Williams-Sonoma Inc posted a higher-than-expected quarterly profit and raised its full-year outlook on Thursday as the home-goods retailer's cost-cutting and merchandising efforts bore fruit.

The operator of the Williams-Sonoma cookware and Pottery Barn furnishings chains, whose shares rose nearly 4 percent in premarket trading, said net profit was $7.3 million, or 7 cents a share, in the third quarter ended November 1. That compares with a year-earlier net loss of $11.0 million, or 10 cents a share.

Excluding one-time items, the company earned 16 cents a share, beating the analysts' average forecast of 5 cents, according to Thomson Reuters I/B/E/S.

Net revenue fell 3 percent to $729 million, but exceeded the analysts' average estimate of $686.1 million. Sales at stores open at least a year rose 1.7 percent.

Williams-Sonoma, like rivals Bed Bath & Beyond and Pier 1 Imports

, has suffered as consumers stuck to buying essentials in the tough economy.

To combat weak demand, Williams-Sonoma has shut stores, cut its advertising budget and managed inventory tightly. In August, the company said it saw leaner inventories boosting margins in the back half of the year.

Williams-Sonoma has also slashed prices on some items to woo shoppers, despite worries that the move might tarnish its image as a high-end retailer.

For the full year, the company said it expected earnings of 25 cents to 34 cents a share. It had earlier forecast a profit of 19 cents to 31 cents before one-time items.

Williams-Sonoma expects full-year net revenue of $2.98 billion to $3.04 billion, up from its prior outlook of $2.84 billion to $2.94 billion.

The company's shares were up 3.6 percent at $21.79 in trading before the market opened.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)