Williams-Sonoma is poised to issue a conservative outlook for 2025 as it prepares to report its fourth-quarter results next month, following a decree of softening demand trends in home furnishings, according to insights from Wedbush Securities. This projected caution is driven by a series of factors that have been negatively impacting consumer sentiment and market dynamics. The demand for furniture and home furnishing products has shown signs of waning as we move into early 2025, even though a rebound in activity is expected in the fourth quarter.
Notably, external factors, including US President Donald Trump's tariff plan, have placed a burden on consumer sentiment, complicating the forecast on discretionary spending and inflation, making it challenging to define its ultimate impact. Historically, Williams-Sonoma provides conservative guidance, and this trend is anticipated to persist in light of ongoing macroeconomic and industry uncertainties.
Wedbush predicted that the home goods retailer might offer a comparable sales outlook, which could range from a 1% decline to a 2% increase for fiscal 2025. In recent adjustments, Wedbush shifted its estimate to a 1.2% increase from a previous forecast of a 1.5% rise. The brokerage has also outlined that opportunities for the retailer to expand its margins this year appear limited unless these gains are tied to volume-related improvements.
With the margin tailwinds of the previous five years dissipating, the potential for new product launches to enhance Williams-Sonoma's market share may only occur incrementally. Analysts Seth Basham and Matthew McCartney from Wedbush expressed, "We brace for a cautious guide that could disappoint investors." This expectation reflects their prediction that Williams-Sonoma will report fiscal fourth-quarter earnings of $3.13 per share, an improvement from a prior estimate of $2.93.
Additionally, Wedbush forecasts that the retailer will experience flat comparable sales growth during the quarter, contrasting with an earlier expectation of a 4.1% decline. The consensus on FactSet anticipates a non-GAAP EPS of $2.92 with a decline of 1.7% in same-store sales. Basham and McCartney noted, "Williams-Sonoma should be a bigger beneficiary of improved category demand trends in the fourth quarter than other publicly traded peers who are more focused on furniture." The brokerage has upheld a neutral rating on Williams-Sonoma's stock and has increased its 12-month price target from $175 to $190..