It appears as though the malaise that washed over American consumers in the 2007 holiday shopping season had an impact on WSM as well. Same-store sales in the nine-week holiday shopping period ended December 30 were down 0.4%, with notable weakness in the home-furnishings area. The company now expects same-store sales in the fourth quarter to be flat to down 1.5%, down from an earlier expectation for an increase of 0.5% to 2.5%. Reuters reported that company CEO, Howard Lester admitted "...the macro environment did weaken and traffic slowed even further than we anticipated" in the fourth quarter.
Naturally, sales numbers have a profound impact on the bottom line, so these sinking figures trickled down to effect per-share earnings expectations. WSM reduced its projected range for the fourth quarter to $1.11 to $1.14 per share, on revenue of $1.36 billion to $1.39 billion. This is below earlier expectations for per-share earnings of $1.19 to $1.25 on revenue of $1.39 billion to $1.42 billion. Based on these previous targets, analysts were estimating per-share results of $1.20 per share on $1.39 billion in sales, according to Reuters.
For the current fiscal year, WSM expects to bank $1.75 to $1.78 per share, including a 3-cents-per-share charge due to a higher tax rate. The new figure compares to previous estimates of $1.84 to $1.90 per share. And for the next fiscal year, Williams-Sonoma expects net earnings per share to decline at a mid-to-high single-digit percentage rate, as net revenue holds flat or suffers a low-single-digit decline.
In separate news, WSM announced a $150 million buyback arrangement. Unfortunately, this nugget of news did little to cushion the blow. The equity breached its 160-month moving average this month for the first time in more than a decade. Additionally, the stock is trading at lows not touched since December 2001.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Reader Comments (Page 1 of 1)
4-08-2008 @ 4:18PM
options trader said...
Yes, this stock has been in down trend for a while... I just bought a put there though.
http://investwiththeedge.blogspot.com/