 million for the third quarter, the results actually beat expectations.

Sales fell at every company nameplate – including, for the first time, PB Teen, executives said during this morning’s quarterly call with analysts. Comps declined progressively throughout the quarter, according to Dave DeMattei, group president for Williams-Sonoma, Williams-Sonoma Home and West Elm.

Special promotions and events are being used to drive traffic through the holidays, and similar strategies will be pursued going into 2009. The overview by nameplate:

Pottery Barn: Merchandise highlights were pillows and “selects” merchandise. The format will be significantly more promotional through the end of the year.

PB Kids: Margins hurt by increased markdowns and accelerated promotions.

PB Teen: Will test teen merchandise for the first time in a PB Kids store opening this month. The company also plans to introduce a wider range of price points.

Williams-Sonoma: Promoting gift assortments and special marketing ploys such as “buy one/get a gift card for later purchase.” Focus is on new and exclusive offerings.

Williams-Sonoma Home: The high-end format’s performance is going to fall well below expectations, said DeMattei. The company is evaluating the prospects for the format in the current environment.

West Elm: Positive comps in textiles, lighting and tabletop couldn’t compensate for poor comps across other categories. But the company remains optimistic about West Elm’s long-term prospects.

Because the company has become so aggressive with promotions and marketing projects, “We are starting to see some things move the consumer our way a little bit,” said chairman and ceo Howard Lester.

For the quarter ended Nov. 2, net loss was approximately $11 million, or 10 cents per share, vs. net earnings in the year-ago quarter of $27.1 million, or 25 cents per share.

Consolidated sales fell 16.0% to $752.1 million. Total comps dropped 21.4%.

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