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Ahead of the Bell: Williams-Sonoma declines

NEW YORK (AP) -- Williams-Sonoma slid more than 3 percent in premarket trading Thursday after the retailer forecast fourth-quarter sales and earnings below Wall Street estimates.

Holiday sales can account for as much as 40 percent of annual revenue for retailers during the final two months of the year and that can spook investors. Raymond James downgraded the company.

Late Wednesday, the San Francisco company, which also runs Pottery Barn and West Elm, said it still expects to earn between $1.21 and$1.28 per share for the fourth quarter on total revenue of $1.36 billion to $1.4 billion.

Analysts surveyed by FactSet were expecting quarterly earnings per share of $1.30 on revenue of $1.4 billion, on average.

The company said its revenue for the nine-week holiday period ended Dec. 30 increase 4.8 percent.

Raymond James analyst Budd Bugatch noted that Williams-Sonoma declined to disclose comparable store sales, a key retailing metric.

"With less transparency, we are feeling more cautious and thus shaving our estimates," Bugatch wrote, cutting estimates for 2012 and 2013. Bugatch also downgraded the stock to "Market Perform," from "Strong Buy."

John Marrin of Jefferies wrote that gross margins were likely solid in a tough environment, and stood by his "Buy," rating on the company before the company releases an update on fiscal 2014, to be issued in March. His price target on the shares is $52.

In premarket trading, shares of Williams-Sonoma Inc. fell $1.68 to $45.45.