09:16 AM EST, 02/28/2025 (MT Newswires) -- Williams-Sonoma ( WSM ) is expected to issue a cautious 2025 outlook when it reports fourth-quarter results next month amid softening demand trends for home furnishings goods, Wedbush Securities said in a Friday client note.

The key factors driving demand for furniture and home furnishing products have waned or remained soft into early 2025 despite a rebound in activity in the fourth quarter, according to the brokerage. US President Donald Trump's tariff plan has also weighed on consumer sentiment but its final impact on discretionary spending and inflation is "difficult to forecast," Wedbush said.

Williams-Sonoma ( WSM ) usually provides conservative guidance and this trend will likely continue amid macroeconomic and industry uncertainties, according to the brokerage. Wedbush said the home goods retailer could provide a comparable sales outlook ranging from a 1% decline to a 2% increase for fiscal 2025. Wedbush now estimates the metric at a 1.2% increase, down from its previous forecast for a 1.5% rise.

The brokerage sees limited chances for the retailer to expand margins this year that aren't volume-related as it believes margin tailwinds from the past five years have subsided. Additionally, new product launches may improve Williams-Sonoma's ( WSM ) market share only incrementally, Wedbush said.

"We brace for a cautious guide that could disappoint investors," Wedbush analysts Seth Basham and Matthew McCartney wrote in the note.

Wedbush now expects Williams-Sonoma ( WSM ) to record fiscal fourth-quarter earnings of $3.13 per share, up from its previous estimate of $2.93. The brokerage forecasts the retailer to log flat comparable sales growth in the quarter, compared with its prior expectation for a 4.1% decline. The current consensus on FactSet is for non-GAAP EPS of $2.92 and a 1.7% decline in same-store sales.

"Williams-Sonoma ( WSM ) 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," according to Basham and McCartney.

Wedbush maintained its neutral rating on Williams-Sonoma's ( WSM ) stock and lifted its 12-month price target to $190 from $175.