X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SAN FRANCISCO-Williams-Sonoma Inc. cited tough economic conditions Wednesday in reporting lower earnings and sliding comparable store sales, saying that the “macroeconomic” environment was working against it as well as others in the home furnishings segment of retailing. Howard Lester, chairman and CEO, commented that the “macro-environment in the home furnishings sector in the first quarter of 2007 continued to be very challenging,” although Lester said that Williams-Sonoma managed to do better than expected in light of prevailing economic conditions.

Lester and other Williams-Sonoma executives, commenting during a conference call with financial analysts, said the company was “particularly pleased with the performance of our emerging brands, which include PBteen, Hold Everything, West Elm, and Williams-Sonoma Home. He also praised the company’s efforts to implement strategies, such as improving its supply chain and technology operations. Although the retail environment for home furnishings and related products “continued to be difficult,” the company remained focused on its most important initiative, the revitalization of the Pottery Barn brand, Lester said.

The company reported an increase in its retail net revenues in the first quarter, saying that the increase resulted mainly from a 6.3% year-over-year rise in retail leased square footage, including 15 net new stores. The company’s plans for expansion call for retail leased square footage to increase in the range of 5% to 6%, versus Williams-Sonoma’s previous guidance in the range of 4% to 5%.

What that means for store count is about 11 net new locations for the year, seven of them in emerging brands. In addition to expanding by adding stores, the company plans to expand the square footage of 19 of its locations and to remodel three of its stores.

For the 13-week first quarter ended April 29, the San Francisco-based firm earned $18.15 million and 16 cents per diluted share, versus $23.1 million and 20 cents per share in the first quarter of 2006.

First-quarter net revenues climbed 2.7% to $816.1 million, but comparable store sales dipped in all of its retail concepts except its outlet stores, which posted a 9.3% increase. The company said, in its guidance regarding future comparable store sales, that it expects the comps to run from flat to minus 2%, mainly because of the “challenging” conditions that Williams-Sonoma and other retailers in its category are facing.

Lester said that Williams-Sonoma is remaining cautious in its outlook for the rest of the year, especially regarding the short term. “We continue to see higher inventory levels among our competition, and are concerned about the ongoing pressure of industry-wide markdowns and rising raw material costs,” he said. Both of those factors “could lead to a further deterioration in the overall macro-environment and lower gross margins.”

Williams-Sonoma Inc. markets through through 584 stores, seven mail order catalogs and six e-commerce websites. Its brands include Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.