UPDATE 4-Williams-Sonoma sees growth as customers return
* Q4 EPS 86 cents vs Wall Street view 74 cents
* Sales up 8.1 pct at $1.09 bln, beating estimates
* Sees Q1 same-store sales up 8-11 pct
* Sees FY rev up 3-6 pct, EPS up 22-33 pct
* Shares up 10 pct (Adds conference call comments, updates share movement)
By Dhanya Skariachan
NEW YORK, March 22 (Reuters) - Williams-Sonoma Inc (WSM.N) beat quarterly profit estimates and forecast strong results for the current fiscal year on signs that consumers are ready to spend more on home decorating, and its shares rose 10 percent.
The operator of the Pottery Barn, West Elm and Williams-Sonoma chains also raised its quarterly dividend by 8.3 percent to 13 cents a share and expects same-store sales to rise 8 percent to 11 percent in the current quarter.
The upscale retailer forecast net revenue growth of 3 percent to 6 percent for this year, with earnings per share up 22 percent to 33 percent before special items.
"These are very strong numbers," said Craig Johnson, president of retail consulting and research firm Customer Growth Partners. "The upmarket consumer is clearly back."
He noted, however, that "you have to look at it (as) an industry that has been in the ditch for three years."
Williams-Sonoma won many shoppers in the holiday season by offering more lower-priced home decor items. [ID:nN07209755]
JPMorgan analyst Christopher Horvers said in a note that the outlook called for earnings of $1.16 to $1.26 a share in the current year, well above his $1.14 estimate.
On a conference call, Williams-Sonoma said customer response to its spring goods was "substantially stronger" than its expectations and said it was "confident" of its outlook.
The company, which sees "significant" opportunity for its brands in markets outside North America, said it will open two more stores in Kuwait this year. [ID:nWEN1972]
Shares of the company, which had risen about 21 percent in the past month, were up $2.39 at $26.53 on Monday morning. The news also drove rival Bed Bath & Beyond's (BBBY.O) stock up 0.8 percent.
Sales at home goods chains had crumbled in the housing downturn, but pent-up demand and changes in pricing and merchandising, including the introduction of less-expensive items, are finally bringing shoppers back.
Williams-Sonoma's earnings rose to $88.4 million, or 81 cents a share, in the fourth quarter ended Jan. 31 from $12.2 million, or 12 cents a share, a year earlier.
Excluding one-time items, the company earned 86 cents a share. On that basis, analysts on average had expected 74 cents, according to Thomson Reuters I/B/E/S.
Net sales rose 8.1 percent to $1.09 billion, beating the analysts' average forecast of $1.07 billion. Sales at stores open at least a year rose 7.6 percent.
Earlier this year, Bed Bath & Beyond forecast better-than-expected full-year results [ID:nN0565774], and Pier 1 Imports (PIR.N) said it expected strong merchandise margins in its fourth quarter. [ID:nSGE6230KX]
"The fact that the industry (sales) overall is down only 3 percent versus the 11 percent that it had been down last year marks a major turning point," Johnson said. "Williams-Sonoma is helping to lead the way back."
Williams-Sonoma also gained from trimming its advertising budget and keeping inventories tight. (Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)
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