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Williams-Sonoma pulverizes previous outlook    

San Francisco – Multi-platform home specialty retailer Williams-Sonoma Inc. has slashed its quarterly and full year earnings guidance – the latter by as much as 75%.

W-S said it now expects fiscal year 2008 diluted earnings per share of $0.25 to $0.47 vs. prior guidance of $1.03 to $1.15. That would stem from the recast outlook on revenues of $3.274 to $3.344 billion vs. prior guidance of $3.572 to $3.638 billion, the retailer said.

The 613-store and direct-to-consumer retailer also slashed its third quarter and fourth quarter projections.

W-S stressed that inventories will end the year down 2% to 5% from 2007 – and it expects at year end to “retain its solid financial position with available cash of approximately $75 million and no outstanding short-term debt” under its $300 million credit line. The company also has trimmed its 2008 capital expenditure outlays to about $195 million.

“Over the past six weeks our sales trends have weakened dramatically, reflecting a significantly higher level of consumer concern over the events that have taken place in the global financial markets as well as the increasing likelihood of a prolonged recession,” said Howard Lester, chairman and ceo.

Lester said sales have slowed across all the company’s divisions. “To put this in perspective,” he said, “comparable store sales have declined from negative 14.0% in August to negative 20.1% in September to negative 26.6% thus far in October.”

He noted that 2009 will also be challenging, and Williams-Sonoma will plan quite conservatively. “As such, in 2009, we expect the following: a reduction in year-end merchandise inventories in the range of 5% to 10%; retail leased square footage growth of less than 4%; and capital spending in the range of $100 to $115 million.”

Williams-Sonoma is No. 10 on the HTT Top 50 Retailing Giants list with 2007 home textiles retail sales of $580 million.

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