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Williams-Sonoma stock price soars

The gourmet-cookware retailer reports results that exceed estimates.

August 30, 2007|From Bloomberg News

Williams-Sonoma Inc., the biggest U.S. gourmet-cookware chain, reported profit Wednesday that exceeded analysts' estimates and increased its full-year earnings forecast. The stock price rose the most in more than five years.

The retailer's Pottery Barn unit, whose 190 stores account for half of revenue, boosted sales at locations open at least a year for the first time in five quarters.

Pottery Barn is selling some items such as dressers, lamps and mirrors at discounts of as much as 75% off original prices. It also reduced shipping costs to generate home goods purchases amid the worst housing slump in 16 years.

"They were terrific numbers, much better than expected," said Joe Feldman, a Telsey Advisory Group analyst in New York. "Pottery Barn had a strong performance due to the initiatives they have in place to really drive the business."

Williams-Sonoma gained $3.13, or 10.6%, to $32.70 for its biggest advance since July 2002. Net income for the second quarter through July 29 decreased 27% to $26 million, or 23 cents a share, as selling, general and administrative costs rose and profit margins shrank. A year earlier, net income was $35.6 million, or 30 cents.

Excluding an expense of 1 cent a share for income taxes, profit was 24 cents a share, the San Francisco-based company said. Williams-Sonoma had forecast 14 cents to 18 cents. Analysts estimated 16 cents on average.

Revenue rose 4.1% to $859.4 million, within the range the retailer predicted. Analysts in a Bloomberg survey estimated $863.4 million. Williams-Sonoma said it expected full-year earnings, excluding expenses of 3 cents a share for income taxes, of $1.82 to $1.90 a share.

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