If you received a cool catalog in the mail recently, most likely it came from one of the companies under the umbrella of Williams-Sonoma
A few months ago I got a catalog from a company called West Elm. After looking through the attractive mix of colorful home decorations and artsy furniture, I instinctively looked to see whether this company was flying solo or part of a bigger picture. When I saw the name Williams-Sonoma, the bigger picture was crystal clear. After all, Williams-Sonoma is a branding juggernaut that commands instant respect for its quality, fairly priced merchandise.
The company produced a 5% increase in same-store sales in its second quarter, led by a 10.2% jump at Pottery Barn and robust growth of 19% at its outlet stores. Williams-Sonoma's earnings of $0.23 per share widely beat the consensus estimate of $0.19 a share and the $0.15 it earned last year. Despite all of its success, the company remained extremely tight-lipped about future prospects, saying "our outlook for 2004 remains conservative due to the ongoing uncertainty in the macroeconomic and geopolitical environments." Roughly translated, management doesn't want to get too excited about the company's flowery prospects and overstate future numbers.
Williams-Sonoma upped its revenue guidance for the third and fourth quarters by 1% to 2% but kept its same-store sales projection at 2% to 4% growth. The company also lifted its full-year 2004 earnings expectations to $1.57 to $1.61 per share from $1.53 to $1.57.
Management is "encouraged" by trends it sees at the retail and catalog levels, especially in its Pottery Barn brands. Williams-Sonoma also plans to open three new West Elm prototype stores, introduce a Pottery Barn Home catalog, and complete the expansion of its East Coast distribution center in the coming months.
On the competitive front, Williams-Sonoma gets a run for its money from Bed Bath & Beyond
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Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.