Williams-Sonoma Profit Up, Forecast Disappoints

NEW YORK – Williams-Sonoma Inc. (WSM) Tuesday said its quarterly profit rose nearly 12 percent on solid sales at its Pottery Barn (search) and Pottery Barn Kids (search) stores, but its shares fell on disappointment that the company maintained its full-year forecast.

The home goods retailer's quarterly profit was slightly better than Wall Street had expected but Williams-Sonoma said it was keeping its full-year forecast conservative because the roll-out of new retail brands added uncertainty.

The company's diffidence about its outlook disappointed investors and helped send its shares down about 2 percent in morning trading.

"People are generally concerned with retailers this month, and Williams-Sonoma is not immune to that investor concern," said Neely Tamminga, senior retail analyst at Piper Jaffray & Co. Tamminga added, however, that the drop in the company's stock price may provide a good buying opportunity for investors.

Last week, retailers like Gap Inc (GPS) and Abercrombie & Fitch (ANF) disappointed Wall Street with their forecasts, raising concerns that consumers may be reining in their spending given factors such as rising gas prices and higher interest rates.

Earnings rose to $30.8 million, or 26 cents per share, in the second quarter ended July 31, from $27.6 million, or 23 cents per share, a year earlier.

Wall Street analysts on average forecast earnings of 25 cents per share, according to Reuters Estimates.

The retailer has posted strong sales in recent years as a booming housing market drives demand for home furnishings. Quarterly revenues rose 12.6 percent to $776.2 million.

The company said it still expects a full-year profit in the range of $1.84 to $1.88 per share. Analysts, on average, expect earnings of $1.88 per share.

Williams-Sonoma said it planned to distribute more catalogs in the second half of the year to support new retail brands including its West Elm furniture and home decor stores.