Williams-Sonoma (WSM) stock slumped 3.02% to $52 in pre-market trading on Friday after the company reported weaker-than-expected revenue and comparable-store sales for the 2016 third quarter and gave a downbeat forecast for the current period.
After yesterday's closing bell, the San Francisco-based home goods retailer also cut the high end of its full-year guidance. Williams-Sonoma now sees 2016 earnings per share of $3.35 and $3.45 on revenue of $5.070 billion to $5.150 billion vs. its prior view for earnings per share in the range of $3.35 and $3.55 on revenue of $5.075 billion to $5.225 billion.
"With top-line softness, negative comps, and a further lowered outlook for FY16, we remain bearish on shares of WSM, which we believe is challenged by ongoing broader structural issues," Barclays wrote in an analyst note.
Total comparable-store sales turned negative for the first time since the 2009 third quarter as growth at West Elm failed to offset challenges across its other major brands, the firm added.
Comparable-store sales declined 0.4% during the quarter, while analysts surveyed by FactSet had projected an increase of 1.4%. Comparable-brand revenue retreated 4.6% at Pottery Barn and fell 10.9% at Pottery Barn teen, while West Elm rose 12%.
"Looking ahead, WSM anticipates a promotional retail environment for the holiday season," Barclays said, "WSM noted room to improve in-stocks in certain back-ordered items, particularly at Pottery Barn, and reiterated its commitment to growing inventory below its sales growth rate."
KeyBanc Capital Markets reiterated its "sector weight" rating on the stock and cut its estimates following the quarterly results.
"WSM experienced weakness similar to what we have seen across much of our home-related retailers and is supportive of our cautious view on the space as we believe the sector faces growing risk from competition (both e-comm and brick-and-mortar) and softer housing conditions," the firm wrote in an analyst note.
KeyBanc now sees full-year earnings of $3.44 per share vs. its previous projection of $3.50 per share.