Financial reports: Williams-Sonoma, The Wet Seal

Williams-Sonoma Toasts Quarterly Results

San Francisco–Home decor cataloger/retailer Williams-Sonoma (NYSE: WSM), which mails the Pottery Barn, Pottery Barn Kids, Hold Everything, and West Elm catalogs, certainly had reason to celebrate during the quarter. Net earnings for its quarter ended Aug. 4, were $14.1 million, compared with $1.4 million last year

. Net revenue, including shipping fees, increased 16% to $495.6 million, compared with $429.0 million last year. Direct-to-customer net sales, which includes catalogs, increased 12%, to $177.1 million in the second quarter of vs. $158.3 million last year. This increase was primarily driven by strong growth in the Pottery Barn and Pottery Barn Kids brands and incremental sales from the West Elm catalog, which was launched in the first quarter.

Net retail sales increased 17% to $285.8 million, compared to $244.4 million last year. Total comparable store sales were flat in the second quarter. Gross margins improved thanks to increases in full price merchandise sales, fewer markdowns, and lower freight costs from the distribution center to the stores. The company also credits improved sourcing, which reduced the cost of merchandise. Merchandise inventories at the end of the second quarter of 2002 were $250.4 million, a decrease of 7% compared with last year.

The Wet Seal Posts So-So Sales
Foothill Ranch, CA–Specialty teen apparel cataloger/retailer The Wet Seal (Nasdaq: WTSLA) said net sales increased 8% for the quarter ended Aug. 3, to $146.2 million compared with net sales of $135.6 million last year. The company’s comparable store sales increased 2%. Net income increased slightly to $3.7 million, from $3.6 in net income last year.

“We were disappointed with the July results especially after positive comparable store sales of 6.4% over the prior year for the first nine weeks of the quarter,” said Kathy Bronstein, vice chairman/CEO in a company statement. “In the month of July, we experienced a significant reduction in the overall bottom business. We attribute this reduction to lack of selection in our stores of seasonal bottoms, which did not perform in the first quarter. These inventory misses were further exacerbated by the elimination of the tax-free promotion in the Florida market, the late ‘back to school’ period in the Texas market, and what we believe to be reduced mall traffic.”

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