Textiles Sluggish as Williams-Sonoma Levels Out
November 26, 2007,
Earnings of $0.25 per diluted share at specialty retailer Williams-Sonoma were even with last year, as third-quarter revenues of $895.1 million were up 5.0% from the year-ago period.
Overall comparable store sales climbed 1.1%. By division, comps rose 0.3% for Williams-Sonoma and Pottery Barn, 2.0% for the outlets, and a hefty 4.5% at Pottery Barn Kids. For the 39 weeks year-to-date, however, PBK comps were down 1.1%.
The linens segment was a part of the good news at the Williams-Sonoma brand, said David DeMattei, group president for W-S, W-S Home and West Elm; he also cited cook's tools, cookware and cutlery — and noted that 27-store West Elm is ahead of plan with 33.2% revenue growth and both furniture and other products pulling their weight.
However, responding to an analyst question, president Laura Alber said that the Pottery Barn segment had experienced "softness in the textiles business all year."
"Particularly in bedding," commented Alber, adding rugs and window treatments to the slow performers. She said her team is "working hard" to deliver more innovative products in 2008.
The same held true at his units, said DeMattei but noted, "Our organic offerings have been really quite good."
The company maintained its earnings guidance for the fourth quarter. For the full year, W-S projects revenues of $3.957 billion to $3.987 billion, a tighter range compared to previous guidance of $3.949 billion to $3.999 billion. Full-year comps now are projected at 0.0% to 1.0%, vs. the earlier plan for 0.0% to 1.5%.
Earnings outlook for the full year grew slightly more optimistic, pegged at $1.81 to $1.87, vs. previous guidance in the range of $1.79 to $1.87.
That optimism didn't keep Wall Street from pushing down the W-S share price by more than 5% the day of the announcement.