Williams-Sonoma Sinks On Weak Q3 Outlook

Williams-Sonoma WSM shares fell sharply in Wednesday's extended session after the specialty retailer said it would miss third-quarter earnings expectations.

The company, which operates Pottery Barn, Williams-Sonoma and other branded stores, websites and catalogs, posted second-quarter results in line with expectations.

But it forecast third-quarter earnings of $0.58 to $0.63 a share, on sales of $1.1 billion to $1.13 billion. Wall Street expected earnings of $0.66 a share on sales of $1.13 billion.

For fiscal 2014 it forecast earnings of $3.07 to $3.17 a share, versus analysts consensus of $3.20.

In the recent second quarter Williams reported growth of 5.7 percent in "comparable brand sales" which include retail same-store sales and direct-to-customer sales, as well as shipping fees and discounts.

Direct-to-customer sales increased 9.4 percent to $523 million, driven by West Elm, Pottery Barn, Williams-Sonoma and Pottery Barn Kids. The segment accounted for about half of total sales in the recent period, compared with 49 percent a year earlier.

Retail net revenue grew 2.4 percent to $517 million from $505 million a year earlier, driven by West Elm and Pottery Barn, partially offset by a decrease in Williams-Sonoma.

Operating margin increased to 8.2 percent from eight percent a year earlier.

Net earnings grew 3.7 percent to $50.7 million, or $0.53 a share, from $48.9 million or $0.49 a share in the year-ago period.

Revenue grew to $1.04 billion from $982.2 million a year earlier. Wall Street expected earnings of $0.53 a share, on revenue $1.05 billion.

Williams-Sonoma traded lower by more than 11 percent.