YOU ARE HERE: LAT HomeCollections

1st-Quarter Profit Drops 13% at Williams-Sonoma

Increased costs for catalogs lead to the first decline in earnings in almost two years.

May 23, 2003|From Bloomberg News

Williams-Sonoma Inc., owner of the Pottery Barn and Williams-Sonoma stores, said Thursday that first-quarter earnings fell 13%, the first decline in almost two years, because of higher catalog costs.

Net income dropped to $13.4 million, or 11 cents a share, from $15.4 million, or 13 cents, a year earlier, the company said. Sales in the three months ended May 4 increased 12% to $536.8 million, helped by the addition of 62 stores during the last year.

Chief Executive Edward Mueller added Pottery Barn Teen, a catalog featuring furniture and linens for 10- to 19-year-olds, in April to try to tap a new market and boost sales. He also spent more on West Elm, a furnishings catalog introduced last year. Profit fell for the first time in seven quarters as shoppers trimmed spending.

"It's somewhat disappointing," said Rob Wilson, president of Tiburon Research Group, who said he has a "sell" rating on Williams-Sonoma shares because the company's inventory has increased and profit from operations has fallen. He said he doesn't personally own the stock.

Net income was 3 cents a share more than the average estimate of analysts surveyed by Thomson Financial.

Shares of San Francisco-based Williams-Sonoma, which has 487 stores, fell 3 cents to $26.50 on the New York Stock Exchange. They have dropped slightly more than 2% this year.

Sales at stores open at least a year fell 0.8%, Williams-Sonoma said.

The company raised its annual earnings forecast by 3 cents a share. The retailer expects net income to climb to as much as $1.27 a share, from 67 cents a share last year.

Sales are forecast to rise to $2.65 billion to $2.72 billion in the year ending Feb. 1, compared with the company's previous estimate of $2.64 billion to $2.73 billion.

Los Angeles Times Articles