Williams-Sonoma Profit Rises, Outlook Weak - Update

(RTTNews) - Williams-Sonoma Inc. (WSM) on Wednesday reported an increase in profit for the fourth quarter, due mainly to higher revenues and improved operating margins. However, earnings for the quarter came in line with Wall Street estimates while revenues fell short of expectations.

Moving ahead, the company detailed a weak outlook for the first quarter and financial year 2015, sending its shares down 3 percent in after-hours trade.

San Francisco, California-based William-Sonoma's fourth-quarter profit rose to $147.0 million or $1.57 per share from $133.8 million or $1.38 per share last year.

Adjusted earnings were $1.52 per share. Analysts polled by Thomson Reuters expected earnings of $1.52 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Williams-Sonoma, the owner of the namesake, Pottery Barn and West Elm home-goods chains, said sales for the quarter rose 5.2 percent to $1.54 billion from $1.47 billion a year earlier. Analysts had a consensus revenue estimate of $1.57 billion for the quarter.

Chief Executive Laura Alber said, "We are very pleased with our fourth quarter results despite the effects of the west coast port disruption. Unfortunately, we expect this disruption to continue and to have a more significant impact through the first half of 2015."

The company's comparable brand revenue growth for the quarter increased 5.1 percent compared to a 10.4 percent increase last year, with namesake-brand up 2.8 percent, Potter Barn brand up 2.9 percent, and Pottery Barn Kids up 2.7 percent. West Elm grew 19.6, while PBteen rose 3.0 percent.

E-commerce revenues rose 9.0 percent to $770 million, while retail net revenues increased 1.6 percent to $772 million from a year ago.

Gross margin for the fourth quarter dropped to 40.1 percent from 40.6 percent last year. Operating margin improved to 15.4 percent from 14.8 percent last year, as selling, general and administrative expenses declined as a percent of sales.

Looking forward to the first quarter, the company expects earnings of $0.40 to $0.45 per share and revenues of $990 million to $1.01 billion. Analysts currently expect earnings of $0.54 per share on revenue of $1.04 billion for the quarter.

For the fiscal year 2015, the company expects earnings of $3.35 to $3.45 per share and revenues of $4.95 billion to $5.02 billion. Analysts currently expect earnings of $3.63 per share on revenues of $5.06 billion for 2015.

Williams-Sonoma boosted its quarterly dividend by 6 percent to $0.35 per share from $0.33 per share, payable on May 28 to shareholders of record on April 24.

WSM closed Thursday's trading at $80.96, down $2.91 or 3.47%, on the NYSE. The stock further dropped $2.00 or 2.47%, in the after-hours trade.