Did Williams-Sonoma Do Enough In Q1 To Battle Amazon?

Shares of Williams-Sonoma, Inc. WSM opened for trading in positive territory at $53.80 Thursday morning in reaction to its first-quarter results. But by the afternoon trading session, the stock had given up all its earlier gains.

Loop Capital Markets' Anthony Chukumba maintains a Hold rating on Williams-Sonoma's stock with an unchanged $54 price target, as the report shows the retailer is off to a "decent" start but prior concerns remain unchanged.

Chukumba elaborated that Williams-Sonoma's profit margins fell on a year-over-year basis, as the company is stuck in a "never-ending investment cycle," especially in e-commerce. Meanwhile, Amazon.com, Inc. AMZN's pending entry into the furniture business is of concern and could impact the company's "long history of industry profitability."

Bleeding Market Share

BTIG's Alan Rifkin holds a more bearish stance on Williams-Sonoma's stock based on his Sell rating and $41 price target.

The analyst highlighted in a research report that, while comps broke positive after two negative quarters, the core Williams-Sonoma concept continues to lose market share as retail sales in the home furniture category rose 2.2 percent in the quarter, which came in above both sales and comp growth.

Rifkin added that the company also showed a 0.7-percent growth in e-commerce despite lowering shipping costs and increasing advertising. The analyst suggested that this indicates continued share loss in the "critical" online space and comes at a time when the home furniture industry as a whole is likely growing by a double-digit rate.

At time of publication, shares of Williams-Sonoma were down 1.91 percent at $48.66.

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Williams-Sonoma Still Holds Durable Appeal, But Sales Trajectory Concerns Linger _______ Image Credit: Clotee Pridgen Alloc… [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons