Williams-Sonoma Reports Operating Results for Second Quarter

August 27, 2025  by Karen Parrish in Business Strategy, Industry   

“We are proud to deliver strong results in the second quarter of 2025, driving a comp of +3.7% with all brands again running positive comps. Additionally, we exceeded profitability estimates with an operating margin of 17.9% and earnings per share of $2.00 with earnings growth of nearly +20%. This growing outperformance was driven by positive comps in both furniture and non-furniture, and strong performance in our retail and ecommerce channels; and has allowed us to raise our guidance on the top-line and reiterate our guidance on the bottom-line, despite continued macroeconomic uncertainty and the tariff environment,” said Laura Alber, president and chief executive officer.

Alber concluded, “Across the company – from our supply chain and care center to our brands and retail stores – we are proud of our strong execution and outperformance. We have a powerful portfolio of brands, serving a range of categories, aesthetics, and life stages and we have built a strong omni-channel platform and infrastructure, which positions us well for the next stage of growth.”

SECOND QUARTER 2025 HIGHLIGHTS

- Comparable brand revenue +3.7%.

- Gross margin of 47.1% +220bps to LY driven by (i) higher merchandise margins of +190bps and (ii) supply chain efficiencies of +30bps. Occupancy rate flat to LY, with occupancy costs of $201 million, +2.1% to LY.

- SG&A rate of 29.2% -20bps to LY driven by (i) lower advertising expenses and (ii) lower general expenses, partially offset by (iii) higher performance-based incentive compensation. SG&A of $537 million, +2.0% to LY.

- Operating income of $328 million with an operating margin of 17.9%. +240bps to LY.

- Diluted EPS of $2.00. +19.8% to LY.

- Merchandise inventories +17.7% to the second quarter LY to $1.4 billion, including a strategic pull forward of receipts to reduce the impact of higher tariffs in fiscal 2025.

- Maintained strong liquidity position of $986 million in cash and $283 million in operating cash flow enabling the company to deliver returns to stockholders of $280 million through $199 million in stock repurchases and $81 million in dividends. Stock repurchase authorization of $903 million remaining under our stock repurchase program.

FIRST QUARTER 2024 OUT-OF-PERIOD FREIGHT ADJUSTMENT

Subsequent to the filing of our fiscal 2023 Form 10-K, in April 2024, we determined that we over-recognized freight expense in fiscal years 2021, 2022 and 2023 for a cumulative amount of $49 million. We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. We then evaluated whether the cumulative amount of the over-accrual was material to our projected fiscal 2024 results, and determined the cumulative amount was not material. Therefore, the Condensed Consolidated Financial Statements for the twenty-six weeks ended July 28, 2024, include an out-of-period adjustment of $49 million, recorded in the first quarter of fiscal 2024, to reduce cost of goods sold and accounts payable, which corrected the cumulative error on the balance sheet as of January 28, 2024.

OUTLOOK

- We are raising our fiscal 2025 net revenue guidance to reflect higher net revenue trends. We now expect annual net revenues in the range of +0.5% to +3.5% inclusive of the impact from the 53rd week in fiscal 2024, with comps in the range of +2.0% to +5.0%.

- We expect that the incremental flow through from our higher net revenues will be pressured by incremental tariff costs. These costs include the additional tariffs on China of 30%, India of 50%, Vietnam of 20%, an average tariff on the rest of the world of 18%, as well as the steel and aluminum tariff of 50% and the copper tariff of 50%.

- We are reiterating our guidance on operating margin for fiscal 2025. In fiscal 2025, we expect an operating margin between 17.4% to 17.8% (with the 53rd week contributing 20bps in fiscal 2024). If there are material changes in future tariffs, we will revisit our guidance.

- For fiscal 2025, we expect annual interest income to be approximately $30 million and our effective tax rate to be approximately 26.5%.

- Fiscal 2025 is a 52-week year. Our financial statements will be prepared on a 52-week basis in fiscal 2025 versus 53-week basis in fiscal 2024. However, we will report comps on a 52-week versus 52-week comparable basis. All other year-over-year comparisons will be 52-weeks in fiscal 2025 versus 53-weeks in fiscal 2024.

- Over the long term, we continue to expect mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call on, Aug 27. A replay of the webcast will be available at http://ir.williams-sonomainc.com/events