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Williams-Sonoma Records 2.5% Profit Jump Despite Revenue Decline

Despite a 4.1% drop in comparable-brand revenue at its flagship Pottery Barn brand, retailer Williams-Sonoma (NYSE: WSM) said profits increased 2.5% to $144.6 million or $1.63 per share in the fourth fiscal quarter.

The company said revenues from all of its brands slipped 0.3% to $1.582 billion in the quarter ended Jan. 29. However, e-commerce revenues rose 2.5% to $808.9 million, accounting for 51.1% of total revenues.

In addition to the Pottery Brand comparable-brand revenue decline, the company said Pottery Brand Kids had a comparable brand revenue drop of 4.9%, but its fast-growing West Elm brand had an increase of 6.5%.

For the fiscal year ended Jan. 29, total revenues topped the $5 billion mark for the first time, even though revenues for Pottery Barn fell 3.5% to $2.024 billion.

The company said Pottery Barn Kids revenues were down 1.4% to $635 million, while PBteen registered a 6.2% decline, falling to $238 million.

West Elm revenues, on the other hand, were up 12.8% to $972 million, while revenues from the Williams-Sonoma brand were up 1.3% to $1.002 billion.

Profits for the fiscal year slipped 1.5% to $305.4 million, but earnings per share rose by 4 cents to $3.41 due to share buybacks that resulted in fewer outstanding shares than the previous fiscal year.

“In 2016, we delivered revenues of over $5 billion, which included another year of double-digit growth across West Elm, our newer businesses Rejuvenation and Mark and Graham, and our company-owned global operations," said Laura Alber, president and CEO. "Additionally, from an operational perspective, we executed one of our best holiday seasons and delivered an improved customer experience which is at the center of everything we do.”

For fiscal 2017, the company is projecting revenues of $5.165 billion to $5.265 billion, a figure that includes comparable brand revenue growth of 1% to 3%.

Earnings per share are projected at $3.45 to $3.65.

As of Jan. 29, the company had 629 brick-and-mortar stores, including 19 in Australia and one in the United Kingdom.

The total included 234 Williams-Sonoma; 201 Pottery Barn, 98 West Elm, 89 Pottery Barn Kids, and 7 Rejuvenation stores.



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