SAN FRANCISCO–Williams-Sonoma saw its fourth quarter net income sink 90 percent as revenues fell at each format, with Pottery Barn and Williams Sonoma Home posting the sharpest declines.
To compete in what executives described as “a new world” of shoppers seeking value, the retailer is lowering its price points and driving monthly promotions.
For the fourth quarter ended Feb. 1, net revenues fell 26.7 percent to $1.01 billion. Comp-store sales decreased 22.3 percent.
Net income plummeted 90 percent to $12.2 million from $124.6 million in the year ago quarter.
Pottery Barn’s net revenues fell over 30 percent. All merchandise categories were down, but textiles and flooring declined less than others, said Laura Alber, president of Williams-Sonoma Inc., who oversees Pottery Barn, during a conference call.
Williams-Sonoma Home also posted declines as its high-end shoppers are feeling the effects of the economic crisis.
To improve performance at the high-end furniture chain, the retailer will close three stores, integrate a bridal registry and “continue to assess the brand’s market potential,” Dave DeMattei, group president of Williams-Sonoma, Williams-Sonoma Home and West Elm, said during the call.
West Elm, the hipper, lower-priced format, was more resilient than Williams-Sonoma’s other brands but still saw net revenue declines.
Positive growth in tabletop was offset by decreases in furniture and home decor, And Williams-Sonoma, the core kitchenware brand, out-performed all formats although net revenues fell 14.2 percent. Declines were less pronounced in bakeware, small electrics and cookware as consumers are eating out less, DeMattei said.
“We are seeing the customer look for value in everything they buy,” Alber said. “We’ve researched our competition heavily to see where they are out-pricing or out-marketing us.”
In Pottery Barn, for example, the retailer has reduced the opening price point, and “We’re also looking at promotions monthly to bring in customers, such as a white sale,” Alber said.
Meanwhile, Williams-Sonoma is adding items for under $100 in open-stock cookware, for one, DeMattei said.