A growing Internet channel vs. floundering store sales is becoming a routine story among big chain web retailers and it’s more of the same at Williams-Sonoma Inc.
In the second quarter Williams-Sonoma posted an 11.7% increase in web sales to $265.1 million from $237.4 million in e-commerce sales in the prior year. At the same time for the period ended Aug.3 total revenue dropped by 4.6% to $819.6 million from $859.4 million in the second quarter of 2007. Store-based revenue declined year over year by 4.9% to $463.2 million from $487 million in Q2 2007. Net earnings declined by 29.2% to $18.4 million from $26 million in Q2 2007.
“We were disappointed by the degree to which the macro-economic environment deteriorated in the second quarter – the impact of which was progressively declining comparable store sales throughout the quarter,” says Williams-Sonoma CEO Howard Lester. “To put this in perspective, comparable store sales declined from negative 8.6% in May to negative 14.0% in July. Despite this trend, however, we remained focused on the aspects of the business we could control, successfully executed against our strategic operational initiatives, and delivered diluted earnings per share in line with expectations.”
The web for Williams-Sonoma, No. 21 in the Internet Retailer Top 500 Guide, also provided the growth engine for sales for the first half of the year. For the period of January through June, Williams-Sonoma recorded e-commerce sales of $516.6 million, up about 10.2% from web sales of $468.9 million in the prior year. Total sales from January through June dropped by 4.8% to $1.6 billion from $1.68 billion in the first six months of 2007. Store-based sales declined from $916.6 million in January through June 2008 from $920.9 million for the same period in 2007, a drop of about 0.5%.
Williams-Sonoma expects revenue to range from $802 million to $820 million in the third quarter.