Williams-Sonoma, Restoration Hardware stocks fall amid downgrades from Barclays

Shares of Williams-Sonoma and Restoration Hardware are both down after receiving downgrades from Barclays due to the weakening housing cycle.

Video transcript

SEANA SMITH: All right, my pick today, it's a twofer for you. We have Williams-Sonoma and RH Barclays downgrading the two stocks to equal weight from overweight. Now they're citing some risks from a slowing housing market. Barclays seeing a, quote, "trickle down effect"-- that's what they're calling it-- and expects consumers to pull back on spending on home furnishings. And as a result, that's going to impact the company's inventory levels over the next couple of quarters.

Williams-Sonoma warning in an earnings call earlier this month that its outlook is getting harder to read. That sent shares lower. Looking at a one-month chart of the stock right now, shares off 2 and 1/2% so far today. And Dave, you and I have talked a lot, and Rachelle, have talked a lot about the slowdown that we have certainly seen play out in the housing market. Again, some of these stocks that had done relatively well during the pandemic because people were spending, were redoing their homes. Now seems like at least they're taking a break.

DAVE BRIGGS: Yeah, Brian Jacobsen earlier in the show said that's the first place he's seeing this roving recession. Not alone as far as a downgrade. Wedbush Seth Basham also downgraded Restoration to neutral from outperform and lowered his price target. We're going to talk about some data later in the show from Redfin today, further evidence of a really slowing housing sector, but it's still up almost 5%--

SEANA SMITH: Which is amazing.

DAVE BRIGGS: --year to date. I always want to couch that. We've had several difficult months, but your prices are still up year over year.