Home furnishing retailers stumbled Thursday on the heels of Williams-Sonoma‘s (NYSE:WSM) weak third-quarter guidance.
The group, down 3%, was one of the session’s biggest losers.
Prior to Thursday’s slide, it ranked No. 56 among the 197 industry groups tracked by IBD.
Williams-Sonoma — which owns the second best Composite Rating in the 13-stock group — plunged 12% in the highest volume of its two-year advance. That can be considered a sell signal.
After the close Wednesday, the San Francisco-based retailer reported Q2 earnings that met consensus estimates and revenue that just missed views.
It said it expects to earn 56-63 cents a share in Q3 on $1.1 billion to $1.13 billion in sales.
That fell short of Street estimates for 66 cents on $1.13 billion in revenue. The retailer also forecast full-year profit of $3.07 to $3.17 a share, below expectations for $3.20.
Its stock, which had broken out past a 73.55 buy point of a short base on Aug. 22, gapped down Thursday. Its loss from that entry is also a sell signal.
Williams-Sonoma’s news apparently weighed on Restoration Hardware (NYSE:RH), a fellow group member whose stock also took a hit late Wednesday. The industry leader gapped down and sank as much as 7% early Thursday, but closed in the upper half of its intraday range, a sign of support.
The stock fell below its 50-day moving average, but continued to form a base. It triggered the eight-week hold rule on June 30 after rallying 24% past a 76.20 buy point in less than three weeks. The hold period expired last week.
The Corte Madera, Calif.-based chain has turned a profit the past three years, snapping a four-year streak of losses. Analysts expect it to boost earnings 35% this year and 26% the next.
While the upscale furnishings chains accounted for most of the group’s losses, selling did not spread to other industry stocks.
Mattress Firm (NASDAQ:MFRM), No. 3 in the home furnishing group by Composite Rating, was little changed.
On Aug. 11, the Houston-based mattress store operator announced preliminary Q2 earnings of 58-61 cents a share on $410 million in sales, above views for 49 cents on $384.6 million in revenue.
The stock shot up 14% that day, surging past a 50.44 flat-base buy point in heavy volume. It’s now 12% above the entry.
Analysts have since lifted their forecast to a per-share profit of 60 cents on $406.6 million in revenue. Mattress Firm is slated to officially report Sept. 4 before the open.
Rival mattress seller Select Comfort (NASDAQ:SCSS) rounds out the top four in the group by Composite Rating. The stock is still working on the right side of a base that kicked off in October and is 16% below its high.
The Minneapolis-based company has faced a slowdown in profit the past seven quarters, but is expected to end that streak with an 11% increase to 40 cents a share in Q3.