Williams-Sonoma gives cautious outlook

By Kristina Cooke

NEW YORK (Reuters) - Upscale home goods retailer Williams-Sonoma Inc (WSM.N: Quote, Profile, Research) on Thursday posted a higher quarterly profit but gave a cautious outlook for the current fiscal year, citing a challenging economic backdrop.

The owner of the Williams-Sonoma, Pottery Barn and West Elm chains, whose shares fell more than 6 percent before Wall Street's opening bell, said it expects first-quarter results of break-even to a profit of 3 cents a share, below analysts average estimate of a profit of 12 cents a share.

The company forecast second-quarter earnings of 15 cents to 19 cents per share and expects earnings per share for the fiscal year that began on February 4 of $1.42 to $1.56. Both of these forecasts were also below analysts' average estimates.

"As we look forward to 2008, we believe we will be operating in one of the most challenging macro-economic environments we have seen in many years," Chief Executive Howard Lester said in the earnings release.

For the fourth quarter, Williams-Sonoma posted higher-than-expected earnings, helped by an extra week of sales than the year-earlier period.

Fourth-quarter net profit rose to $124.6 million, or $1.15 a share, from $121.1 million, or $1.06 per share, a year earlier. Analysts had on average expected $1.12 per share, according to Reuters Estimates.

Net revenue rose 9.5 percent to $1.37 billion in the fourth quarter even as sales at stores open at least a year fell 0.1 percent.

Lester said the fourth-quarter results reflected the company's ability to execute its business in difficult economic times.  Continued...