NEW YORK – Housewares retailer Williams-Sonoma Inc. (WSM) on Tuesday said quarterly earnings rose 22 percent, helped by tighter inventory controls, but it remained cautious for the remainder of the year.
While the profit for the just-completed quarter topped Wall Street expectations, the company maintained its forecast for the rest of the year.
Earnings for the fiscal first quarter ended May 1 rose to $26.2 million, or 22 cents per share, from $21.4 million, or 18 cents per share, a year earlier. Revenue rose to $720.7 million from $640.9 million.
Wall Street analysts on average had forecast earnings of 19 cents per share, according to Reuters Estimates.
"The sales looked good," said Amy Ryan, analyst at ThinkEquity Partners. "Gross margin was better than expected." Ryan has a "buy" rating on the company's stock.
Chief Executive Ed Mueller said in a statement the company was keeping a conservative outlook due to uncertainty about the economy and "geopolitical environments" — but declined to provide specifics on those "environments." The company has cited the same reason for maintaining caution a number of times during the past year.
The outlook was justified despite its strong first-quarter performance due to the limited budget of many of the company's customers, said Joan Storms, analyst at Wedbush Morgan Securities.
"There are other spending alternatives for the consumer out there," said Storms, who has a "buy" rating on the company's stock. "I just think its prudent in this sort of an environment."
The new inventory controls allow the company to fill customer orders faster and added 1 cent per share to Williams-Sonoma's bottom line during the quarter. But that benefit had not been expected until the second quarter, so the company cut its outlook for that period by 1 cent.
Williams-Sonoma, which operates its namesake chain as well as Pottery Barn (search) and Hold Everything (search), affirmed its fiscal-year earnings per share forecast of $1.84 to $1.88. It tightened its revenue outlook for the full year, forecasting sales in a range of $3.508 billion to $3.566 billion, from previous guidance of $3.503 billion to $3.573 billion.
Total sales at stores open for at least year, a key measure of retail health, rose 5 percent. Same-store sales at Williams-Sonoma branded stores fell 0.5 percent but the company said the decline was due to a decrease in the level of markdowns at the stores.
Same-store sales at the company's Pottery Barn stores rose 6.1 percent during the quarter.
Shares of Williams-Sonoma fell 19 cents to $37.53 on the New York Stock Exchange.
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