Williams-Sonoma profit declines 21%

Williams-Sonoma Inc., the biggest gourmet-cookware retailer in the U.S., said Wednesday that first-quarter profit fell 21% as sales at its Pottery Barn stores declined for the fourth consecutive quarter.

Revenue rose 2.7% to $816.1 million, the smallest gain in at least nine years. Net income decreased to $18.2 million, or 16 cents a share, Williams-Sonoma said. Profit a year earlier was $23.1 million, or 20 cents.

At Pottery Barn, which accounts for half the company’s revenue, sales at locations open at least a year fell 1.2% after the 195-store chain cut prices to clear inventory.

A slumping U.S. housing market is causing consumers to curb spending on home decorations and household items.

“Working through excess inventory is taking quite some time,” said Colin McGranahan, an analyst with New York-based Sanford Bernstein & Co. Unsold goods will reduce profit margins through the year, he said.

Williams-Sonoma ended the quarter with $639.4 million in inventory, 17% more than a year earlier, led by leftover items at Pottery Barn.

The company is working to reduce inventory, President Laura Alber said during a conference call. “We’re starting to see real traction on our inventory levels, and I think you’ll be pleased to see the reduction going forward,” she said.

The San Francisco-based company reduced its second-quarter earnings forecast by 3 cents a share because of weak demand for housing-related goods and rising raw-material costs, and now sees profit of 13 cents to 17 cents a share. The forecast includes a 1-cent charge related to income taxes.

Williams-Sonoma repeated its full-year earnings guidance of $1.76 to $1.84 a share.

Williams-Sonoma stock fell 43 cents to $33.53.