UPDATE: Canaccord Downgrades Williams-Sonoma Amid Ongoing Margin Pressure
In a report published Tuesday, Canaccord Genuity analyst Laura Champine downgraded the rating on Williams-Sonoma (NYSE: WSM) from Buy to Hold, but reiterated the $59.00 price target.
In the report, Canaccord Genuity noted, “WSM faces notable gross margin headwinds in H2 as we believe more aggressive promotions will continue to drive sales, particularly in the retail segment. We estimate the gross margin will decline 53bps yr./yr. to 38.9%, which would be the company's weakest margin since FY09. WSM is also contending with investments above its initial expectation as its ramps up its global infrastructure to support new company-operated stores and e-commerce sites in Australia and the U.K. We think this translates to a 20bps EBIT margin contraction in FY13. We are downgrading shares from Buy to HOLD. The near-term pressure is fairly reflected at the stock's current multiples of 18x our FY14 EPS estimate and 8x FY14E EV/EBITDA, in our view.”
Williams-Sonoma closed on Friday at $56.40.
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