Williams-Sonoma, Inc. Announces Operating Results for Fourth Quarter & Year End

March 18, 2026  by Karen Parrish in Business Strategy, Industry   

“We are proud of our strong finish to 2025. In Q4, our comp came in at +3.2%, and we delivered an operating margin of 20.3% with earnings per share of $3.04. Normalizing for the 53rd week last year and the tariff impact this year; we delivered substantial operating margin improvement versus last year. As we look forward to 2026 and beyond, we are confident in our competitive advantages that have allowed us to take market share, and our focus is on widening that advantage,” said Laura Alber, President and Chief Executive Officer.

Alber concluded, “In 2025, we delivered sustainable, profitable growth in a dynamic environment. This performance is a testament to strong consumer demand for our distinctive products and brands, and our world class team. Our powerful portfolio of brands, strong channel execution, and growth strategies drove our results in 2025. And in 2026, we are focused on accelerating growth, delivering world-class customer service, and driving earnings.”

FOURTH QUARTER 2025 HIGHLIGHTS

- Comparable brand revenue +3.2%.

- Gross margin of 46.9% -40bps to LY driven by (i) lower merchandise margins of -170bps and (ii) occupancy deleverage of -80bps, partially offset by (iii) favorable physical inventory results of +160bps and (iv) supply chain efficiencies of +50bps. Occupancy costs of $215 million, +4.9% to LY.

- SG&A rate of 26.6% +80bps to LY driven by (i) higher general expenses of +120bps, partially offset by (ii) lower employment expenses of -30bps and (iii) lower advertising expenses of -10bps. SG&A of $627 million, -1.3% to LY.

- Operating income of $478 million with an operating margin of 20.3%. -120bps to LY, the additional week in the fourth quarter fiscal 2024 contributed -60bps.

- Diluted EPS of $3.04 per share. -7.3% to LY.

- Merchandise inventories +9.8% to the fourth quarter LY to $1.5 billion, driven by incremental tariff costs of approximately $80 million.

FISCAL YEAR 2025 HIGHLIGHTS

- Comparable brand revenue +3.5%.

- Gross margin of 46.2% -30bps to LY driven by (i) the impact of -70bps from the prior year out-of-period freight adjustment in Q1 FY24, (ii) lower merchandise margins of -40bps and (iii) occupancy deleverage of -20bps, partially offset by (iv) supply chain efficiencies of +50bps and (v) favorable physical inventory results of +50bps. Occupancy costs of $820 million, +3.4% to LY.

- SG&A rate of 28.0% +10bps to LY driven by (i) higher general expenses of +20bps and (ii) higher performance-based incentive compensation of +20bps, partially offset by (iii) lower advertising expenses of -30bps. SG&A of $2.19 billion, +1.6% to LY.

- Operating income of $1.42 billion with an operating margin of 18.1%. -50bps to LY, including the impact of -70bps from the prior year out-of-period freight adjustment in Q1 FY24. The additional week in fiscal 2024 contributed -20bps.

- Record diluted EPS of $8.84 +0.6% to LY.

- ROIC of 42.3% and Adjusted ROIC of 51.6%.

- Maintained strong liquidity position of $1.0 billion in cash and $1.3 billion in operating cash flow enabling the company to deliver returns to stockholders of nearly $1.2 billion through $854 million in stock repurchases and $316 million in dividends. Stock repurchase authorization of $1.3 billion remaining under our stock repurchase program.

DIVIDEND INCREASE

- In March 2026, we increased our quarterly dividend 15%, or $0.10, to $0.76 per share.

OUTLOOK

- In fiscal 2026, we expect annual net revenues in the range of +2.7% to +6.7%, with comps in the range of +2.0% to +6.0%; and an operating margin between 17.5% to 18.1%.

- Our guidance includes (i) no refund of International Emergency Economic Powers Act tariffs paid, (ii) all tariff rates currently in place remain for fiscal 2026, including the Section 232 tariffs, the current Section 301 tariffs and the Section 122 tariffs, and (iii) the impact of tariffs will be front-loaded in the first half of fiscal 2026 as the tariffs flow through our weighted average cost of goods sold. Although the Section 122 tariffs expire in July 2026, our guidance assumes that these will be replaced with tariffs at a similar rate.

- 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.

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 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, our Consolidated Financial Statements for fiscal 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.

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, March 18. A replay of the webcast will be available at http://ir.williams-sonomainc.com/events.