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Cookware retailer's holiday sales up

Williams-Sonoma beats estimates, sending its shares to their biggest gain in two years.

January 10, 2007|From Bloomberg News

Gourmet-cookware retailer Williams-Sonoma Inc. on Tuesday reported holiday sales that exceeded analysts' estimates on gains at all but one of its chains.

The company's stock rose 5.85%, the most in more than two years. Sales at Williams-Sonoma's stores open more than a year rose 1.1% for the eight weeks through Dec. 24, the San Francisco-based retailer said. Total revenue gained 3.6% to $900.4 million.

Pottery Barn's home furnishing division was the only chain that saw sales drop, the company said without being more specific.

"The holiday results don't change our overall view, but they do reinforce Williams-Sonoma's solid management and strong execution," Colin McGranahan, an analyst at Sanford C. Bernstein & Co., wrote in a report.

Williams-Sonoma shares gained $1.83 to $33.10. It was the biggest gain since August 2004. The shares declined 27% last year, their worst annual performance since 2000.

The retailer was cautious about the outlook for the year through January 2008, Chairman Howard Lester said.

Williams-Sonoma's strategies for reviving Pottery Barn might pressure profit margins, particularly in the first half of the year, Lester said.

He forecast a "mid-single-digit to high-single-digit" percentage increase in net revenue for the year that ends January 2008, and a "flat to mid-single-digit" percentage gain in per-share profit.

Williams-Sonoma's results were consistent with retail industry forecasts for sales growth that was slower than the previous year.

Sales at stores open at least a year, a key measure of retail health, gained 2.9% in November and December combined, down from 3.6% a year earlier, according to the International Council of Shopping Centers.

The home furnishings sector was hurt by a slowdown in the housing market, analysts have said.

The company's holiday sales were in line with its forecast for a decline of 1% to a gain of 1.5%.

The company reiterated its fourth-quarter profit projection, which it had lowered 15 cents a share in November to $1 to $1.06. At the time, Williams-Sonoma said it needed to discount items at Pottery Barn to clear out excess inventories.

Williams-Sonoma also confirmed its annual forecast for per-share profit of $1.70 to $1.76.

Williams-Sonoma's newer brands are its West Elm apartment furnishings chain and Williams-Sonoma Home, which sells customized and upscale furniture. It also operates Pottery Barn Kids and PBteen stores.

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