On Nov. 16, Williams-Sonoma (NASDAQ:WSM) released third-quarter earnings for the period ended Oct. 29.

  • Net sales increased 3%, driven by a 7.7% increase in retail square footage.

  • Gross margin decreased 120 basis points, after fixed occupancy expenses in the retail channel increased at a faster rate than net revenue growth. Operating margins declined by 210 basis points as a result of higher employment costs.

  • Out of 55 investors, 51 think Williams-Sonoma will outperform the S&P 500 in our new ratings service, Motley Fool CAPS. Got an opinion of your own? Bring it to CAPS!

(Figures in millions, except per-share data)

Income Statement Highlights

Q3 2006

Q3 2005

Change

Sales

$852.8

$827.6

3%

Net Profit

$29.1

$37.1

(21.4%)

EPS

$0.25

$0.31

(19.4%)

Diluted Shares

115.8

118.9

(2.6%)



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

38.2%

39.4%

(1.2)

Operating Margin

5.1%

7.2%

(2.1)

Net Margin

3.4%

4.5%

(1.1)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$108.7

$91.8

18.4%

Accounts Rec.

$57.9

$60.2

(3.9%)

Inventory

$661.2

$587.4

12.6%


Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$218.8

$196.6

11.3%

Long-Term Debt

$13.0

$14.8

(11.6%)



Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2006

YTD 2005

Change

Cash From Ops.

($12.0)

$19.9

N/A

Capital Expenditures

($144.4)

($119.4)

N/A

Free Cash Flow

$132.4

$139.2

(4.9%)



Find out why Fools always follow the money.

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Related Foolishness:

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