Williams-Sonoma Plans Growth

For the fourth quarter ended Jan. 30, Williams-Sonoma earned $102.6 million or 86 cents per share, only a penny increase from last year's fourth quarter, but this year's results included an adjustment of 9 cents per share for the lease accounting changes.

Without that change, the company would have earned $113.3 million, or $95 cents per diluted share. For the year, the company increased 14.6% to $180.1 million, or $1.51 per share, which would have been an increase of 21.4% to $190.8 million, or $1.60 per share, without the accounting change. Sales climbed 7.9% to nearly $1.1 billion in the fourth quarter and rose 13.9% to more than $3.1 billion for the year. Comparable store sales rose 4.1% for the quarter, up from 1.5% in the fourth quarter of 2003, and climbed 4% versus 3% on a full-year basis.

The company plans to finish 2005 with 578 stores, which will be a gain of 26 from the 552 it operated at the end of 2004. The increase will come after the opening of 38 new stores and the closing of 12 existing locations. Among the new stores this year will be three new Williams-Sonoma Home prototype stores due to open in the third quarter, 12 new Williams-Sonoma locations, 10 new Pottery Barn sites–along with some closings of those two brands--and seven new West Elm stores against no scheduled closings of the West Elm brand.

"We continue to believe that West Elm has the potential to be ourlargest brand if we can successfully evolve the merchandisingstrategy," CEO Ed Mueller said during Tuesday's conference call. Mueller said that the company's overall sales increases in the fourth quarter and the year resulted primarily from a year-over-year increase in retail leased square footage of 11.4%, including 40 net new stores, along with the comparable store sales increase. He noted that the Williams-Sonoma Home stores slated to open during 2005 will be the first retail locations for the brand, which has thus far been limited to Internet and catalog sales.

For the year 2005, the company is projecting an increase of 8% to 9% in retail leased square footage and 3% to 5% in comparable store sales. Among other initiatives during 2005, the company is planning to test, on a national basis, a new store inventory management program that will re-stock each store on a daily basis, with UPS providing the shipping.