Williams-Sonoma Inc. posted net earnings of $18.8 million for the second quarter, a decrease from net earnings of $25.9 million in the prior year.

The direct marketer and retailer reported net revenue of $819,6 million for the quarter ended Aug. 3, a 4.6% decrease from to $859.4 million last year.

The San Francisco company posted direct marketing revenue of $356.4 million for the quarter, a 4.3% drop from $371.7 million in the prior year.

The firm said its gross margin was 34% compared to 37.2% in the prior year. Management attributed this to an increase in cost of merchandise sold and an increase in inventory related reserves, partially offset by the favorable benefit of the company

Williams-Sonoma Inc., the housewares cataloger based in San Francisco, reported net earnings of $500,000 for the quarter ended April 29, a decline from earnings of $4.8 million, for the 13 weeks ended April 30, 2000.

Direct-to-customer sales were $167.7 million, an increase of 14% versus the first quarter of 2000. The direct-to-customer increase was led by the Pottery Barn Kids catalog and the Williams-Sonoma and Pottery Barn Internet businesses.

Net revenue grew 14.3% to $417.6 million versus $365.3 million in first quarter 2000.