Williams-Sonoma Inc. (WSM) on Thursday reported a 28 percent increase in profit for the first quarter on higher revenues as well as comparable brand sales. Both revenue and earnings per share beat analysts' estimates.
Looking ahead, the home products and furnishings retailer forecasts earnings for the second quarter below Street estimates, but raised its full-year earnings and revenue guidance.
Laura Alber, President and CEO of Williams-Sonoma said, "Our first quarter 2013 financial results represent our best first quarter in the company's history, exceeding our expectations for both operating margin and diluted EPS, on revenue growth of 9%. We delivered these results while simultaneously investing in our future growth strategies."
Direct-to-customer or DTC sales in the first quarter rose 12 percent from last year to $419.08 million, with increases across all brands. The growth was primarily led by Pottery Barn, West Elm, Williams-Sonoma and Pottery Barn Kids. DTC net revenues accounted for 47 percent of total company net revenues in the latest quarter, compared to 46 percent in the year-ago period.
Retail net revenues rose 6 percent to $468.72 million, driven primarily by the company's international franchise operations, Pottery Barn and West Elm, partially offset by a decrease in Williams-Sonoma.
San Francisco, California-based William-Sonoma's net earnings for the first quarter increased to $39.47 million or $0.40 per share from $30.72 million or $0.30 per share in the year-ago period.
The latest quarter's results include charges of about $0.02 per share associated with the previously announced retirement of the former President of the Williams-Sonoma brand.
Adjusted earnings per share for the latest quarter were $0.41, compared to $0.34 in the prior-year quarter. On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.37 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter grew 9 percent to $887.81 million from $817.61 million in the same period last year. Analysts had a consensus revenue estimate of $868.11 million.
Comparable brand revenue growth in the quarter was 7.2 percent. This compares to comparable brand revenue growth of 5.4 percent in the previous-year period.
Looking ahead to the second quarter, Williams-Sonoma forecasts earnings in a range of $0.43 to $0.46 per share and net revenues in a range of $920 million to $940 million. Analysts currently expect the company to report earnings of $0.48 per share for the quarter on revenues of $932.53 million.
For fiscal 2013, Williams-Sonoma raised its earnings outlook to a range of $2.67 to $2.77 per share from its prior range of $2.65 to $2.75 per share. The company also raised its forecast for revenues to a range of $4.22 billion to $4.30 billion from the prior range of $4.20 billion to $4.28 billion.
Analysts currently expect the company to earn $2.77 per share for the year on revenues of $4.25 billion.
Separately, home furnishings retailer West Elm, a member of the Williams-Sonoma portfolio of brands, announced today that it has signed two leases for stores in the UK and Australia.
The first lease is for about 12,000 square feet of retail space at 209 Tottenham Court Road in London, representing the first Williams-Sonoma, Inc. store in Europe.
The second store that will be located at 464 Chapel Street in Melbourne is about 8,000 square feet. It follows the recent openings of four Williams-Sonoma stores - West Elm, Williams-Sonoma, Pottery Barn and Pottery Barn Kids - in Sydney on May 2. Both West Elm stores are currently slated to open in late 2013.
WSM closed Thursday's regular trading session at $56.70, up $1.67 or 3.03 percent on a volume of 1.95 million shares. In after-hours, the stock further gained $0.05 or 0.09 percent to $56.75.
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