Kitchenware Firm’s Shares Rise 12%

Shares of Williams-Sonoma Inc. on Tuesday rose 12% after an analyst said the San Francisco-based kitchen goods and home-furnishings retailer is on track to meet fiscal second-quarter profit estimates because it held down costs and improved inventory management.

Williams-Sonoma shares rose $3.19 to close at $29.69 on the New York Stock Exchange after earlier touching $30.69.

Analyst Shelly Hale at Banc of America Securities upgraded Williams-Sonoma to “buy” from “market perform,” and said the company could beat by a penny her earnings estimate of 7 cents a share for the quarter ending in July. Analysts surveyed by First Call/Thomson Financial have an average forecast of 8 cents.

“The stock has pulled back from when we downgraded it in April, and we feel the company has made significant progress,” Hale said.

On April 3, Hale downgraded the stock to “market perform” from “buy,” and the stock has fallen about 15% since then. At the time, the retailer faced such issues as “bloated inventories,” an inefficient direct fulfillment center and increasing costs, the analyst said in a report.

Second-quarter sales are increasing in line with expectations, and Williams-Sonoma, which had suffered from excess inventories in the last few quarters, now expects second-quarter inventories will rise in line with sales, a projected 32%, Hale wrote.

Same-store sales are expected to increase 5% for its second quarter.

The retailer operates the Williams-Sonoma and Pottery Barn chains and has about 344 stores. It also sells on the Internet and has catalogs under the names Hold Everything and Chambers.