It's the time of year when you get a hernia trying to carry the stack of catalogs from the mailbox back into the house.
Sure, it makes for good reading material when you're trying to pass some time, but how many of us really give in to the buying impulse? I would say that for every 25 catalogs I receive, there's maybe one item I will end up purchasing.
Specialty retailer (and catalog maven) Williams-Sonoma (NYSE:WSM) distributes over 23% of its catalogs this time of year. The San Francisco-based company, which promotes brands including Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, Hold Everything, and West Elm, is in the midst of a very variable retail cycle.
On a positive note, Williams-Sonoma reported third-quarter earnings of $0.24 per share today, which was 20% better than last year's earnings of $0.20 per share and a penny ahead of the analysts' consensus estimate. Net revenues increased 14.2% and same-store sales were up 3.1%, with the sales broken down as follows: Williams-Sonoma down 4.2%, Pottery Barn up 5.7%, Pottery Barn Kids up 5.6%, Hold Everything up 4.0%, and outlet stores up 19.6%.
On the darker side, the company followed competitors Pier 1 Imports (NYSE:PIR) and Linens 'n Things (NYSE:LIN) by lowering its guidance. Williams-Sonoma's CEO, Ed Mueller, said it is "remaining cautious in our outlook of the economy and the retail environment overall."
Despite the troubles of a few retailers, the overall view for the sector has been quite positive going into the holiday season. Traditionally strong home-related companies like Home Depot (NYSE:HD) and Bed Bath & Beyond (NASDAQ:BBBY) should lead the way to a prosperous end of the year.
What does Williams-Sonoma expect for its own future? It lowered earnings guidance for the fourth quarter to $0.93 to $0.97 per share -- down from $0.95 to $0.99. The company also dropped its sales expectations to a range of $1.11 billion to $1.13 billion from $1.11 billion to $1.14 billion. Same-store sales should continue to grow in the same 2% to 4% range originally anticipated.
The Williams-Sonoma shares might be fairly valued at 24 times this year's earnings estimate of $1.60 (which is slightly above the 21% expected growth rate), but that may change if the storm clouds on the horizon don't lift soon.
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Fool contributor Phil Wohl spent over 12 years on Wall Street and does not own shares of any company mentioned in this take.
