Williams-Sonoma, Inc. (WSM) Earnings & Analysis

Latest quarter

Williams-Sonoma reported Q2 FY2027 revenue of $2.0 billion, up 6.70% from $1.8 billion a year earlier. Revenue, as the consensus counts it, was $2.0 billion versus the consensus estimate of $1.9 billion, while adjusted EPS of $2.10 exceeded the consensus estimate of $2.05.

The company reported diluted EPS of $2.84, compared with $2.00 a year earlier. Its filing said the reported EPS included tariff-refund income and related interest, partly offset by vendor reimbursements and a one-time employee recognition cost. The filing attributed revenue growth to 6.2% company comparable-brand revenue growth and non-comparable brand revenue growth; e-commerce comparable sales grew 6.5% and retail comparable sales grew 5.5%.

Gross margin was 51.6%, versus 47.1% a year earlier, and operating margin was 22.9%, versus 17.9%. The filing said tariff refunds, occupancy-cost leverage and supply-chain efficiencies contributed to gross-margin expansion, while lower merchandise margins from tariffs partly offset those items. Williams-Sonoma reported free cash flow of $480.8 million, compared with $230.7 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Laura Alber said company comparable sales rose 6.2%, with positive comparable sales across every brand, both direct-to-consumer and retail channels, and furniture and non-furniture categories. She said the company was prioritizing product newness, higher-quality product lines, photography, floor sets and storytelling to support full-price selling. Alber said B2B grew 14.5%, including growth in both contract and trade, and that the company saw growth in priority international markets.

Alber said the company was using technology to improve product discovery, personalization, design tools and checkout, while applying artificial intelligence in areas including supply chain and inventory management. She also said the transportation team had sought offsets to rising supply-chain costs while maintaining service levels.

Jeffrey Yurcisin said the company received $200 million of tariff refunds, including interest, during the quarter and recognized $174 million of that amount in income. He said the company used $47 million to reimburse vendor partners for tariff-related concessions and recorded a $10 million employee 401(k) contribution. Yurcisin said the company would exclude the refunds from its second-quarter and planned third-quarter non-GAAP results to provide a comparable view of operations.

Yurcisin said non-GAAP gross margin was 45.5%, with tariff effects reducing merchandise margins, partly offset by supply-chain efficiencies and occupancy leverage. He said tariff pressure peaked in Q2 and that the company expected it to moderate in the second half as prior-year tariffs are lapped, while higher fuel costs remained embedded in guidance.

In response to questions about brand strategy, Alber said the company was seeking to improve products by category and had additional work planned for the second half. In response to questions about the back-half margin framework, Yurcisin did not provide quarterly margin guidance and referred instead to the full-year operating-margin range. In response to questions about B2B, Yurcisin said contract revenue grew 20%, trade revenue grew 12%, and contract represented 36% of B2B revenue.

Guidance

Williams-Sonoma raised its fiscal 2026 comparable-brand revenue-growth outlook from 2.00%–6.00% to 4.00%–6.50%. The company now expects total net revenue growth of 4.70%–7.20% and non-GAAP operating margin of 17.8%–18.2%. It continues to expect approximately $275.0 million of capital expenditures and an approximately 26.0% non-GAAP tax rate. The company said its guidance excludes benefits from tariff refunds and related interest.