Williams-Sonoma Gains on Forecast Boost: San Francisco Mover

Williams-Sonoma Inc. (WSM), the owner of the namesake, Pottery Barn and West Elm home-goods chains, advanced the most in 17 months after increasing its full-year earnings forecast.

The shares jumped 9.6 percent to $41.91 at 9:59 a.m. in New York, after reaching $42.35 for the biggest intraday gain since March 2011. Williams-Sonoma had declined 0.7 percent this year through yesterday.

Offering more exclusive goods has improved profitability at San Francisco-based Williams-Sonoma even as consumer demand has been uneven, David Magee, an analyst with SunTrust Robinson Humphrey in Atlanta, wrote in a note today. Proprietary goods including All-Clad waffle makers are preventing customers from comparison shopping at other retailers.

“While essentially all of Pottery Barn’s assortment is proprietary in nature, only about 50 percent of Williams-Sonoma content is exclusive but that number is growing,” wrote Magee, who recommends buying the shares.

Full-year adjusted earnings per share will be $2.44 to $2.51, up from a previous projection of $2.42 to $2.49, Williams-Sonoma said in a statement yesterday. Analysts projected $2.50, the average of estimates compiled by Bloomberg.

Second-quarter gross margin widened to 38.3 percent of sales from 37.9 percent a year earlier. Analysts had estimated 37.4 percent.

“Margin progress is an encouraging read,” wrote Magee.

Revenue increased 7.3 percent to $874 million. Sales gains were led by West Elm, which saw a 16 percent improvement in sales at stores open at least a year, and by Pottery Barn, whose comparable sales advanced 12 percent. The namesake stores’ sales dipped 0.4 percent.

Williams-Sonoma will open its first four company-owned stores outside North America next year in Sydney, Chief Executive Officer Laura Alber also said in yesterday’s statement.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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