NEW YORK (TheStreet) -- Williams-Sonoma (WSM) shares tumbled 11% to $66.70 in premarket trading on Wednesday following the home furnishing and cookware brand's disappointing forward guidance for the third quarter.
Williams-Sonoma's second-quarter profit of 53 cents a share met analysts' expectations but sales were slightly softer at $1.04 billion vs. $1.05 billion expected by analysts for the period ended Aug. 3. Direct-to-consumer sales represented half of total revenue for the quarter. In the same period last year, Williams-Sonoma earned 49 cents a share on $982 million in revenue.
Comparable sales for Williams-Sonoma's brands were mixed. The company had overall comp sales growth of 5.7% in the period vs. 8.4% growth last year; analysts expected growth of 6.2% in the second quarter, according to Consensus Metrix. Pottery Barn sales rose 4.4% in the second quarter compared to 9.9% last year and consensus expectations of 6%. West Elm had same-store sales growth of 16.7% vs. 12.8% expected by analysts.
Williams-Sonoma forecast third-quarter earnings to range between 58 cents a share and 63 cents a share compared with earnings of 66 cents a share expected by analysts. The company maintained its full-year profit guidance of $3.07 to $3.17 a share.
Here's what Wall Street analysts are saying on Thursday.
Brian Nagel, Oppenheimer (Perform; $68 PT)
We view the essentially in-line Q2 (July) results and updated FY14 (Jan. 2015) guidance that Williams-Sonoma announced last night (8/27) as mixed. WSM continues to outperform most others in Home Retail and rank among the best operators in Consumer. Unfortunately, investors had come to expect and discount perfection at the chain, and trends in Q2 (July) weakened enough to undermine these views. WSM is no longer immune to mounting competitive pressures in the sector. We are concerned somewhat that Street estimates and management guidance could prove optimistic in an aggressively promotional holiday 2014.
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