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Why Williams-Sonoma Stock Was Wilting This Week

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According to data compiled by S&P Global Market Intelligence, Williams-Sonoma (NYSE: WSM) shares were weakening considerably -- as of early morning Friday they were down nearly 13% week to date. As pointed out by an analyst tracking the company, it's very exposed to the risk posed by the tariffs freshly enacted by the U.S. government.

Delaying that coffee machine purchase

Williams-Sonoma is a storied home furnishings and kitchen goods retailer that, like many of its peers, relies significantly on imports for its product line-up. In an analysis published on Thursday (the day after the tariffs were formally announced), KeyBanc analyst Bradley Thomas flagged those sectors as being among the most vulnerable in a trade dispute.

According to reports, Thomas wrote that it was difficult to find any positive factors in the levies for retailers such as Williams-Sonoma. Although some of the tariffs are sure to be negotiated down, they will doubtlessly increase consumer inflation, which in turn will negatively affect the retail sector in general.

In the analyst's view, it is the discount retailers rather than their higher-end peers who look better set to endure the tariff era.

Negative indicators

Market players are clearly accepting takes like this, and that's understandable. One of the first retail segments hit during stressful economic times is that for relatively expensive, non-essential goods. It's basic consumer psychology -- as uncertainty rises, demand and desire for pricey items deflates.

For Williams-Sonoma investors and observers, then, it will be crucial in the coming weeks and months to tease out how its shoppers are reacting to the new economic reality. Hopefully for them, the company's foot traffic and sales volume won't sag too much.

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