WSM - Williams-Sonoma dips after Barclays downgrades as Americans spend less

2023-07-07 09:33:20 ET

Barclays downgraded Williams-Sonoma ( NYSE: WSM ) to Underweight Friday as consumers appear to be spending less. Shares dropped about 2% after the open.

"Average ticket growth is moderating across our group, driven by more than just disinflation," analysts led by Seth Sigman wrote in a note. "That means certain retailers may remain pressured even if we end up in a more stable consumer environment and traffic/transaction trends improve."

While the average ticket is still about 30% above historic levels, "that seems to be on the cusp of correcting," Barclays said.

WSM in particular has "unique" risks and uncertainty as inflation moderates and prices start to be rolled back as input costs moderate, the firm said.

That said, traffic and transaction numbers appear to be improving, though reliance on those factors can be "difficult and expensive to drive."

Earnings per share for the second quarter are expected to come in nearly 30% lower than a year earlier, according to consensus estimates and 13 of the last 19 EPS revisions have been to the downside.

Still, 20 of 25 Wall Street analysts have Hold, Buy or Strong Buy ratings on the stock.

More on retailers:

• Williams-Sonoma declares $0.90 dividend
• Williams-Sonoma gains after full-year guidance is reaffirmed
• Ikea is expanding rapidly in the U.S. - these stocks could be impacted
• Walmart, Wayfair among expected beneficiaries from Bed Bath & Beyond bankruptcy

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