Williams-Sonoma Profit Tops Street; Stock Up

(RTTNews) - Home products retailer Williams-Sonoma Inc (WSM), Wednesday reported a marginal increase in fourth-quarter profit as higher sales of furniture and cookware products largely offset some weak margins and higher income tax expense. Nonetheless, both earnings and sales for the quarter easily topped Wall Street estimates.

Williams-Sonoma provided some weak earnings guidance for the first quarter and full year 2014 even as sales expectations for the year appear bright. The company also raised its quarterly cash dividend by 6 percent to $0.33 per share.

Williams-Sonoma shares touched a new high in a year, gaining 6.58 percent in after-hours trade on the New York Stock Exchange.

"The strength of our brands across retail and e-commerce, in conjunction with disciplined execution, enabled our team to drive record operating results," said CEO Laura Alber.

Williams-Sonoma has been investing in brands and infrastructure to buoy growth and seen steady growth in online sales. The company said strong sales were despite the recent quarter being shorter by one week compared with a year ago.

The company also passed comfortably through a harsh winter weather in the U.S. that impacted retailers and other sectors as well.

San Francisco, California-based Williams-Sonoma posted fourth-quarter net earnings of $133.80 million or $1.38 per share, compared with $133.73 million or $1.34 per share last year. On average, 25 analysts polled by Thomson Reuters expected earnings of $1.36 per share for the quarter. Analysts' estimates typically exclude special items.

Williams-Sonoma offers cookware and tools, electrics, and entertaining essentials, furniture and other items via its stores as well as e-commerce websites and direct mail catalogs.

The company's sales for the fourth quarter climbed to $1.47 billion from $1.41 billion last year. Twenty-two analysts had a consensus revenue estimate of $1.43 billion for the quarter.

Comparable brand revenue for the quarter was up 10.4 percent.

But margins for the quarter were soft. Gross margin slipped to 40.6 percent from 41.3 percent last year and operating margin dropped 20 basis points to 14.8 percent.

Results were also weighed down by income tax expense that was higher by $7 million at $84 million for the quarter.

For the first quarter, Williams-Sonoma expects earnings of $0.41 to $0.44 per share and sales of $920 million to $940 million. Analysts currently expect earnings of $0.46 per share on sales of $943.6 million for the quarter.

The company expects comparable brand revenue growth of 4 percent to 6 percent for the quarter.

For fiscal year 2014, Williams-Sonoma estimates earnings of $3.05 to $3.15 per share and sales of $4.63 billion to $4.71 billion. Analysts currently expect earnings of $3.20 per share on sales of $4.64 billion for the year.

The company expects comparable brand revenue growth of 5 percent to 7 percent for the year.

Williams-Sonoma stock closed Wednesday at $58.98, down $0.01 or 0.02%, on a volume of 1.6 million shares. In after hours, the stock gained $3.88 or 6.58% at $62.85. In the past year, the stock has traded in the range of $44.31 - $61.56.