Williams-Sonoma Inc. (WSM: Quote) Tuesday reported an increase in profit for the second quarter, reflecting strong sales at Pottery Barn and West Elm stores. Both earnings and revenue for the quarter came in ahead of Wall Street estimates.
Going ahead, the home products retailer predicted strong results for the third quarter and lifted its fiscal year 2012 earnings forecast. Following the news, the company's shares rose over nine percent in after-hours trade.
The company's comparable brand revenue growth for the quarter increased 7.4 percent on top of 6.5 percent increase last year, with Potter Barn brand posting 11.7 percent growth and West Elm reporting 15.6 percent improvement.
Comparable store sales increased 3.9 percent compared to 1.4 percent last year.
Gross margin, or gross profit as a percentage of revenues, advanced to 38.3 percent from 37.9 percent last year.
Net revenues for the latest quarter rose 7.3 percent to $874.3 million from $814.8 million last year. Twenty-two analysts had a consensus revenue estimate of $864.35 million for the quarter.
Both direct-to-customer and retail revenues increased 12.6 percent and 3 percent, respectively.
San Francisco-based Williams-Sonoma's second-quarter profit improved to $43.4 million or $0.43 per share from $39.3 million or $0.37 per share last year.
On average, 26 analysts polled by Thomson Reuters expected earnings of $0.41 per share for the quarter. Analysts' estimates typically exclude special items.
Selling, general and administrative expenses increased 20 basis points due to investments to improve e-commerce and for global expansion.
Looking forward to the third quarter, Williams-Sonoma anticipates earnings of $0.43 to $0.46 per share on revenues of $905 million to $925 million. Analysts currently expect earnings of $0.43 per share on revenues of $913.35 million..
The company lifted its earnings and revenue guidance for the full year attributable to good results and strong growth anticipated ahead. For the full-year 2012, the company now expects earnings of $2.40 to $2.47 per share, adjusted earnings of $2.44 to $2.51 per share and revenues of $3.98 billion to 4.03 billion.
Analysts currently expect earnings of $2.50 per share on revenues of $4.00 billion for the full year.
Previously, Williams-Sonoma expected earnings of $2.38 to $2.45 per share, adjusted earnings of $2.42 to $2.49 per share and revenues of $3.95 billion to $4.02 billion.
Chief Executive Laura Alber said, "Our momentum entering the third quarter remains strong, and we are well-prepared to execute our second-half strategies. While pleased with the progress we have made in the first half of this year, we believe it is prudent to remain cautious given the continuing uncertainties in the economy."
Williams-Sonoma closed Tuesday's trading at $38.23, up $0.90 or 2.41%, on a volume of 3.1 million shares. The stock further gained $3.62 or 9.47% in after-hours trade.
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by RTT Staff Writer
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