Although retailers and just about every other business in the market got doused with cold water yesterday after Federal Reserve Chairman Jerome Powell predicted a tough slog through a recession rather than a V-shaped recovery, Williams-Sonoma (NYSE:WSM) is still expected to see its stock soar 67% to $72 a share.
Barclays analyst Adrienne Yih maintained her overrating on the luxury home goods retailer, believing Williams-Sonoma should be able to capture greater e-commerce sales, and she gave a massive upgrade to her price target for the retailer, boosting it from her previous $48 per share level.
A connection with the consumer
Williams-Sonoma has a history of strong e-commerce growth, and in its fiscal fourth quarter recorded double-digit gains in traffic, revenue, and new customers. For the year, the home goods retailer saw e-commerce sales reach an all-time high, accounting for 56% of total revenue.
With consumers stuck at home, and perhaps for a while longer yet if the economy isn't expected to grow as fast as originally believed, Williams-Sonoma may be able to achieve even greater e-commerce sales.
Yih told clients in a research note that although sales and profit margins could come under pressure in the near term because all of its stores are closed, Williams-Sonoma says it will begin reopening where permitted beginning May 17. The retailer says it will maintain social distancing guidelines, limiting the number of customers in a store at any one time and implementing appointments for shopping.
Yih believes Williams-Sonoma's strong e-commerce capabilities will help blunt the worst of the damage while offering substantial growth potential.