Earnings fall 7.1 percent at Williams-Sonoma
Williams-Sonoma, parent of home decor chains Pottery Barn and West Elm, saw more challenges in the third quarter, but still recorded same-store growth at four of its retail banners.
Earnings were $27.07 million, down 7.1 percent from $29.14 million in the same quarter last year. Net sales rose 5 percent to $895.1 million compared with $852.8 million in the same period last year.
The increase in sales was driven by new store openings — the company opened 15 net new stores in the third quarter, representing a 5.6 percent gain in total retail square-footage. “Net revenues generated in the West Elm, Pottery Barn Kids, Williams-Sonoma Home and Pottery Barn brands were the primary contributors to the year-over-year revenue increase,” the company said.
In same-store sales, the company saw a gain of 0.3 percent respectively at both Williams-Sonoma and Pottery Barn retail stores. Same-store sales jumped 4.5 percent at Pottery Barn Kids stores and 2 percent at the company’s outlet stores.
“The home furnishings environment in the third quarter continued to be very challenging,” said Howard Lester, chairman and CEO, “particularly in the areas of the country where housing-related macro issues have had the greatest impact. Despite these challenges, however, we delivered positive top-line growth in all our brands.”
Direct-to-consumer net sales, including catalog and Internet sales, rose 5 percent to $400.9 million from $381.9 million in the previous year. Internet sales alone accounted for $266.3 million, a 17.2 percent increase from $227.3 million last year.
In the fourth quarter, Lester commented that the company believes it will see the “overall macro environment is having a greater impact on retail traffic than we previously anticipated.”
“This premise was confirmed by the disappointing October comparable-store sales results that were reported earlier this month by most other retailers,” he said. “But while this is a real concern, our strategic focus all year has been on ‘traffic-generating’ merchandising and marketing initiatives.”
Williams-Sonoma operates 597 stores in the United States, seven mail order catalogs and six e-commerce Web sites.
Home Depot sues Los Angeles
Home Depot has filed a lawsuit against Los Angeles, claiming that the city revoked a remodeling permit for political reasons after the company had almost completed a Kmart conversion project. The Atlanta retailer is seeking $10 million in damages and compensation, as well as a lifting of the stop-work order and reinstatement of its permits.
The lawsuit, filed on Nov. 9 in Los Angeles Superior Court, involves a vacant Kmart store in the Sunland-Tujunga community, on the northern edge of Los Angeles. Home Depot took over the lease for the store in 2004 but faced stiff community opposition to its plans to raze the site and build a new unit. In 2006, the city’s building department issued permits for Home Depot to remodel the store instead, but citizens still opposed the project because of concerns over traffic, air quality, noise and possible effects on local businesses.
This past July, the Los Angeles City Council revoked Home Depot’s remodeling permits, saying the project needed an environmental review. The store was 90 percent complete, according to the company.
Home Depot claims that it was singled out for unfavorable treatment and that the city’s action was illegal. It also alleges that the campaign against it was aided by city councilmember Wendy Greuel and a local competitor, a chain of hardware stores called Do-it Centers.
Neither Wendy Greuel nor Do-it Centers, a 10-unit chain based in Chatsworth, Calif., could be reached yesterday for comment. But in a press release issued by her office on Aug. 15, Greuel stated that the Kmart remodel was a “project” involving structural alterations and therefore required a building or change-of-use permit.
Lowe’s to build new flatbed distribution center
Lowe’s Cos. announced plans Monday for a new flatbed distribution center to be built in Purvis, Miss. The facility will serve as the main distribution center for more than 60 Lowe’s stores located in Mississippi, Louisiana, Alabama and Florida.
The nation’s second largest home improvement retailer said that the new 200,000-square-foot facility represents an investment of approximately $15 million and should be fulfilling shipping operations by mid-2008.
“Flatbed distribution centers play a vital role in the state-of-the-art distribution network that keeps Lowe’s stores supplied with the products our customers need,” said Mike Mabry, Lowe’s executive vp-logistics and distribution.
The company currently operates 14 flatbed distribution centers throughout the United States. Lowe’s will release its 2007 third-quarter earnings statement Nov. 19.