Williams-Sonoma (WSM) Analyst Downgrade - Williams-Sonoma (NYSE:WSM)

Jefferies analyst Jonathan Matuszewski downgraded Williams-Sonoma, Inc WSM from Hold to Underperform and cut the price target from $160 to $100.
As a discretionary retailer serving upper-middle income consumers whose EBIT% is 2x versus FY19 thanks partly to over-earning, he saw WSM shares underperforming ahead of a softer macro.
Based on recessionary category performance, JEF comps were cumulative ~600 bps below Street through FY26.
Based on rising promos, the Street gross margin is 50-60 bps too high in FY24 + FY25.
Williams-Sonoma is a "poster child" for retailers that have over-earned during the pandemic, he wrote.
Matuszewski saw deteriorating demand for discretionary durable goods beginning now and worsening in 2023 amid weakening macro conditions.
He saw that B2B P&L benefits would likely stall as commercial clients cut back.
While the industry is fragmented, he thought investors underestimated share shifts.
Price Action: WSM shares traded higher by 2.83% at $120 on the last check Tuesday.

Williams-Sonoma Gets A Big Downgrade, Analyst Calls It 'Poster Child' Retailer That Benefited During The Pandemic