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Williams-Sonoma cautious about 2Q

San Francisco– Citing a sluggish home furnishings environment, Williams-Sonoma today lowered its second-quarter estimates, although it affirmed its full-year expectations.

The multi-channel retailing company now anticipates second quarter earnings of 14-18 cents per share, vs. a previous forecast of 16-20 cents. Pressure on profits is coming from rising raw material prices, heavier markdowns across the home furnishings sector, and high inventory levels across the industry, executives told analysts during Williams-Sonoma’s first quarter conference call earlier today.

“We believe an ongoing cautious outlook is appropriate,” said Howard Lester, chairman and ceo.

Consolidated results were modest during the first quarter ended April 29. Sales rose just 2.7% to $816.1 million, in part due to the closure last year of the Hold Everything chain. Excluding Hold Everything, sales rose 5.2%.

On the bricks-and-mortar side of the business, consolidated comps were off 0.8%. Only in the outlet segment did the company report positive comps – up 9.3%. All other division comps were flat to slightly down.

Diluted earnings per share were off 20% to 16 cents, impacted by 5 cents per share due to an accounting change.

During today’s call, executives said several strategic changes got underway during the quarter, particularly for the Pottery Barn brand. Under PB’s brand extensions, the company plans to extend PBKids into apparel – including 1,000-square-foot stand-alone stores – and expand giftware. Pottery Barn Bed +Bathis expanding its merchandise assortment. Pottery Barn Outdoor catalog is broadening its circulation.

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