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Williams-Sonoma Reports Lower Second-Quarter Profits

Retailer Williams-Sonoma (WSM) said second-quarter revenues edged up 2.8% to $1.16 billion, but net income fell 3.5% amid what the company described as a softening retail environment.

The retailer, parent company of Pottery Barn, West Elm and several other brands, said net income for the quarter ended July 31 totaled $51.8 million or 58 cents per share. That compares with $53.7 million or 58 cents per share in the same quarter last year.

Laura Alber, President and CEO, said the latest results reflect the strength of its brand portfolio and a variety of operational improvements related to its supply chain and inventory management.

“Despite the progress that we have made against our strategic initiatives, the overall retail environment has softened and we are being impacted by a more cautious consumer," she said. "We remain focused on what we can control to drive growth and continuous improvements in our operations, including strengthening and growing our brands, further differentiating our product offering, innovating our marketing and digital strategies and enhancing the retail experience.”

Comparable brand revenue was up 0.6% companywide, but fell 4.8% at Pottery Barn and was flat for the Williams-Sonoma brand. The star performer was the West Elm brand, which had comparable brand growth of 15.8%.

E-commerce generated 51.7% of revenues in the quarter, up from 50.6% in the same quarter a year ago.

For the six months ended July 31, revenues rose 4.6% to $2.26 billion, while net income was down 7.2% to $91.4 million or $1.01 per share.

As a result of the softer retail climate, the company cut its revenue and earnings forecasts for the current fiscal year, which ends Jan. 31.

Revenues are now projected at $5.075 billion to $5.225 billion, which is down from a May projection of $5.15 billion to $5.25 billion.

Earnings per share, not including a variety of one-time charges, are now forecast to be $3.35 to $3.55. That's down from the May forecast of $3.50 to $3.65.

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