Williams-Sonoma

Williams-Sonoma Inc. (San Francisco) has announced a “disappointing” 7.3 percent increase in net revenues for the eight-week holiday period ended Dec. 26, 2004. Same-store sales for the eight-week holiday period were flat, though positive in all brands except Pottery Barn, which saw a weaker than expected consumer response to its holiday merchandising strategies. Net sales increased 6.9 percent.

“[The] holiday net revenues increase . . . was below our expectations for the holiday period,” said ceo Ed Mueller. “Although we believe that the concerns we communicated in our last press release regarding the volatility of sales trends and the retail environment overall were contributing factors to our lower-than-expected sales results, the majority of our shortfall was driven by a weaker-than-expected consumer response to the holiday merchandising strategies in the Pottery Barn brand. Also contributing to the shortfall was a significant year-over-year increase in pre-holiday gift card sales and a greater-than-expected shift in retail sales into the week after Christmas — which is not included in our eight-week reporting period. Like many other retailers, year-over-year sales growth did accelerate in the two weeks immediately following our December 26th holiday period cut-off date.

“Throughout the holiday period,” Mueller continued, “we remained intently focused on operational execution, including well-planned markdown strategies, strong distribution and transportation management, and disciplined cost containment initiatives. Based on our success in all of these areas, and a positive initial consumer response to our early spring merchandising strategies in the Pottery Barn brand, we are pleased to announce today that, despite lowering our sales expectations for the fourth quarter, we are reiterating our fourth quarter and fiscal year 2004 diluted earnings per share guidance in the range of $0.93 to $0.97 and $1.58 to $1.62, respectively. It is important to note, however, that approximately 29 percent of our fourth quarter sales and 40 percent of our fourth quarter catalog circulation occurs in the month of January. Within that January catalog circulation, 27 percent is in our emerging brands, which inherently creates a higher level of uncertainty in our forecasts. Due to this uncertainty, and the fact that we are continuing to see more volatility in sales trends than we have seen in prior years, we are continuing to be cautious in our outlook and believe that our earnings for the quarter will be within our range of guidance.”