Out of the Gate: Williams-Sonoma falls on results

Shares of Williams-Sonoma Inc. fell Wednesday after the home furnishings maker posted lower first-quarter profit and cut its revenue outlook for the second quarter.

The stock dropped $1.40, or 5.6 percent, to $23.59 in morning trading.

Early Wednesday, the San Francisco-based company said its first-quarter profit declined 42 percent and sales dropped 4 percent, but results still beat Wall Street expectations. However, Williams-Sonoma cut its second-quarter and full-year revenue outlook, citing the weak economy.

"Business deterioration is dramatic," said Banc of America Securities analyst David Strasser in a note to investors, adding that if cost cuts continue they may start to damage customer satisfaction. He called the new guidance "a best guess," given that the company's previous outlooks have not kept pace with the rapidly weakening business environment.

Goldman Sachs analyst Matthew Fassler was less downbeat, saying the company appears to be managing costs well even if business trends are "discouraging."