Earnings Preview: Williams-Sonoma

Mar.27.08 | About: Williams-Sonoma Inc. (WSM)

Williams-Sonoma (NYSE:WSM) is expected to report Q4 earnings today before the market open with a conference call scheduled for 10:00 am ET.

Guidance

Analysts are looking for a profit of $1.12 on revenue of $1.37B. The consensus range is $1.11 to $1.13 for EPS, and revenue of $1.36B to $1.39B, according to First Call. On January 15, Williams-Sonoma lowered its Q4 EPS view to $1.11 to $1.14, from $1.19 to $1.25, and its revenue view to $1.363B to $1.385B, from $1.387B to $1.417B, and said it sees 2008 EPS down in the mid-to-high single digits and revenue flat to down in the low-single digits.

Analyst analysis

An analyst at RBC Capital Markets said home furnishings companies like Williams-Sonoma will remain pressured until housing transaction volumes stabilize, which he believes matters more than nominal housing prices. While the company's growth prospects for its emerging brands are significant, the analyst believes they are still only 10% of overall sales, which implies core brands will still drive overall operations in the near-term. Additionally, the analyst believes Williams will be impacted due to the tighter credit environment and broader economic pressures.

Thomas Weisel sees risk that the company's 2008 guidance could come in below its preliminary outlook given on January 15 and thinks the recent stock outperformance could abate. However, the firm, which has an Overweight rating on the stock, continues to see a compelling long-term opportunity