Financial Reports: Williams-Sonoma, Coldwater Creek

Williams-Sonoma Earnings Down 21%
Although first-quarter revenue rose nearly 3% at San Francisco-based Williams-Sonoma, net earnings fell 21%. For the 13 weeks ended April 29, the home decor and kitchenware merchant netted $18.2 million on sales of $816.1 million. For the first quarter of last year, Williams-Sonoma had net earnings of $23.1 million on sales of $794.3 million.

First-quarter retail sales increased 4.5%, to $453.4 million. Direct-to-consumer sales inched less than 1%, to $362.7 million, though. Internet revenue rose 20%.

In addition to the titular brand, Williams-Sonoma consists of Pottery Barn, PBteen, Pottery Barn Kids, West Elm, and Williams-Sonoma Home.

Solid 1Q for Coldwater Creek
Women’s apparel cataloger/retailer Coldwater Creek registered some solid growth for the first quarter ended May 5. The Sandpoint, ID-based merchant posted a 4% increase in net income, to $12.0 million from $11.6 million for the first quarter of 2006. Net sales for the first quarter soared nearly 31%, to $281.3 million from $215.3 million last year. Same-store sales increased 7%.

Net sales from the retail segment increased 44%, to $184.9 million. Catalog/Internet net sales rose 11%, to $96.4 million from $86.7 million. Specifically, Internet sales increased 18.5%, to $65.8 million, but catalog sales slipped 2%, to $30.6 million.

Direct Sales Up 6% at Williams-Sonoma
Second-quarter direct-to-consumer sales for San Francisco-based home products cataloger/retailer Williams-Sonoma increased 6%, to $362.2 million for the three months ended July 30. The Pottery Barn Kids, Pottery Barn, PBteen, West Elm, and Williams-Sonoma brands drove most of the growth. All brands in the direct-to-customer channel, including Pottery Barn and West Elm, posted year-over-year growth during the quarter, except for Hold Everything, which is being discontinued, and Williams-Sonoma Home. Excluding Hold Everything, direct-to-customer revenue for the second quarter increased 8% compared to the same quarter last year. Internet sales for the second quarter climbed nearly 24%, to $213.8 million.

Total net sales for the second quarter increased 6%, to $825.5 million, compared with $776.2 million after the second quarter last year. Retail sales rose 7%, to $463.4 million. Net income grew nearly 16%, to $35.6 million from $30.8 million.

Despite the solid performance, the company had some sobering news to report. “While we were extremely pleased with our earnings performance in the second quarter, we, like many retailers, began to see a softening in consumer demand late in the quarter–principally in our Pottery Barn brand,” CEO Howard Lester said in a statement. “When we last updated our guidance in mid-July, we believed that the softness we were seeing was specific to the execution of our Pottery Barn summer merchandising strategy. Today, however, after five weeks in home with our new Pottery Barn fall catalog, we believe there is a greater macro-economic issue also affecting this business. To date, the consumer response in Pottery Barn is continuing to trend well below our expectations, causing us to approach the third and fourth quarters with an extremely cautious outlook.”

Lester added the company plans to focus on “things we can control,” such as customer service, inventory management, and operational execution.

Net Income Soars at Coldwater Creek
As it did in the first quarter, women’s apparel cataloger/retailer Coldwater Creek registered some impressive year-over-year in the second quarter. For the three months ended July 29, the Sandpoint, ID-based merchant had net income of $12.0 million, up 94% from $6.2 million for the second quarter of 2005. Net sales for the quarter rose as well: 41%, to $216.4 million from $153.3 million last year.

Net sales from the retail segment increased 52%, to $143.8 million from $94.5 million last year. Catalog/Internet sales rose 23%, to $72.6 million from $58.8 million. Specifically, Internet sales increased 30%, to $49.9 million, while catalog sales grew 11%, to $22.7 million.