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Larry Thomas

Pottery Barn, West Elm help Williams-Sonoma to double-digit gains

SAN FRANCISCO — Powered by its Pottery Barn and West Elm brands, retailer Williams-Sonoma recorded double-digit sales and earnings growth in the third fiscal quarter.

The company said growth was especially strong in its direct-to-consumer segment, which includes catalog and Internet sales, and noted that direct-to-consumer revenues made up 49% of total revenues in the quarter - two percentage points higher than the same quarter last year.

Total revenues for the 13 weeks ended Nov. 3 were $1.05 billion, up 11.3% from $944.6 million in the comparable quarter.

Comparable brand revenue, which includes direct-to-consumer and retail store sales, rose 8.2%. West Elm had the largest comparable-brand increase at 22.2%, followed by PB Teen at 16.7%, Pottery Barn at 8.4%, Pottery Barn Kids at 3.9% and Williams-Sonoma at 1.4%.

Net income totaled $56.7 million or 58 cents per share. That was an increase of 16% from $48.9 million or 49 cents per share in the same quarter last year.

"Our strong third quarter and our performance year-to-date illustrate the power of our business model and the relevancy of our brands," said Laura Alber, president and CEO. "Importantly, we delivered this revenue growth and accompanying operating margin expansion while simultaneously investing in our multi-faceted growth initiatives."

Results for the first nine months of the fiscal year mirrored the quarterly growth. Revenues rose 10.8% to $2.92 billion, while nine-month net income was up 18% to $145.1 million or $1.46 per share.

"We believe we are well-positioned heading into the holiday season and will continue to execute our key strategies to deliver an exceptional experience for our customers," Alber added. "We are focused on top-line results in conjunction with operational and capital discipline to deliver long-term shareholder value."

The retailer also boosted sales and earnings estimates for its fiscal year, which ends in February.

Revenues are now projected at $4.29 billion to $4.35 billion, up from an August forecast of $4.26 billion to $4.34 billion. Earnings per share are now projected at $2.76 to $2.83, not including one-time employee separation charges. The August earnings forecast was $2.69 to $2.79 per share.

As of Nov. 3, the company had 595 stores, including 256 Williams-Sonoma, 196 Pottery Barn, 84 Pottery Barn Kids, 55 West Elm and 4 Rejuvenation.

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