Bumpy Road For Williams-Sonoma, But Outlook Is Positive

Oppenheimer has published a research report on Williams-Sonoma WSM after the company reported 3Q results that showed strong sales momentum. In the report, Oppenheimer writes "We have for some time recommended WSM as one of the most compelling investment opportunities in hardlines retail. The above-plan Q3 (Oct) results and updated FY10 (Jan. 2011) guidance that WSM reported yesterday give us even greater confidence that aggressive strategic repositioning is enabling the company to better capitalize upon an improving economic environment and still-subdued competition. WSM shares declined more than 10% yesterday and are now back to pre-Nov. levels. We believe that the pullback in WSM shares reflects an overreaction to conservative guidance and not underlying fundamental weakness at the chain. Near-term expectations for WSM have now been reset lower. We reiterate our Outperform rating on WSM shares. Our $42 PT suggests upside potential of 31%." Williams-Sonoma closed yesterday at $32.09.