Williams-Sonoma

(WSM) - Get Report

, the home and cookware retailer that saw its stock plunge Wednesday after a key executive said he would resign, is looking for more than his replacement, say three people familiar with the company.

The San Francisco concern also has been searching for a chief operating officer, a new post for the company, with the intent that the executive would eventually succeed Howard Lester, the 63-year-old chairman and chief executive, these people say.

Meanwhile, Wednesday's bombshell that Chief Administrative Officer Dennis Chantland, 56, who also served as chief financial officer, would resign July 1, stunned investors.

It's unclear whether Chantland's resignation was prompted by the COO search -- a move that indicates Lester's intent to look outside the company for his successor. The company, in a press release, said Chantland was leaving to pursue personal interests. And on a conference call following the company's fourth-quarter earnings release Wednesay, Chantland told investors that he wanted to lead a less hectic life. "He wants to play golf," says an investor who was on the call.

Williams-Sonoma said no one would be available to comment until next week. Chantland didn't return calls seeking a comment.

While analysts say the market overreacted to news of Chantland's departure -- shares dove 24% to 29 Wednesday -- his exit leaves investors with several unanswered questions. Thursday the stock closed at 28 5/16, off 11/16.

"If Howard is looking for someone to take over, why wouldn't he turn to his right-hand man?" says Brian Postol, an analyst with

A.G. Edwards

, who rates the company accumulate. (His firm hasn't performed any underwriting for Willams-Sonoma.)

"If everything had been hunky-dory, we would've heard about this much sooner and it would've been handled in a cleaner way."

Observers point out that Chantland, who joined the company in 1995, is leaving before all of his goals have been met.

"This came out of left field," says the investor, who asked not to be named. "You're always concerned when someone in a high position who isn't that old leaves."

Chantland came out of semi-retirement after a long stint with

Dayton Hudson

(DH)

to join Williams-Sonoma, where he is credited with lending financial controls to Lester's marketing smarts. In his three years with the company, Chantland strengthened distribution, developed product management groups and consolidated sourcing, which led to margin improvements. During his tenure, earnings more than doubled to $54.8 million in the most recent fiscal year ended Jan. 31.

But there was more for him to accomplish. "He was getting the back-of-the-house in order, and he's leaving before he completes" the job, the investor says.

For instance, one of his goals was to reduce selling, general and administrative expenses, which have yet to decline as a percent of sales. The figure swelled mildly last year thanks to projects like the opening of a new call center in Oklahoma. With much of that spending behind it, the company is at the point where SG&A should begin declining. But investors say they expected Chantland to remain with the company until that goal was achieved.

Because of his crucial role at Williams-Sonoma -- often wearing several hats at once -- analysts and investors say it may take more than one executive to fill his outsized shoes.

Williams-Sonoma will need to find a CFO to replace Chantland, whom investors say was particularly adept at communicating the company's progress and strategy to Wall Street. And it will likely look for a logistics expert, someone who can oversee supply-chain management, another area in Chantland's domain, says Thomas Courtney, an analyst with

NationsBanc Montgomery Securities

, who rates the company a buy. (His firm hasn't performed any recent underwriting for Williams-Sonoma.)

Meanwhile, Lester will be left to run an increasingly complex company until those positions are filled. The Williams-Sonoma today is far grander than the four-store chain in which he invested $50,000 23 years ago. At that time, Lester, who was in his early 40s, was flush from money made in the computer business. He saw a niche for upscale cookware and home furnishings and used his marketing acumen to feed American's need to nest.

Today, Williams-Sonoma has 298 stores and five catalogs under the Williams-Sonoma,

Pottery Barn

,

Hold Everything

,

Gardeners Eden

and

Chambers

names. And his initial investment is worth some $74 million.

With the business increasingly complex -- the company is developing a Web site and has launched a Pottery Barn catalog for kids -- the need for seasoned senior executives is paramount.

In its most recent fiscal fourth quarter, earnings grew 28% to $43.9 million, or 75 cents per share, compared with $34.2 million, or 61 cents per share, the year earlier. Revenue jumped 19% to $441 million. And sales at stores open at least one year grew 6%.

But those earnings missed the

First Call

consensus by a penny, which underscores the company's need for a strong financial manager. And that's causing some investors to take a wait-and-see approach despite the stock's recent haircut.

"I'm going to be cautious until I see Dennis' replacement," the investor says.