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Williams-Sonoma Seen Reporting Strong Comparable Sales Amid Cost Headwinds, RBC Says

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Williams-Sonoma Seen Reporting Strong Comparable Sales Amid Cost Headwinds, RBC Says

Williams-Sonoma (WSM) is expected to report stronger-than-expected comparable sales growth for the fiscal first quarter, though cost headwinds likely dampened the home goods retailer's earnings, RBC Capital Markets said in a note.

RBC upgraded Williams-Sonoma's comparable sales outlook to a 3.3% rise from its prior forecast that called for a gain of 2.8%, according to a Monday client note. The consensus is for same-store sales growth of 3.1%, the brokerage said.

The company is scheduled to release its latest quarterly results next week.

The brokerage said tax refunds and generally favorable spring weather likely drove "meaningful" quarter-over-quarter acceleration in transaction and site traffic data for Williams-Sonoma. This implies widening market share gains versus category declines in the quarter, RBC analyst Steven Shemesh wrote in the note.

However, RBC now projects Williams-Sonoma's adjusted earnings of $1.82 for the first quarter, down from its previous estimate of $1.89 and compared with the Street's $1.81 view. Factors including higher fuel and transportation costs likely hurt gross margins, Shemesh said.

The brokerage expects the retailer to reiterate its full-year outlook, but cautioned that it may not be able to achieve the high end of the guidance. In March, Williams-Sonoma said it expected annual net revenue to rise by 2.7% to 6.7% and comparable revenue to grow by 2% to 6%.

For fiscal 2026, RBC now anticipates the company reporting comparable sales growth of 2%, down from its previous estimate of 3.2%. Adjusted EPS is pegged at $8.95, versus the brokerage's prior forecast of $9.07. The Street is looking for same-store sales growth of 4.4% and non-GAAP EPS of $9.28.

"With our channel work pointing to deteriorating category demand beginning in April and fuel/transportation costs ticking higher, we're lowering our (second- to fourth-quarter) estimates," according to Shemesh.

RBC lowered its price target on Williams-Sonoma's stock to $191 from $213, with an outperform rating.

Price: $167.43, Change: $-1.21, Percent Change: -0.72%

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