Williams-Sonoma profit falls 42% as sales dip
By Larry Thomas -- Furniture Today, June 8, 2008
SAN FRANCISCO — Hurt by declining traffic in all of its major retail formats, Williams-Sonoma said fiscal first-quarter profits plunged 42% on a 4.2% decline in sales.
The company, whose operations include the Pottery Barn, Pottery Barn Kids and Williams-Sonoma chains, said it has implemented a variety of cost-cutting measures as it weathers the home furnishings industry slump.
“We're prepared to face one of the most difficult retail environments in the history of the (Pottery Barn) brand,” said President Laura Alber. “We don't see a rebound in the home furnishings category in the next several quarters.”
Total sales for the quarter ended May 4 were $781.8 million, compared with $816.1 million in last year's first quarter.
Net income totaled $10.45 million or 10 cents per share, compared with $18.15 million or 16 cents per share in the comparable period last year.
Comparable-store sales tumbled 10.5% at Pottery Barn, 10.9% at Pottery Barn Kids, and 4.8% at Williams-Sonoma.
“We are increasingly concerned about the downward trends in consumer confidence,” said Howard Lester, chairman and CEO. “Our approach in this environment will not be business as usual.”
Lester said the company is projecting second-quarter sales of $828 million to $846 million, down from earlier projections of $850 million to $868 million. If the new targets are hit, it would represent a decline of 1.6% to 3.7% from last year's second quarter.
Second-quarter earnings projections remain at 15 cents to 19 cents per share. The company earned 23 cents per share in last year's second quarter.
The company operates 603 stores, including 256 Williams-Sonoma, 198 Pottery Barn, 94 Pottery Barn Kids, 29 West Elm, nine Williams-Sonoma Home and 17 outlet stores.
| Williams-Sonoma | |||
|---|---|---|---|
| Owns California Closet, Chambers, Gardener's Eden, Hold Everything and Pottery Barn | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| 13 weeks ended 5/4 | 2008 | 2007 | Change |
| (a) Based on average shares outstanding of 107.1 million in the 2008 quarter and 112.4 million in the 2007 quarter. |
|||
| Revenues | $781,784,000 | $816,051,000 | (4.2%) |
| Operating income | 16,883,000 | 28,442,000 | (40.6%) |
| Net income | 10,447,000 | 18,150,000 | (42.4%) |
| Earnings per share (a) | 0.10 | 0.16 | (37.5%) |
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