11:59 AM EST, 03/03/2025 (MT Newswires) -- Williams-Sonoma's ( WSM ) ability to flex labor and advertising costs remains a key factor in maintaining profitability even in a challenging sales environment, RBC Capital Markets said in an earnings preview Monday.

The firm expects Williams-Sonoma's ( WSM ) Q4 earnings per share to be above consensus and its gross margin to improve because of the company leveraging merchandise, supply chain and occupancy benefits as well as selling, general and administrative cost deleverage.

For fiscal 2025, RBC said it expects a cautious topline guidance as comparable sales are expected to be flat and tougher full-priced selling and supply chain comparisons may limit the benefits of fixed cost deleverage if sales remain muted.

"With Williams-Sonoma's ( WSM ) shares up +11% [compared with] the market since reporting Q3 and currently trading at about 24 times our 2025 EPS estimate, we don't love the setup into the print," RBC analysts said in the note.

RBC has an outperform rating on the stock with a price target of $189.

Price: 188.97, Change: -5.61, Percent Change: -2.88