Williams-Sonoma profit off
By Larry Thomas -- Furniture Today, June 3, 2007
San Francisco — Top 100 company Williams-Sonoma, whose retail brands include Pottery Barn, said sales in its first quarter were 2.7% above last year's comparable period, but net income dropped more than 21%.
The company blamed the earnings decline on increasing costs of goods sold and a sluggish retail environment that led to more price-oriented promotions.
All its core store brands — Williams Sonoma, Pottery Barn and Pottery Barn Kids — recorded a decline in same-store sales during the quarter, with Pottery Barn Kids turning in the worst performance with a drop of 3.8%.
Williams-Sonoma stores had a decline of 0.6%, while Pottery Barn was down 1.2%.
"Although the macro environment in the home furnishings sector in the first quarter continued to be very challenging, we aggressively managed the rapid changes in our business and delivered better-than-expected earnings," said Chairman and CEO Howard Lester.
Total revenues for the 13 weeks ended April 29 came to $816.1 million, compared with $794.3 million in the first quarter last year. Net income was $18.2 million or 16 cents per share, compared with $23.1 million or 20 cents per share in last year's first period.
Lester said the retailer's most important initiative is the revitalization of the Pottery Barn brand, which does most of the company's furniture volume, and said the company would continue to revamp its merchandise assortment and close under-performing stores.
The company ended the quarter with 195 Pottery Barn stores, two fewer than it had at the end of the fourth quarter. Pottery Barn Kids has 93 locations, one more than at the end of the fourth quarter.
During the second quarter, the company estimated it would open two and close five Pottery Barn stores, while opening one and closing two Pottery Barn Kids stores.
Williams-Sonoma ranks No. 4 on Furniture/Today's latest list of the Top 100 U.S. Furniture Stores, published in the May 28 edition. The company had estimated furniture, bedding and accessory sales of $1.34 billion last year, a 5.5% increase over 2005's $1.27 billion. It was Williams-Sonoma's first appearance on the Top 100. Previously, only its Pottery Barn brand had been ranked.
| Williams-Sonoma | |||
|---|---|---|---|
| Owns California Closet, Chambers, Gardener's Eden and Pottery Barn | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 4/29 | 2007 | 2006 | Change |
| Revenues | $816,051,000 | $794,286,000 | 2.7% |
| Operating income | 28,442,000 | 34,690,000 | (18.0%) |
| Net income | 18,150,000 | 23,099,000 | (21.4%) |
| Earnings per share | 0.16 | 0.20 | (20.0%) |
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