威廉姆斯-索诺马公司（WSM）：上调至同等权重

Restricted - External WSMEQUAL WEIGHTfrom UnderweightU.S. Broadlines, Hardlines &Food RetailNEUTRALUnchangedPrice TargetUSD 166.00raised 27% from USD 131.00Price (16-May-25)USD 173.84Potential Upside/Downside-4.5%Source: Bloomberg, Barclays ResearchMarket Cap (USD mn)21371Shares Outstanding (mn)122.94Free Float (%)98.7452 Wk Avg Daily Volume (mn)2.1Dividend Yield (%)1.52Return on Equity TTM (%)53.91Current BVPS (USD)17.40Source: BloombergPrice PerformanceExchange-NYSE52 Week rangeUSD 219.98-125.33Source: IDCLink to Barclays Live for interactive chartingU.S. Broadlines, Hardlines & FoodRetailSeth Sigman+1 212 526 7417seth.sigman@barclays.comBCI, USTheo Brito+1 212 526 9504theo.brito@barclays.comBCI, USOliver Hu+1 212 526 6180oliver.hu@barclays.comBCI, US FY24 (ex-53rdweek, ex-out of period adjustment), which we believe had factored in at least 50bps fromtariffs.4) Lapping shrink:While the “correction” in Q4 to results for Q1-3 of last year would haveimplied a GM 100 bps lower than reported (40 bps in Q1, 130 bps in Q2/3 and a miss in Q3 vs.expectations at the time), it could provide easier comparisons for this year; its unclear how theshrink reserve will change (i.e. should it come down) since the issue in 2024 seemedone-off.5) Top-line mixed but seems stable,with demand bouncing around the bottom, and sometiming benefits in 1H; WSM expected Q1 growth to be below Q4, but seemed to be trendingwithin FY guidance at the time of the call. We estimate base comps 1%+, moderating from 3% inQ4 but still positive, with potential upside from theshiftedcomps calendar (est. 40-50 bpsbenefit) caused by last year’s extra week, plus non-comp benefit on from swapping a lowervolume week for a high volume.6) We see risk of demand slowing ahead but there is minimal acceleration in this guidance,on a relative basis:Assuming Q1 in line with FY range (even if at the low end), would still implyless risk to guide for the rest of the year than other cyclical names. E.g. home improvementnames may need a few hundred basis point acceleration to deliver on guidance.7) WSM stock stilloffJanuary highs:Home furnishings stocks have been among the weakestretail performers since January. While WSM stock is up 25% since its low in April, its still down20% since January and has been one of the worst performers as we show inside.8) Still see some risks:Our prior concerns centered on WSM's ability to grow in line or fasterthan the industry, while also still growing margins from this elevated level. Our work over timehas shown that imbalance between sales and margins that largely played out last year as well.While earlier, the price increases are a positive for now as it protects the P&L (assuming neutraldemand ), this is a notoriously promotional category and we are still unsure the costs to grow(discounts, marketing etc). Further, there are broader consumer risks ahead as pricing sets to gohigher in Q2/3. Finally, we expect some supply chain bumps ahead which may be challengingfor WSM.Summing it up.WSM now trades 20x FY25E EPS/ 13x EBITDA, well above its historic range. Thesignificant profit improvement has justified that. From here, its a matter of where thenormalized growth algorithm can settle. Should this trade like a top tier compounding large capretailer that trades in the low 20's or higher, even though its earnings are not depressed, andjust assuming steady flow through from here? Should this trade like a premium brand with morecontrol of its own destiny than retailers have, even though it seems to be under-growing themarket? Ultimately, this company is in a better position from an operating and financialperspective vs. a few years ago, but much of that seems to be embedded, and that long termgrowth story is still less clear in our view.Estimates largely unchanged:For FY25, we maintain EPS of $8.52 vs consensus $8.44, basedon +1.7% comps (vs. consensus 1.5%, guidance 0-3%), assuming more price, worse volume (lowto mid single digit price,offsetby volume). Our estimate also embeds slightly higher interestincome and roughly $800mn of share repurchase. For Q1, we model EPS $1.83 with base comps+1% (1.5% incl. calendar benefit related to weekshift),with GM down (core up similar to Q4, butoffsetby the out of period adjustment from last year). We raise our PT to $166 equating to 20xFY25 EPS, 13x EBITDA from $131 at 10x EBITDA prior, a premium to historic range based onstronger profitability but a discount to the top tier in our space reflecting long term uncertaintyover the growth algorithm. 2 Pricing Analysis•We analyzed “list” prices for nearly 25k SKU’s for Williams Sonoma, West Elm, and PotteryBarn, with the Barclays Investment Sciences team, comparing April vs. March (pre April 2announcements), showing just under 10% of the assortment has changed price with anaverage price increase of 10% on those SKU’s, driving average prices across the fullassortment up ~1%.•We would not expect that full 1% to flow through to sales in Q1 (since this