Textiles a Positive at Pottery Barn
November 27, 2006,
Third-quarter sales at Williams-Sonoma were up modestly — but profits were sharply down — and Pottery Barn division president Laura Alber said of her brand, "Revenues were negative in all key product categories except textiles."
Overall earnings per diluted share were $0.25, down 19.4% from $0.31 for the same period one year ago. Net revenues were $852.8 million, up 3.0% from $827.6 million.
The company is banking on massive promotional and direct-to-consumer activities to pump up sales in the fourth quarter, said chairman Howard Lester and other executives during the company's earnings call.
Comp sales have slumped from an anemic 1.3% and 1.2% in the first and second quarters to the third quarter's perfectly flat 0.0%. Guidance for the holiday term is from negative 1.0% to positive 1.5%, yielding a fiscal 2006 guidance of 0.0% to 1.0% overall.
Lester was pleased with strong performance in the Williams-Sonoma, Pottery Barn Kids, and West Elm brands. He allayed the difficulty in the Pottery Barn unit (where third-quarter comps were down 2.5%) to the ease with which competitors knock off and heavily promote many core items, and to the "macro-economic" environment.
Alber noted that Pottery Barn Kids was a bright spot, with "net revenues up 9.8% on top of a 12.3% increase last year," and again pointed to "particular strength in textiles" and decorative accessories. However, she said a key vendor bankruptcy undercut progress in the nursery category.