By Kristina Cooke
NEW YORK (Reuters) - Upscale home goods retailer Williams-Sonoma Inc on Thursday posted a higher quarterly profit, but forecast disappointing fiscal-year earnings because of tough economic conditions, sending its shares down 5 percent.
Higher gasoline and food prices, resetting mortgage rates, a credit crunch and the U.S. housing decline have hurt all retailers. But chains that specialize in home goods, like Williams-Sonoma, Pier 1 Imports Inc and Bed Bath & Beyond Inc , have been especially affected because of significantly weaker demand for furniture and decor.
"As we look forward to 2008, we believe we will be operating in one of the most challenging macro-economic environments we have seen in many years," Chief Executive Howard Lester said in a statement.
The owner of the Williams-Sonoma, Pottery Barn and West Elm chains forecast earnings per share of $1.42 to $1.56 for the fiscal year that began on February 4. Analysts on average were expecting $1.62, according to Reuters Estimates.
Williams-Sonoma said it expected results of break-even to earnings of 3 cents a share for the current quarter, below the analysts' average estimate of a 12-cent profit.
It forecast second-quarter earnings of 15 cents to 19 cents per share, compared with analysts' estimates of 21 cents.
For the fourth quarter, Williams-Sonoma posted higher-than-expected earnings, helped by one more week of sales than in the year-earlier period and a lower tax rate. The company had cut its outlook for the quarter in January.
Net profit rose to $124.6 million, or $1.15 a share, from $121.1 million, or $1.06 per share. Analysts had on average expected $1.12 per share.
Net revenue rose 9.5 percent to $1.37 billion even as sales at stores open at least a year fell 0.1 percent.
Lester said the fourth-quarter results reflected the company's ability to execute its business in difficult economic times.
Given the increasingly challenging home-furnishings industry, Williams-Sonoma said it would focus on reducing catalog circulation, containing discretionary costs and aggressively managing inventory.
The San Francisco-based company also raised its quarterly cash dividend by 4.3 percent to 12 cents per share.
Williams-Sonoma shares were down $1.25 at $23.74 in morning New York Stock Exchange trade. The stock has traded in a 52-week range of $19.30 to $36.94.
(Additional reporting by Euan Rocha; Editing by Mark Porter and Lisa Von Ahn)
