Williams-Sonoma Climbing Back
November 23, 2009,
Improving business trends across all but one nameplate resulted in a better-than-expected third quarter for Williams-Sonoma Inc.
Sales fell 3.0% to $729 million for the quarter ended Nov. 2. Total comp rose 1.7% — the company’s first positive overall comp in eight quarters.
The Pottery Barn and West Elm brands had year-over-year revenue increases, while net revenues in the Pottery Barn Kids, Williams-Sonoma and Williams-Sonoma Home brands declined. Williams-Sonoma Home, which addresses the luxury market, was the only business that did not experience better results during the quarter, and the company is “critically assessing” the future of the format, chairman and ceo Howard Lester told analysts during last week’s conference call.
Pottery Barn — the first of Williams-Sonoma’s chains to stumble ahead of the housing market’s collapse — had the best quarter.
“We do believe there is some pent up demand, and we also know we’re getting some new customers into the brand,” said Laura Alber, president. “Lower price points tend to drive new customers in.”
Gross margin improved to 34.7% from 32.0%. “But we are in no way back to the levels of pre-recession,” cautioned Sharon McCollam, exec vp, coo and cfo.
Executives said they do not expect the economy to bounce back sharply. They believe the recession has permanently reset consumers’ shopping habits and are focusing on winning share of wallet over the next two years.
“We are not counting on the economy to improve our business,” said Alber.
Year-to-date, the company is running a loss of $10.98 million, or 10 cents per share, compared to a profit of $17.8 million , or 17 cents per share, in the first nine months of last year. Sales fell 9.8% to $1.19 billion.
Looking ahead, the company raised its guidance for the fiscal year to earnings per share of 25 cents to 34 cents from an earlier forecast of 19 cents to 31 cents.