Back in late September, I suggested that investors should wait before investing in specialty retailer Williams-Sonoma Inc. (NYSE: WSM).

I argued then that the price tag for purchasing the company's goods was too high for most consumers in the current environment, as the days of easy money were over.

No more endless dollars from rising home values funding unlimited purchase of goods like furniture, beds and kitchen gadgets of the sort sold by WSM. This was evidenced by continuing declining earnings and same-store sales at the company.

In addition, I noted that Williams-Sonoma had any number of formidable competitors, which could put a strain on its profit margins. There will be a time to own this stock, I wrote, but that time hasn't arrived yet. I foresaw another 20% decline in the shares.

As it turned out, there was a lot more than 20% more downside to the stock -- more like 75% before the stock finally found a bottom as Thanksgiving approached. A brief rally ensued, but a miserable Black Friday sent most shares in the retail sector quickly south again.

Williams-Sonoma, Inc. (NYSE: WSM), parent of the eponymous chain for discerning chefs and the Pottery Barn brand of home furnishings and domestics, roared to a 10% drop in Tuesday's session after reducing its fourth-quarter and full-year earnings outlooks.

It appears as though the malaise that washed over American consumers in the 2007 holiday shopping season had an impact on WSM as well. Same-store sales in the nine-week holiday shopping period ended December 30 were down 0.4%, with notable weakness in the home-furnishings area. The company now expects same-store sales in the fourth quarter to be flat to down 1.5%, down from an earlier expectation for an increase of 0.5% to 2.5%. Reuters reported that company CEO, Howard Lester admitted "...the macro environment did weaken and traffic slowed even further than we anticipated" in the fourth quarter.

Naturally, sales numbers have a profound impact on the bottom line, so these sinking figures trickled down to effect per-share earnings expectations. WSM reduced its projected range for the fourth quarter to $1.11 to $1.14 per share, on revenue of $1.36 billion to $1.39 billion. This is below earlier expectations for per-share earnings of $1.19 to $1.25 on revenue of $1.39 billion to $1.42 billion. Based on these previous targets, analysts were estimating per-share results of $1.20 per share on $1.39 billion in sales, according to Reuters.

These are tough times for retail sellers of home furnishings and decorative products. Take a look at the five-year charts for Bombay Company Inc. (NYSE:BBA) and Pier 1 Imports (NYSE:PIR), two of the leaders in the category:

Ah -- I was waiting for news like this. Target -- the trendy and large discount retailer that has stores all over the nation competing just fine with larger Wal-Mart -- has been accused by upscale (and sky-high priced) retailer Williams-Sonoma of copying product designs of everything from Christmas stockings to votive candle holders.

This is not the first time that Target Corporation (NYSE:TGT) has been accused of design poaching. Brand name retailers with insane margins have been known to target discount chains that have similar product offerings without the similar retail price tag. What else can they do? Protecting those fat margins has to be done somehow, so when a similar product is offered at a discount price and at a discount retailer, the lawyers (as always) lather up for a nice herbal bath of sorts.

The suit by Williams-Sonoma Inc. (NYSE: WSM) "suggests" Target hides behind its vendors, which might indemnify the corporation from such lawsuits, at the same time it specifies precisely what products look like. Hmm -- this sounds like just about every retailer I've ever studied. How a lawsuit can proceed on such a flimsy pretense is beyond me, but it will be interesting to see how Target settles here -- and it will settle -- it has before; often quietly and out-of-court. It's a shame Williams-Sonoma can't copyright the blue sky and snowflake designs on its overpriced Christmas merchandise. Dang.