US homewares chain William-Sonoma has beaten revenue expectations in the first quarter of 2010, with sales rising 17.3% to $718m in the period ending May 2.
Encouragingly profits also showed a big swing into the positive, with the company posting a $19.5m profit for the period ending May 2 compared with a loss of $18.7m in the same period the year before. This was helped by an increase in gross margin from 30.1% to 37.7% as the company minimised discounting.
A cost-cutting programme also continues, with 18 stores set to close permanently this year. The closures are part of a strategy to reduce the company’s physical footprint in favour of lower cost channels such as the internet and targeted mailings.
Commenting on the results, chairman and ceo Howard Lester, who retires at the end of this month said: “This year-on-year improvement was driven by the cumulative success we have seen from our strategic and tactical initiatives over the past 18 months. Our ongoing focus on our customers, their needs and the aspects of the business we could control – combined with an improving economic backdrop – drove these better-than-expected results.”
He continued: “We continue to believe that there is risk of volatility in the economy over the next several quarters as consumer spending begins to compare against significantly higher numbers in the back half of 2009. But despite any potential volatility, I am increasingly confident in our competitive positioning as ‘the’ premier multi-channel retailer for home furnishings.”