SAN FRANCISCO-Pottery Barn’s sales were down during parent company Williams-Sonoma’s second quarter, posting a performance that Chairman and Chief Executive Howard Lester calls, “way below expectations.” Year-over-year same-store slid 0.2%, and revenues increased 5.6% for the period, which ended July 30.

Executives say the problems at the 191-store chain were fueled by general macro-economic conditions and not specific issues at Pottery Barn. They also blame a decrease in mall traffic. “We’re seeing a greater price sensitivity than we have in the past,” said Laura Abler, president of the company, during a conference call.

The company is now adjusting prices at the chain and changing assortment displays, among other initiatives. Furniture was the only category in which Pottery Barn posted a sales gain during the quarter, and management says that this is due to having lower prices than competitors in the segment.

The 91-store Pottery Barn Kids chain, however, recorded an 8.1% same-store sales gain. This is due to those stores targeting a wealthier demographic that is not impacted by the overall economy’s pressures, such as energy prices.

The 256-unit Williams-Sonoma chain logged a same-store sales increase of 2.3% on a total revenue dip of 0.2%. The company undertook the renovation of assortment in 31 stores during the quarter.

Executives say they are hopeful about the chain’s more urban, 14-unit West Elm concept, but expectations for next year’s expansion have been cut in half, to 10 new stores. “The challenge for us is finding the right real estate in the proper neighborhoods,” Lester says. “We are aggressively looking for it.”

Based on Pottery Barn’s performance, the company is dropping its full-year revenue guidance from between $3.83 billion to $3.9 billion to between $3.75 billion to $3.8 billion. The earnings-per-share forecast has fallen from $1.97 to $2.01 to $1.87 to $1.94.

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