UBS Remains Sidelined on Williams-Sonoma (WSM) Ahead of 1Q Report

UBS maintained a Neutral rating on Williams-Sonoma and $63.00 price target on (NYSE: WSM) ahead of the company's 1Q earnings report. UBS estimates WSM's SG&A deleveraged by 20 bps in the quarter. This was likely driven by incremental investments in its supply chain (including labor) & upgrading its eComm capabilities.

Analyst Michael Lasser commented, "While the home furnishings industry has been a difficult space lately w. rising online competition & intense promotional activity, we think WSM navigated it better than others in 1Q. We model a 3.0% brand comp for its 1Q. This is at the lower end of its 3-6% guidance (cons. 3.2%), but we see room for upside to our est. First, we think it picked up some of the marginal customers from RH that would've bought on discount, but weren't interested in getting a Grey Card (we think this transition has been bumpy for RH). Also, this Q has been less about giftable items so WSM didn't face as much noise from the department stores (like it did in 4Q). Finally, while HF industry sales (NAICS 442) grew by a solid 6.8% in 1Q (including the extra day in Feb), WSM's brand comp has underperformed the industry's growth by -260 bps on avg. over the last 4 Qs. This math would put WSM's brand comp in the 4% range. Assuming that this is a realistic outcome, it would put some of the skepticsm at bay for at least the near-term."

For an analyst ratings summary and ratings history on Williams-Sonoma click here. For more ratings news on Williams-Sonoma click here.

Shares of Williams-Sonoma closed at $50.13 yesterday.

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