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Cookware retailer’s holiday sales up

From Bloomberg News

Gourmet-cookware retailer Williams-Sonoma Inc. on Tuesday reported holiday sales that exceeded analysts’ estimates on gains at all but one of its chains.

The company’s stock rose 5.85%, the most in more than two years. Sales at Williams-Sonoma’s stores open more than a year rose 1.1% for the eight weeks through Dec. 24, the San Francisco-based retailer said. Total revenue gained 3.6% to $900.4 million.

Pottery Barn’s home furnishing division was the only chain that saw sales drop, the company said without being more specific.

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“The holiday results don’t change our overall view, but they do reinforce Williams-Sonoma’s solid management and strong execution,” Colin McGranahan, an analyst at Sanford C. Bernstein & Co., wrote in a report.

Williams-Sonoma shares gained $1.83 to $33.10. It was the biggest gain since August 2004. The shares declined 27% last year, their worst annual performance since 2000.

The retailer was cautious about the outlook for the year through January 2008, Chairman Howard Lester said.

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Williams-Sonoma’s strategies for reviving Pottery Barn might pressure profit margins, particularly in the first half of the year, Lester said.

He forecast a “mid-single-digit to high-single-digit” percentage increase in net revenue for the year that ends January 2008, and a “flat to mid-single-digit” percentage gain in per-share profit.

Williams-Sonoma’s results were consistent with retail industry forecasts for sales growth that was slower than the previous year.

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Sales at stores open at least a year, a key measure of retail health, gained 2.9% in November and December combined, down from 3.6% a year earlier, according to the International Council of Shopping Centers.

The home furnishings sector was hurt by a slowdown in the housing market, analysts have said.

The company’s holiday sales were in line with its forecast for a decline of 1% to a gain of 1.5%.

The company reiterated its fourth-quarter profit projection, which it had lowered 15 cents a share in November to $1 to $1.06. At the time, Williams-Sonoma said it needed to discount items at Pottery Barn to clear out excess inventories.

Williams-Sonoma also confirmed its annual forecast for per-share profit of $1.70 to $1.76.

Williams-Sonoma’s newer brands are its West Elm apartment furnishings chain and Williams-Sonoma Home, which sells customized and upscale furniture. It also operates Pottery Barn Kids and PBteen stores.

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