Williams-Sonoma Posts Upbeat Q3 Results, But Issues Weak Q4 Forecast

reported stronger-than-expected results for the third quarter on Thursday, but the company issued a weak forecast for the current quarter. The San Francisco, California-based company posted quarterly net income of $70.5 million, or $0.77 per share, up from $64.9 million, or $0.68 per share, in the year-ago quarter. Its revenue climbed 7.8 percent to $1.23 billion. However, analysts were expecting earnings of $0.73 per share on revenue of $1.22 billion. Comparable brand revenue gained 4.5 percent for the quarter. E-commerce revenue surged 7.0 percent to $628 million, while retail revenue gained 8.6 percent to $604 million. Its operating margin narrowed to 9.0 percent from 9.2 percent. At the end of the third quarter, merchandise inventories rose 12.5 percent to $1.102 billion, versus $980 million at the end of year-ago quarter. During the quarter, the compant repurchased 922,127 shares of common stock for a total cost of around $71 million. Laura Alber, President and Chief Executive Officer, said, "We are pleased with our solid third quarter results, which speak to the power of our brands and our ability to execute our customer-focused strategy. We achieved total net revenue growth of 8%, EPS growth of 13%, and we are reiterating our full year guidance. Looking ahead, while the retail landscape and consumer demand has been more volatile, we believe our balanced portfolio of differentiated brands and strong multi-channel platform positions us for ongoing market share gains." For the current quarter, the company expects earnings of $1.53 to $1.62 per share, on revenue of $1.575 billion to $1.63 billion. Analysts projected earnings of $1.67 per share on revenue of $1.64 billion. Williams-Sonoma projects FY15 earnings of $3.36 to $3.45 per share, on revenue of $4.965 billion to $5.02 billion. Williams-Sonoma shares fell 3.75 percent to $63.73 in the after-hours trading session.