Williams-Sonoma Profit Drops

And the retailer warns that the fourth quarter will be another slow one.
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Williams-Sonoma

(WSM) - Get Report

shares got burned Thursday after the cookware retailer warned that the current quarter will probably be a rough one.

The San Francisco-based company, which also sells home-furnishing products and operates the Pottery Barn chain, said that a "weakening" macro environment and slower-than-expected November traffic will probably push fiscal fourth-quarter results to the low end of prior guidance.

That outlook had non-GAAP earnings at $1.20 to $1.26 a share on sales of between $1.39 billion and $1.42 billion. Analysts polled by Thomson Financial are seeking a profit of $1.22 a share on a top line of $1.4 billion.

CEO Howard Lester blamed housing-market woes, which he says continued to make the home-furnishings market "very challenging" in the third quarter. In a press release, he pointed out that Williams was nevertheless able to eke out a 1.1% same-stores sales rise in October even as "most other retailers" dipped into the red.

Same-store sales, in Williams' case, refer to stores open for at least a year and whose gross square footage didn't change by more than 20% in the past year. The company's flagship chain saw this figure slide to a 0.3% gain, vs. 4.3% last year, though Pottery Barn and the company's other concepts all saw year-over-year improvements.

As for overall third-quarter financials, income was down 7.1% from last year to $27.1 million, or a flat 25 cents a share, for a penny EPS beat. Revenue climbed 5% to an about in-line $895.1 million, with the retail portion of that partly buoyed by a net increase of 15 new stores.

Shares closed off $1.86, or 6.2%, at $28.40.