Williams-Sonoma Falls on Lowered Outlook

Shares of Williams-Sonoma Inc. (NYSE: WSM) are tumbling more than 13% in morning trade after the company lowered its fourth quarter earnings outlook below analyst estimates. The company now projects fiscal 2011 earnings of $1.10 to $1.15 per share. This is down from earlier estimates that called for earnings of $1.15 to $1.20 per share. The revised estimates are significantly lower than analyst estimates of $1.19 per share.

The company also lowered its revenue outlook to a range of $1.24 to $1.26 per share from earlier estimates of $1.27 per share.

The company’s holiday promotions didn’t materialize into strong sales. Like most other retailers the company offered discounts to entice customers. Sales were hurt as customers held out for last minute deals.

Laura Alber, President and Chief Executive Officer, commented, “Holiday comparable brand revenues increased 4.9% on top of 11.3% last year. Our home furnishings brands had strong performance, particularly West Elm and Pottery Barn. Williams-Sonoma faced greater challenges on a year-over-year basis given the heavy market discounting on nationally branded products.

“In total, the strength of our merchandising strategies, operating model and execution continued to allow us to drive increased sales and profit on a year-over-year basis during the holiday selling period.

The company also increased its quarterly dividend 29 percent to 22 cents per share from 17 cents per share and announced a new $225 million share buyback program.

Looking forward CEO Alber added, “Looking forward to fiscal 2012, we remain committed to the fundamental strategies that drove our record earnings performance in fiscal 2011 and allowed us to gain market share, invest in future growth and improve company-wide profitability. These strategies include attracting new customers to our brands, filling ‘white space’ in the marketplace by expanding our merchandise categories, and capitalizing on the world-class service that distinguishes our brands from the competition. These strategies also include continuing to drive efficiencies in our global supply chain and expanding our initiatives in e-commerce.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.