[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details the registrant's information and filer status for the Form 10-Q filing [Registrant Information](index=1&type=section&id=Registrant%20Information) Williams-Sonoma, Inc. is a Delaware-incorporated registrant with its principal executive offices in San Francisco, CA. Its common stock trades on the New York Stock Exchange under the symbol WSM - Registrant: **WILLIAMS-SONOMA, INC.**[2](index=2&type=chunk) - State of Incorporation: **Delaware**[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :-------------------------------------- | | Common Stock, par value $.01 per share | WSM | New York Stock Exchange, Inc. | [Filer Status](index=1&type=section&id=Filer%20Status) The registrant is classified as a large accelerated filer and is not a shell company. As of August 24, 2025, there were 121,790,333 shares of common stock outstanding - The registrant is a **large accelerated filer**[4](index=4&type=chunk) - The registrant is **not a shell company**[5](index=5&type=chunk) - As of August 24, 2025, **121,790,333 shares** of the registrant's Common Stock were outstanding[5](index=5&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Williams-Sonoma, Inc., including statements of earnings, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items [Condensed Consolidated Statements of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This section summarizes the company's net revenues, gross profit, operating income, net earnings, and diluted EPS Key Earnings Data (Thirteen Weeks Ended) | Metric | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :---------------------------- | :--------- | | Net revenues | $1,836,760 | $1,788,307 | 2.7% | | Gross profit | $864,623 | $803,940 | 7.5% | | Operating income | $328,059 | $277,900 | 18.1% | | Net earnings | $247,562 | $216,855 | 14.2% | | Diluted earnings per share | $2.00 | $1.67 | 19.8% | Key Earnings Data (Twenty-six Weeks Ended) | Metric | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :---------------------------- | :--------- | | Net revenues | $3,566,873 | $3,448,655 | 3.4% | | Gross profit | $1,630,432 | $1,599,108 | 2.0% | | Operating income | $618,772 | $595,012 | 4.0% | | Net earnings | $478,825 | $477,271 | 0.3% | | Diluted earnings per share | $3.86 | $3.67 | 5.2% | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's comprehensive income, including net earnings and foreign currency translation adjustments for the reported periods Comprehensive Income (Thirteen Weeks Ended) | Metric | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | | :---------------------- | :----------------------------- | :---------------------------- | | Net earnings | $247,562 | $216,855 | | Foreign currency translation adjustments | $480 | $(49) | | Comprehensive income | $248,042 | $216,900 | Comprehensive Income (Twenty-six Weeks Ended) | Metric | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | | :---------------------- | :----------------------------- | :---------------------------- | | Net earnings | $478,825 | $477,271 | | Foreign currency translation adjustments | $5,650 | $(1,391) | | Comprehensive income | $484,475 | $475,975 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and stockholders' equity at specific reporting dates Key Balance Sheet Items (in thousands) | Metric | August 3, 2025 | February 2, 2025 | July 28, 2024 | | :-------------------------- | :------------- | :--------------- | :------------ | | Cash and cash equivalents | $985,823 | $1,212,977 | $1,265,259 | | Merchandise inventories, net | $1,433,605 | $1,332,429 | $1,217,693 | | Total current assets | $2,655,520 | $2,754,609 | $2,714,564 | | Total assets | $5,228,368 | $5,301,607 | $5,181,939 | | Total current liabilities | $1,766,309 | $1,911,974 | $1,743,202 | | Total liabilities | $3,078,672 | $3,159,188 | $2,945,849 | | Total stockholders' equity | $2,149,696 | $2,142,419 | $2,236,090 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including net earnings, stock repurchases, dividends, and stock-based compensation Stockholders' Equity Changes (February 2, 2025 to August 3, 2025) | Item | Amount (in thousands) | | :---------------------------------- | :-------------------- | | Balance at February 2, 2025 | $2,142,419 | | Net earnings | $478,825 | | Foreign currency translation adjustments | $5,650 | | Repurchases of common stock | $(291,197) | | Dividends declared | $(164,603) | | Stock-based compensation expense | $46,506 | | Balance at August 3, 2025 | $2,149,696 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash flows from operating, investing, and financing activities for the reported periods Cash Flow Summary (Twenty-six Weeks Ended) | Cash Flow Activity | August 3, 2025 (in thousands) | July 28, 2024 (in thousands) | | :---------------------------------- | :----------------------------- | :---------------------------- | | Net cash provided by operating activities | $401,678 | $473,283 | | Net cash used in investing activities | $(111,488) | $(70,959) | | Net cash used in financing activities | $(521,133) | $(398,222) | | Net (decrease) increase in cash and cash equivalents | $(227,154) | $3,252 | | Cash and cash equivalents at end of period | $985,823 | $1,265,259 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements [NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION](index=10&type=section&id=NOTE%20A.%20FINANCIAL%20STATEMENTS%20-%20BASIS%20OF%20PRESENTATION) The financial statements are unaudited and include Williams-Sonoma, Inc. and its wholly-owned subsidiaries. The fiscal year ends on the Sunday closest to January 31. An out-of-period freight adjustment of $49.0 million was recorded in Q1 fiscal 2024 to correct prior over-recognition of freight expense. The company is evaluating new FASB ASUs on income tax disclosures and expense disaggregation - The Company's fiscal year ends on the Sunday closest to January 31. Fiscal 2025 is a 52-week year ending February 1, 2026, and fiscal 2024 was a 53-week year ending February 2, 2025[25](index=25&type=chunk) - An out-of-period adjustment of **$49.0 million** was recorded in the first quarter of fiscal 2024 to reduce cost of goods sold and accounts payable, correcting an over-recognition of freight expense from fiscal 2021-2023[27](index=27&type=chunk) - The company is evaluating the impact of new FASB ASUs 2023-09 (Income Taxes) and 2024-03/2025-01 (Expense Disaggregation Disclosures) on its financial statements[28](index=28&type=chunk)[29](index=29&type=chunk) [NOTE B. BORROWING ARRANGEMENTS](index=10&type=section&id=NOTE%20B.%20BORROWING%20ARRANGEMENTS) The company amended its credit facility in June 2025, increasing the unsecured revolving line of credit to $600 million (with an option to increase to $850 million) and extending its maturity to June 26, 2030. No borrowings were outstanding under this facility during the thirteen and twenty-six weeks ended August 3, 2025. The company also maintains $35 million in unsecured letter of credit facilities - In June 2025, the company amended its credit facility, increasing the unsecured revolving line of credit to **$600 million**, with an option to increase by **$250 million** to a total of **$850 million**[30](index=30&type=chunk) - The Credit Facility matures on **June 26, 2030**[31](index=31&type=chunk) - As of August 3, 2025, there were **no borrowings** under the Credit Facility, and **$11.9 million** in undrawn standby letters of credit were outstanding[31](index=31&type=chunk) - The company has three unsecured letter of credit facilities totaling **$35 million**, with **$0.8 million** outstanding as of August 3, 2025[34](index=34&type=chunk) [NOTE C. STOCK-BASED COMPENSATION](index=11&type=section&id=NOTE%20C.%20STOCK-BASED%20COMPENSATION) The company's Long-Term Incentive Plan allows for various stock awards, with approximately 7.7 million shares available for future grants as of August 3, 2025. Stock-based compensation expense recognized in SG&A increased to $26.6 million for the thirteen weeks ended August 3, 2025, and $47.0 million for the twenty-six weeks ended August 3, 2025, compared to prior year periods - As of August 3, 2025, approximately **7.7 million shares** were available for future grant under the Amended and Restated 2001 Long-Term Incentive Plan[35](index=35&type=chunk) - Stock awards generally vest evenly over **four years** for service-based awards and **three years** for performance-based awards[36](index=36&type=chunk) Stock-Based Compensation Expense (in thousands) | Period | August 3, 2025 | July 28, 2024 | | :---------------------- | :------------- | :------------ | | Thirteen Weeks Ended | $26,600 | $21,800 | | Twenty-six Weeks Ended | $47,000 | $44,800 | [NOTE D. EARNINGS PER SHARE](index=12&type=section&id=NOTE%20D.%20EARNINGS%20PER%20SHARE) Basic earnings per share is calculated by dividing net earnings by the weighted-average common shares outstanding, while diluted EPS includes the effect of dilutive stock-based awards. Diluted EPS for the thirteen weeks ended August 3, 2025, was $2.00, up from $1.67 in the prior year, and for the twenty-six weeks, it was $3.86, up from $3.67 Earnings Per Share (Thirteen Weeks Ended) | Metric | August 3, 2025 | July 28, 2024 | | :-------------------------- | :------------- | :------------ | | Basic earnings per share | $2.03 | $1.69 | | Diluted earnings per share | $2.00 | $1.67 | | Dilutive stock-based awards (shares in thousands) | 1,474 | 1,554 | Earnings Per Share (Twenty-six Weeks Ended) | Metric | August 3, 2025 | July 28, 2024 | | :-------------------------- | :------------- | :------------ | | Basic earnings per share | $3.91 | $3.72 | | Diluted earnings per share | $3.86 | $3.67 | | Dilutive stock-based awards (shares in thousands) | 1,549 | 1,769 | [NOTE E. SEGMENT REPORTING](index=12&type=section&id=NOTE%20E.%20SEGMENT%20REPORTING) The company aggregates its operating segments (brands) into a single reportable segment due to similar economic characteristics. The Chief Executive Officer, as the chief operating decision maker, assesses performance based on operating income. Net revenues by brand show Pottery Barn as the largest contributor, with all brands showing growth in the thirteen and twenty-six weeks ended August 3, 2025, compared to the prior year - The company identifies its operating segments by brand and aggregates them into a **single reportable segment** due to similar economic and qualitative characteristics[40](index=40&type=chunk) - The Chief Executive Officer, as the CODM, assesses performance and allocates resources based on **operating income**[42](index=42&type=chunk) Net Revenues by Brand (in thousands) | Brand | Thirteen Weeks Ended Aug 3, 2025 | Thirteen Weeks Ended July 28, 2024 | Twenty-six Weeks Ended Aug 3, 2025 | Twenty-six Weeks Ended July 28, 2024 | | :-------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Pottery Barn | $724,579 | $725,323 | $1,419,671 | $1,402,658 | | West Elm | $468,550 | $458,779 | $905,635 | $889,088 | | Williams Sonoma | $249,053 | $239,867 | $506,546 | $478,106 | | Pottery Barn Kids and Teen | $286,749 | $259,408 | $516,465 | $481,210 | | Other | $107,829 | $104,930 | $218,556 | $197,593 | | Total | $1,836,760 | $1,788,307 | $3,566,873 | $3,448,655 | [NOTE F. COMMITMENTS AND CONTINGENCIES](index=13&type=section&id=NOTE%20F.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various lawsuits, claims, and proceedings in the ordinary course of business. Management believes the ultimate resolution of these current matters will not have a material adverse effect on the condensed consolidated financial statements - The company is involved in lawsuits, claims, and proceedings incident to the ordinary course of business[50](index=50&type=chunk) - Management believes the ultimate resolution of these current matters will **not have a material adverse effect** on the Condensed Consolidated Financial Statements[50](index=50&type=chunk) [NOTE G. STOCK REPURCHASE PROGRAM AND DIVIDENDS](index=14&type=section&id=NOTE%20G.%20STOCK%20REPURCHASE%20PROGRAM%20AND%20DIVIDENDS) The Board of Directors authorized a $1.0 billion stock repurchase program in September 2024, with $903.4 million remaining as of August 3, 2025. The company repurchased 1.2 million shares for $199.1 million in the thirteen weeks ended August 3, 2025, and 1.8 million shares for $289.1 million in the twenty-six weeks ended August 3, 2025. Cash dividends declared increased to $0.66 per share for the thirteen weeks and $1.32 per share for the twenty-six weeks ended August 3, 2025 - A **$1.0 billion** stock repurchase program was authorized in September 2024, with **$903.4 million** remaining as of August 3, 2025[51](index=51&type=chunk) Stock Repurchases and Dividends | Metric | Thirteen Weeks Ended Aug 3, 2025 | Twenty-six Weeks Ended Aug 3, 2025 | Thirteen Weeks Ended July 28, 2024 | Twenty-six Weeks Ended July 28, 2024 | | :-------------------------------- | :------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Shares repurchased | 1,227,599 | 1,826,790 | 921,466 | 1,235,264 | | Aggregate cost (excluding excise taxes) | $199.1 million | $289.1 million | $129.8 million | $173.6 million | | Average cost per share | $162.22 | $158.26 | $140.89 | $140.54 | | Cash dividends declared per common share | $0.66 | $1.32 | $0.57 | $1.14 | [NOTE H. FAIR VALUE MEASUREMENTS](index=15&type=section&id=NOTE%20H.%20FAIR%20VALUE%20MEASUREMENTS) Fair value measurements are categorized into a three-level hierarchy. Cash and cash equivalents use Level 1 inputs. Long-lived assets are measured on a nonrecurring basis using Level 2 and Level 3 inputs, with impairment charges of $0.3 million and $1.3 million recognized for the thirteen and twenty-six weeks ended August 3, 2025, respectively - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[60](index=60&type=chunk) - Cash and cash equivalents are based on **Level 1 inputs**[56](index=56&type=chunk) - Long-lived assets are measured at fair value on a nonrecurring basis using **Level 2 and Level 3 inputs**[57](index=57&type=chunk) - Impairment charges of **$0.3 million** and **$1.3 million** were recognized for the thirteen and twenty-six weeks ended August 3, 2025, respectively[57](index=57&type=chunk)[59](index=59&type=chunk) [NOTE I. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=16&type=section&id=NOTE%20I.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) Changes in accumulated other comprehensive income (loss) are primarily driven by foreign currency translation adjustments. The balance improved from $(21.593) million at February 2, 2025, to $(15.943) million at August 3, 2025, largely due to positive foreign currency translation adjustments Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance at Feb 2, 2025 | Foreign Currency Translation Adjustments (H1 FY25) | Balance at Aug 3, 2025 | | :-------------------------- | :--------------------- | :------------------------------------------------- | :--------------------- | | Foreign Currency Translation | $(21,593) | $5,650 | $(15,943) | | Cash Flow Hedges | $0 | $0 | $0 | | Total | $(21,593) | $5,650 | $(15,943) | [NOTE J. REVENUE](index=17&type=section&id=NOTE%20J.%20REVENUE) Revenue from merchandise sales is recognized when control transfers to the customer, either upon in-store pickup or delivery. The company defers revenue for gift cards, customer loyalty programs, and credit card issuer incentives. As of August 3, 2025, the liability for expected sales returns was $30.5 million, and gift card and other deferred revenue totaled $578.2 million - Revenue from merchandise sales is recognized at the point in time when **control of merchandise is transferred** to the customer[62](index=62&type=chunk) - The company defers revenue for gift cards, customer loyalty programs, and incentives from credit card issuers[65](index=65&type=chunk) Revenue-Related Liabilities (in thousands) | Metric | August 3, 2025 | February 2, 2025 | July 28, 2024 | | :-------------------------------- | :------------- | :--------------- | :------------ | | Liability for expected sales returns | $30,500 | $42,700 | $32,700 | | Gift card and other deferred revenue | $578,200 | $584,800 | $576,500 | [NOTE K. INCOME TAXES](index=18&type=section&id=NOTE%20K.%20INCOME%20TAXES) The effective tax rate for the first half of fiscal 2025 increased to 24.9% from 23.8% in the prior year, primarily due to lower excess tax benefits from stock-based compensation and changes in earnings mix. The recently enacted One Big Beautiful Bill Act (OBBB) is expected to have a minimal impact on the effective tax rate but result in favorable cash tax impacts in fiscal 2025 - The effective tax rate for the first half of fiscal 2025 was **24.9%**, up from **23.8%** in the first half of fiscal 2024[70](index=70&type=chunk) - The increase in the effective tax rate was primarily driven by **lower excess tax benefits** from stock-based compensation and the tax effect of changes in earnings mix[70](index=70&type=chunk) - The One Big Beautiful Bill Act (OBBB), signed into law in July 2025, is expected to have a **minimal impact** on the effective tax rate but result in **favorable cash tax impacts** in fiscal 2025[71](index=71&type=chunk) [NOTE L. IMMATERIAL CORRECTION OF 2024 INTERIM PERIOD CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=18&type=section&id=NOTE%20L.%20IMMATERIAL%20CORRECTION%20OF%202024%20INTERIM%20PERIOD%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The company identified and corrected an immaterial error in its fiscal 2024 interim financial statements related to unrecorded shrink losses and bonus accruals. This correction impacted cost of goods sold, gross profit, SG&A, operating income, net earnings, EPS, merchandise inventories, accrued expenses, income taxes payable, and retained earnings for the affected periods - An **immaterial correction** was made to the fiscal 2024 interim financial statements for unrecorded shrink losses and bonus accruals[73](index=73&type=chunk)[74](index=74&type=chunk) Impact of Immaterial Correction on Earnings (Thirteen Weeks Ended July 28, 2024, in thousands) | Item | As Previously Reported | Adjustments | As Corrected | | :---------------------------------- | :--------------------- | :---------- | :----------- | | Cost of goods sold | $961,981 | $22,386 | $984,367 | | Gross profit | $826,326 | $(22,386) | $803,940 | | Selling, general and administrative expenses | $536,410 | $(10,370) | $526,040 | | Operating income | $289,916 | $(12,016) | $277,900 | | Net earnings | $225,745 | $(8,890) | $216,855 | | Diluted earnings per share | $1.74 | $(0.07) | $1.67 | Impact of Immaterial Correction on Balance Sheet (As of July 28, 2024, in thousands) | Item | As Previously Reported | Adjustments | As Corrected | | :-------------------------- | :--------------------- | :---------- | :----------- | | Merchandise inventories, net | $1,247,426 | $(29,733) | $1,217,693 | | Accrued expenses | $207,633 | $(11,001) | $196,632 | | Income taxes payable | $53,373 | $(4,592) | $48,781 | | Retained earnings | $1,728,063 | $(14,140) | $1,713,923 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and liquidity for the second quarter and first half of fiscal 2025 compared to the prior year. It highlights revenue growth driven by strong sales and improved inventory, discusses changes in gross profit and SG&A, and outlines the company's strategic priorities and outlook amidst macroeconomic uncertainties [FORWARD-LOOKING STATEMENTS](index=21&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties, which could cause actual results to differ materially. These statements cover various aspects of the business, including financial performance, strategic initiatives, market conditions, and regulatory changes - The report contains forward-looking statements regarding business and results of operations, subject to risks and uncertainties[81](index=81&type=chunk) - Key areas of forward-looking statements include tax laws, tariffs, strategic priorities, competitive landscape, economic conditions, supply chain, and capital allocation[81](index=81&type=chunk) [OVERVIEW](index=22&type=section&id=OVERVIEW) Williams-Sonoma, Inc. is a digital-first, design-led, and sustainable home retailer operating multiple brands across various channels. The company reported a 2.7% increase in net revenues and 3.7% comparable brand revenue growth in Q2 FY25, driven by strong sales and improved inventory. Diluted EPS grew by 19.8% to $2.00. The company maintains a strong liquidity position but faces macroeconomic headwinds, including increased tariffs - Williams-Sonoma, Inc. is a specialty retailer of high-quality home products, operating as the world's largest **digital-first, design-led, and sustainable home retailer**[82](index=82&type=chunk) - Net revenues in Q2 FY25 increased by **$48.5 million (2.7%)**, with company comparable brand revenue growth of **3.7%** (retail **+7.3%**, e-commerce **+2.0%**)[84](index=84&type=chunk) - Diluted earnings per share grew by **19.8%** to **$2.00** in Q2 FY25[87](index=87&type=chunk) - The company's focus for the remainder of the year includes returning to growth, elevating customer service, and driving earnings, while navigating macroeconomic uncertainties and increased tariffs (doubled from **14% to 28%**)[90](index=90&type=chunk) [NET REVENUES](index=23&type=section&id=NET%20REVENUES) Net revenues primarily consist of merchandise sales through e-commerce, retail stores, and catalogs, including shipping fees and revenues from business-to-business, franchisees, credit card incentives, and gift card breakage. For Q2 FY25, net revenues increased by 2.7% with a 3.7% comparable brand growth, driven by strong furniture and non-furniture sales. For H1 FY25, net revenues increased by 3.4% with a 3.6% comparable brand growth, benefiting from improved in-stock inventory levels - Net revenues for Q2 FY25 increased by **$48.5 million (2.7%)**, with company comparable brand revenue growth of **3.7%** (retail **+7.3%**, e-commerce **+2.0%**)[92](index=92&type=chunk) - Net revenues for H1 FY25 increased by **$118.2 million (3.4%)**, with company comparable brand revenue growth of **3.6%** (retail **+6.8%**, e-commerce **+2.0%**)[93](index=93&type=chunk) Comparable Brand Revenue Growth (YoY) | Brand | Q2 FY25 | Q2 FY24 | H1 FY25 | H1 FY24 | | :-------------------------- | :------ | :------ | :------ | :------ | | Pottery Barn | 1.1% | (7.1)% | 1.5% | (8.9)% | | West Elm | 3.3% | (4.8)% | 1.8% | (4.4)% | | Williams Sonoma | 5.1% | (0.8)% | 6.2% | 0.1% | | Pottery Barn Kids and Teen | 5.3% | 1.5% | 4.6% | 2.1% | | Total | 3.7% | (3.3)% | 3.6% | (4.1)% | [STORE DATA](index=24&type=section&id=STORE%20DATA) As of August 3, 2025, the company operated 509 stores, a slight decrease from 521 stores as of July 28, 2024. Pottery Barn remains the brand with the highest store count and average leased square footage per store Store Count and Average Leased Square Footage | Brand | Store Count (Aug 3, 2025) | Store Count (July 28, 2024) | Average Leased Square Footage Per Store (Aug 3, 2025) | | :-------------------------- | :------------------------ | :-------------------------- | :---------------------------------------------------- | | Pottery Barn | 181 | 185 | 15,000 | | Williams Sonoma | 154 | 158 | 6,900 | | West Elm | 119 | 122 | 13,300 | | Pottery Barn Kids | 44 | 45 | 7,800 | | Rejuvenation | 11 | 11 | 8,100 | | Total | 509 | 521 | 11,400 | - Store selling square footage at period-end was **3,779,000 sq ft** as of August 3, 2025, down from **3,855,000 sq ft** as of July 28, 2024[97](index=97&type=chunk) [GROSS PROFIT](index=24&type=section&id=GROSS%20PROFIT) Gross profit increased by 7.5% in Q2 FY25, with gross margin expanding by 220 basis points to 47.1%, driven by higher merchandise margins and supply chain efficiencies. For H1 FY25, gross profit increased by 2.0%, but gross margin decreased by 70 basis points to 45.7%, primarily due to an out-of-period freight adjustment in the prior year, partially offset by current period supply chain efficiencies and occupancy leverage Gross Profit and Margin (in thousands) | Metric | Q2 FY25 | % Net Revenues Q2 FY25 | Q2 FY24 | % Net Revenues Q2 FY24 | H1 FY25 | % Net Revenues H1 FY25 | H1 FY24 | % Net Revenues H1 FY24 | | :-------------------------- | :------ | :--------------------- | :------ | :--------------------- | :------ | :--------------------- | :------ | :--------------------- | | Gross profit | $864,623 | 47.1% | $803,940 | 44.9% | $1,630,432 | 45.7% | $1,599,108 | 46.4% | - Q2 FY25 gross margin increased by **220 basis points**, driven by **190 basis points** from higher merchandise margins and **30 basis points** from supply chain efficiencies[101](index=101&type=chunk) - H1 FY25 gross margin decreased by **70 basis points**, primarily due to a **140 basis point** impact from an out-of-period freight adjustment in Q1 FY24 and **10 basis points** from lower merchandise margins, partially offset by **60 basis points** from supply chain efficiencies and **20 basis points** from occupancy leverage[102](index=102&type=chunk) [SELLING, GENERAL AND ADMINISTRATIVE EXPENSES](index=25&type=section&id=SELLING,%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES) Selling, general and administrative (SG&A) expenses increased by 2.0% in Q2 FY25 and 0.8% in H1 FY25. As a percentage of net revenues, SG&A leveraged by 20 basis points in Q2 FY25 and 70 basis points in H1 FY25, primarily due to lower advertising and general expenses, partially offset by increased employment expense SG&A Expenses (in thousands) | Metric | Q2 FY25 | % Net Revenues Q2 FY25 | Q2 FY24 | % Net Revenues Q2 FY24 | H1 FY25 | % Net Revenues H1 FY25 | H1 FY24 | % Net Revenues H1 FY24 | | :-------------------------- | :------ | :--------------------- | :------ | :--------------------- | :------ | :--------------------- | :------ | :--------------------- | | Selling, general and administrative expenses | $536,564 | 29.2% | $526,040 | 29.4% | $1,011,660 | 28.4% | $1,004,096 | 29.1% | - Q2 FY25 SG&A as a percentage of net revenues decreased by **20 basis points**, driven by lower advertising (**80 bps**) and general expenses (**40 bps**), partially offset by increased employment expense (**100 bps**)[105](index=105&type=chunk) - H1 FY25 SG&A as a percentage of net revenues decreased by **70 basis points**, driven by lower advertising (**70 bps**) and general expenses (**30 bps**), partially offset by increased employment expense (**30 bps**)[106](index=106&type=chunk) [INCOME TAXES](index=25&type=section&id=INCOME%20TAXES) The effective tax rate for the first half of fiscal 2025 increased to 24.9% from 23.8% in the prior year, mainly due to lower excess tax benefits from stock-based compensation and a change in earnings mix. The recently enacted OBBB Act is expected to have a minimal impact on the effective tax rate but will provide favorable cash tax impacts in fiscal 2025 - The effective tax rate for the first half of fiscal 2025 was **24.9%**, compared to **23.8%** for the first half of fiscal 2024[107](index=107&type=chunk) - The increase in the effective tax rate was primarily driven by **lower excess tax benefits** from stock-based compensation and the tax effect of the change in earnings mix[107](index=107&type=chunk) - The One Big Beautiful Bill Act (OBBB), signed in July 2025, is expected to have a **minimal impact** on the effective tax rate but will result in **favorable cash tax impacts** in fiscal 2025[108](index=108&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company expects to maintain adequate liquidity for its operations, dividends, capital expenditures, and stock repurchases for the next 12 months, supported by $985.8 million in cash and cash equivalents and an amended $600 million revolving credit facility. Operating cash flow decreased in H1 FY25 due to higher inventory spending and decreased accrued expenses, while investing and financing activities saw increased cash outflows primarily for property and equipment purchases, stock repurchases, and dividends - The company believes its cash on hand, cash flows from operations, and available credit facilities will provide **adequate liquidity** for business operations, dividends, capital expenditures, and stock repurchases over the next 12 months[113](index=113&type=chunk) - As of August 3, 2025, the company held **$985.8 million** in cash and cash equivalents[114](index=114&type=chunk) - Net cash provided by operating activities for H1 FY25 was **$401.7 million**, a decrease from **$473.3 million** in H1 FY24, primarily due to higher spending on merchandise inventories and a decrease in accrued expenses[119](index=119&type=chunk) - Net cash used in investing activities for H1 FY25 was **$111.5 million**, an increase from **$71.0 million** in H1 FY24, mainly due to purchases of property and equipment[120](index=120&type=chunk) - Net cash used in financing activities for H1 FY25 was **$521.1 million**, an increase from **$398.2 million** in H1 FY24, primarily driven by increased stock repurchases and dividend payments[121](index=121&type=chunk) [Seasonality](index=27&type=section&id=Seasonality) The company's business experiences substantial seasonal variations, with a significant portion of revenues and net earnings historically realized during the peak selling season from October through January, and lower levels from February through September - A significant portion of revenues and net earnings are realized during the **peak selling season (October through January)**, with lower levels from February through September[122](index=122&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=27&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) There were no significant changes to the company's critical accounting estimates during the second quarter of fiscal 2025, as discussed in its Annual Report on Form 10-K - **No significant changes** to critical accounting estimates occurred during the second quarter of fiscal 2025[123](index=123&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks including interest rate fluctuations, foreign currency exchange rate changes, and inflation. While the impact of these risks has been immaterial to date, the company monitors them, especially as it expands globally and faces heightened global inflationary pressures [Interest Rate Risk](index=27&type=section&id=Interest%20Rate%20Risk) The company's credit facility has a variable interest rate, but there were no borrowings during Q2 FY25. Investments in money market funds and interest-bearing demand deposit accounts are also subject to interest rate changes - The company's Credit Facility has a **variable interest rate**, but no borrowings were outstanding during the second quarter of fiscal 2025[125](index=125&type=chunk) - Investments in money market funds and interest-bearing demand deposit accounts are affected by changes in market interest rates[126](index=126&type=chunk) [Foreign Currency Risks](index=27&type=section&id=Foreign%20Currency%20Risks) The majority of inventory purchases are denominated in U.S. dollars, limiting direct foreign currency impact. While foreign operations in Canada, Australia, and the UK expose the company to exchange rate fluctuations, the impact was not material in Q2 FY25 or Q2 FY24, and a hypothetical 10% change would not materially impact financial statements - The majority of inventory purchases are denominated in **U.S. dollars**, limiting direct foreign currency impact[127](index=127&type=chunk) - Foreign operations in Canada, Australia, and the United Kingdom expose the company to foreign currency exchange rate fluctuations, but the impact was **not material** in Q2 FY25 or Q2 FY24[128](index=128&type=chunk) - A hypothetical **10% change** in foreign currency exchange rates would not have a material impact on the company's historical or current Condensed Consolidated Financial Statements[128](index=128&type=chunk) [Inflation](index=28&type=section&id=Inflation) The company has experienced varying levels of inflation, impacting supply chain, shipping, product, and labor costs. While the effects have been immaterial to date, global inflationary pressures are weakening customer sentiment. The company's operating model and pricing power have helped mitigate these increased costs - The company has experienced varying levels of inflation, impacting supply chain, shipping, product, and labor costs[129](index=129&type=chunk) - The effects of inflation on financial statements have been **immaterial to date**, but future material impact is not assured[129](index=129&type=chunk) - The company's unique operating model and pricing power helped mitigate increased costs during Q2 FY25 and Q2 FY24[129](index=129&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of August 3, 2025. There were no material changes in internal control over financial reporting during the second quarter of fiscal 2025 [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of August 3, 2025 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective** as of August 3, 2025[130](index=130&type=chunk) [Changes in Internal Control Over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in internal control over financial reporting during the second quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - **No material changes** in internal control over financial reporting occurred during the second quarter of fiscal 2025[131](index=131&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is contained in Note F to the Condensed Consolidated Financial Statements and indicates that current matters are not expected to have a material adverse effect - Information on legal proceedings is provided in **Note F** to the Condensed Consolidated Financial Statements[134](index=134&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended February 2, 2025 - **No material changes** to risk factors were reported in the current quarterly period[135](index=135&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board of Directors authorized a $1.0 billion stock repurchase program in September 2024. During the second quarter of fiscal 2025, the company repurchased 1,227,599 shares of common stock for an aggregate cost of $199.1 million, with $903.4 million remaining under the program - A **$1.0 billion** stock repurchase program was authorized in September 2024[136](index=136&type=chunk) Common Stock Repurchases (Q2 FY25) | Fiscal Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program | | :-------------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------- | | May 5, 2025 - June 1, 2025 | 754,597 | $164.51 | $978,415,000 | | June 2, 2025 - June 29, 2025 | 473,002 | $158.56 | $903,415,000 | | June 30, 2025 - August 3, 2025 | — | — | $903,415,000 | | Total | 1,227,599 | $162.22 | $903,415,000 | [Item 3. Defaults Upon Senior Securities](index=29&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not applicable[140](index=140&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not applicable[141](index=141&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of fiscal 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of fiscal 2025[142](index=142&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Ninth Amended and Restated Credit Agreement, Director Compensation Policy, CEO and CFO certifications, and financial statements in Inline XBRL format - Key exhibits include the Ninth Amended and Restated Credit Agreement, Director Compensation Policy, CEO and CFO certifications, and financial statements in Inline XBRL format[143](index=143&type=chunk) [SIGNATURE](index=31&type=section&id=SIGNATURE) The report is duly signed on behalf of Williams-Sonoma, Inc. by Jeffrey E. Howie, Executive Vice President and Chief Financial Officer, and Jeremy Brooks, Senior Vice President and Chief Accounting Officer, on August 29, 2025 - The report was signed by Jeffrey E. Howie, Executive Vice President and Chief Financial Officer, and Jeremy Brooks, Senior Vice President and Chief Accounting Officer[146](index=146&type=chunk) - Date of signature: **August 29, 2025**[146](index=146&type=chunk)

Core Viewpoint - Williams-Sonoma demonstrates strong financial performance and resilience against consumer headwinds, supported by robust cash flow and aggressive capital returns, including dividends and share buybacks [1][2][4]. Financial Performance - The company reported net revenue of $1.84 billion, a 2.8% increase year-over-year, slightly exceeding consensus estimates, with comparable sales up 3.7% [5]. - Operating margin increased by 220 basis points compared to last year, reaching the high end of the long-term target range, driven by wider gross margins and declining SG&A expenses [8]. Capital Returns - Williams-Sonoma is recognized for its aggressive capital return strategy, including a dividend yield of approximately 1.3% and a double-digit CAGR in distribution growth [2][3]. - The company has been actively buying back shares, reducing the share count by an average of 4.7% per quarter, supported by a healthy balance sheet and cash flow [2][4]. Market Outlook - The company raised its revenue outlook, forecasting top-line growth between 0.5% and 3.5%, with no additional impact from tariffs anticipated [8][9]. - Analysts maintain a consensus price target of $189.65, with a potential high forecast of $230.00, indicating strong institutional support and a bullish sentiment trend [10][12]. Institutional Activity - Institutional ownership is approximately 99%, with a recent shift from selling in Q1 to robust buying in Q2, resulting in a buy ratio of nearly 4-to-1 [10][11]. - The number of Buy ratings is increasing while Sell ratings are declining, reflecting a positive shift in analyst sentiment [12].

Core Insights - Williams-Sonoma Inc. (WSM) reported strong second-quarter fiscal 2025 results, with earnings and net revenues exceeding expectations and showing year-over-year growth [1][3][8] - Following the earnings announcement, WSM's shares rose by 4.1% in pre-market trading [1] Financial Performance - Earnings per share (EPS) for the quarter were $2, surpassing the Zacks Consensus Estimate of $1.79 by 11.7%, and up from $1.74 in the prior-year quarter [3][8] - Net revenues reached $1.84 billion, exceeding the consensus estimate of $1.82 billion by 1.1% and growing 2.8% year over year [3][8] - Comparable sales (comps) increased by 3.7%, a significant improvement from a negative 3.3% in the same period last year [3][8] Segment Performance - Comps at Williams-Sonoma increased by 5.1%, while West Elm saw a 3.3% gain, and Pottery Barn Kids and Teens grew by 5.3% [4] - Pottery Barn's comps rose slightly by 1.1%, contrasting with a 7.1% decline in the previous year [4] Operational Highlights - Gross margin improved to 47.1%, up 220 basis points year over year, attributed to higher merchandise margins and supply-chain efficiencies [5] - Selling, general and administrative expenses were 29.2% of net revenues, reflecting a 20 basis point decline year over year [5] - Operating margin expanded by 240 basis points to 17.9%, exceeding the projected margin of 15.3% [6][8] Cash Flow and Shareholder Returns - As of August 3, 2025, cash and cash equivalents stood at $985.8 million, a decrease from $1.21 billion at the end of fiscal 2024 [7] - Net cash from operating activities for the first half of fiscal 2025 was $401.7 million, down from $473.3 million a year ago, allowing for nearly $280 million returned to shareholders through stock repurchases and dividends [7] Future Guidance - WSM raised its fiscal 2025 guidance, projecting annual net revenues to grow between 0.5% and 3.5%, and comparable brand revenue growth expected between 2.0% and 5.0% [9] - Operating margin guidance remains between 17.4% and 17.8%, with long-term expectations of mid-to-high single-digit net revenue growth and operating margins in the mid-to-high teens [10]

Group 1 - Williams-Sonoma reported quarterly earnings of $2 per share, exceeding the Zacks Consensus Estimate of $1.79 per share, and showing an increase from $1.74 per share a year ago, resulting in an earnings surprise of +11.73% [1] - The company achieved revenues of $1.84 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 1.14%, and up from $1.79 billion year-over-year [2] - Over the last four quarters, Williams-Sonoma has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - The stock has gained approximately 6.9% since the beginning of the year, while the S&P 500 has increased by 9.9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The trend of estimate revisions for Williams-Sonoma was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Group 3 - The current consensus EPS estimate for the upcoming quarter is $1.93 on revenues of $1.84 billion, and for the current fiscal year, it is $8.54 on revenues of $7.73 billion [7] - The Retail - Home Furnishings industry, to which Williams-Sonoma belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - In Q2, the company reported net revenue of $1.84 billion, exceeding expectations with a comparable sales growth of 3.7% [40][41] - Operating margin improved to 17.9%, up 240 basis points year-over-year, with diluted earnings per share growing nearly 20% to $2 [45][50] - Gross margin was 47.1%, reflecting a 220 basis point increase from the previous year, driven by merchandise margins and supply chain efficiencies [41][42] Business Line Data and Key Metrics Changes - All brands delivered positive comparable sales, with Pottery Barn achieving a 1.1% comp, West Elm at 3.3%, and Williams Sonoma at 5.1% [21][26][29] - The B2B segment grew by 10% in Q2, with strong performance in both trade and contract businesses [11][31] - Emerging brands like Rejuvenation continued to show double-digit growth, with Rejuvenation achieving its seventh consecutive quarter of double-digit comps [11][32] Market Data and Key Metrics Changes - The company experienced strong performance in strategic global markets, including Canada, Mexico, India, and the UK, with differentiated product offerings driving growth [35] - Retail channels saw a 7.3% comp increase, while e-commerce grew by 2% [41] Company Strategy and Development Direction - The company is focusing on three key priorities: returning to growth, enhancing customer service, and driving earnings [9][36] - Strategic collaborations and product innovation are central to the growth strategy, particularly in furniture and seasonal decor [10][12] - The company is leveraging AI across its operations to enhance customer experience, optimize supply chain, and automate internal processes [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, including high interest rates and tariff volatility [39][50] - The company raised its top-line guidance for fiscal year 2025, expecting comparable brand revenue growth of 2% to 5% [17][49] - Management acknowledged the impact of increased tariffs but emphasized the strength of their operating model and mitigation strategies [51][52] Other Important Information - The company plans to invest between $250 million and $275 million in capital expenditures for fiscal year 2025, focusing on e-commerce and supply chain efficiency [54] - The quarterly dividend was increased by 15% year-over-year, marking the sixteenth consecutive year of increased payouts [54] Q&A Session Summary Question: Can you discuss the comp performance and what drove the outperformance? - Management noted that the positive comps were driven by momentum across nearly all initiatives, with strong results from newness and innovation [59][61] Question: How do you view the gross margin versus SG&A outlook for the second half? - Management reiterated that while gross margins may be pressured by tariffs, SG&A could benefit from strong comps, maintaining overall operating margin guidance [62][66] Question: What is your pricing strategy for the back half of the year? - Management emphasized the importance of providing value and quality while being strategic about price increases, ensuring competitiveness [70][71] Question: How do you view the furniture category's performance? - Management linked the positive performance in furniture to product innovation and newness, rather than broader macroeconomic improvements [88] Question: How will higher tariff costs impact margins in the second half? - Management indicated that the impact of tariffs would gradually build throughout the year, but they remain confident in their growth strategies [106][108] Question: How do you assess demand elasticity in light of tariff increases? - Management highlighted that demand elasticity varies by product category and emphasized the importance of product differentiation in pricing strategy [110][112]

Financial Data and Key Metrics Changes - In Q2, the company reported a net revenue of $1.84 billion, exceeding expectations with a comparable sales growth of 3.7% [41][42] - Operating margin was 17.9%, an increase of 240 basis points year-over-year, with diluted earnings per share growing nearly 20% to $2 [46][40] - Gross margin improved to 47.1%, up 220 basis points from the previous year, driven by merchandise margins and supply chain efficiencies [42][43] Business Line Data and Key Metrics Changes - All brands delivered positive comparable sales, with furniture and non-furniture categories both showing growth [37][41] - The B2B segment grew by 10% in Q2, with strong performance in both trade and contract businesses [30][9] - Emerging brands, particularly Rejuvenation, continued to show double-digit growth, with Rejuvenation achieving its seventh consecutive quarter of positive comps [10][31] Market Data and Key Metrics Changes - The company gained market share despite a weak housing market and high interest rates, indicating strong brand performance [40][41] - Retail channels saw a 7.3% increase in comparable sales, while e-commerce grew by 2% [42] - The company reported strong performance in strategic global markets, including Canada, Mexico, India, and the UK [34] Company Strategy and Development Direction - The company is focusing on three key priorities: returning to growth, enhancing customer service, and driving earnings [7][35] - Strategic collaborations and product innovation are central to the growth strategy, particularly in furniture and seasonal decor [8][9] - The integration of AI across various business functions aims to enhance customer experience, optimize supply chain, and automate operations [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties and tariff volatility while maintaining growth [40][52] - The company raised its top-line guidance for fiscal year 2025, expecting comparable brand revenue growth of 2% to 5% [15][49] - Management acknowledged the challenges posed by increased tariffs but emphasized the effectiveness of their mitigation strategies [51][52] Other Important Information - The company plans to invest between $250 million and $275 million in capital expenditures for fiscal year 2025, focusing on e-commerce and supply chain efficiency [54] - A quarterly dividend of $0.66 per share was announced, marking the sixteenth consecutive year of increased dividend payouts [54] Q&A Session Summary Question: Can you discuss the comp performance and what drove the outperformance? - Management noted that the positive comps reflect strong momentum across nearly all initiatives, with both furniture and non-furniture categories performing well [58][60] Question: How do you view gross margin versus SG&A outlook for the second half? - Management reiterated that while gross margins may be pressured by tariffs, SG&A could benefit from strong sales, maintaining overall operating margin guidance [61][64] Question: What is the pricing strategy for the back half of the year? - The company aims to provide value while being strategic about price increases, ensuring competitiveness and quality [66][68] Question: Can you provide an update on sourcing products given tariff changes? - Management emphasized strong sourcing capabilities and flexibility in product sourcing to mitigate tariff impacts [74][76] Question: How much price increase has been taken across the industry? - Management indicated that pricing strategies are complex due to market dynamics, but they are pleased with their own pricing strategies and customer response [80][84] Question: What signals have you seen regarding consumer interest in furniture shopping? - Management attributed the positive performance in furniture to new product offerings rather than broader macroeconomic improvements [87][88] Question: How do you view demand elasticity for the second half? - Management noted that demand elasticity varies by category and emphasized the importance of product differentiation in pricing strategy [109][110]

Williams-Sonoma raised its full-year sales growth target as a strong second-quarter showing across all brands kept concerns of increased tariffs on imported furniture at bay https://t.co/TF5Omut64L ...

[Second Quarter 2025 Results Overview](index=1&type=section&id=Q2_2025_Results_Overview) Williams-Sonoma, Inc. reported strong Q2 2025 results, driven by comparable brand revenue growth, significant operating margin expansion, and increased diluted EPS [Headline Financial Performance](index=1&type=section&id=Headline_Financial_Performance) Williams-Sonoma, Inc. announced strong second quarter 2025 results, with comparable brand revenue growth, significant operating margin expansion, and increased diluted EPS, leading to an upward revision of the fiscal 2025 net revenue outlook Q2 2025 Headline Performance Metrics | Metric | Q2 2025 Performance | | :----------------------- | :------------------ | | Comparable Brand Revenue | +3.7% | | Operating Margin | 17.9% (+240bps YoY) | | Diluted EPS | $2.00 (+19.8% YoY) | - The company has raised its 2025 net revenue outlook[1](index=1&type=chunk) [CEO Statement](index=1&type=section&id=CEO_Statement) CEO Laura Alber highlighted the strong Q2 2025 performance, driven by positive comparable sales across all brands and channels, exceeding profitability estimates, and attributed this outperformance to strong execution and the company's robust omni-channel platform and brand portfolio, positioning it for future growth despite macroeconomic uncertainties - All brands achieved positive comparable sales, contributing to a **+3.7% comp**[3](index=3&type=chunk) - Outperformance was driven by positive comparable sales in both furniture and non-furniture categories, and strong performance in retail and e-commerce channels[3](index=3&type=chunk) - The company has a powerful portfolio of brands serving diverse categories and life stages, supported by a strong omni-channel platform and infrastructure[4](index=4&type=chunk) [Q2 2025 Key Highlights](index=1&type=section&id=Q2_2025_Key_Highlights) Key financial and operational highlights for Q2 2025 include strong comparable brand revenue growth, significant gross margin expansion driven by higher merchandise margins and supply chain efficiencies, and improved operating income, with the company also maintaining a strong liquidity position and returning capital to stockholders through repurchases and dividends Q2 2025 Financial and Operational Highlights | Metric | Q2 2025 Value | Change YoY | | :--------------------------------- | :-------------- | :--------- | | Comparable Brand Revenue | +3.7% | | | Gross Margin | 47.1% | +220bps | | - Merchandise Margins | | +190bps | | - Supply Chain Efficiencies | | +30bps | | SG&A Rate | 29.2% | -20bps | | Operating Income | $328 million | | | Operating Margin | 17.9% | +240bps | | Diluted EPS | $2.00 | +19.8% | | Merchandise Inventories | $1.4 billion | +17.7% | | Cash and Cash Equivalents | $986 million | | | Operating Cash Flow | $283 million | | | Returns to Stockholders | $280 million | | | - Stock Repurchases | $199 million | | | - Dividends | $81 million | | - SG&A rate decreased by **20bps** due to lower advertising and general expenses, partially offset by higher performance-based incentive compensation[4](index=4&type=chunk) - Merchandise inventories increased by **17.7%** year-over-year, including a strategic pull forward of receipts to mitigate the impact of higher tariffs in fiscal 2025[4](index=4&type=chunk) [Financial Outlook and Adjustments](index=2&type=section&id=Financial_Outlook_and_Adjustments) The company updates its fiscal 2025 outlook, reiterates long-term targets, and addresses a prior-period freight expense adjustment [Fiscal 2025 Outlook](index=2&type=section&id=Fiscal_2025_Outlook) The company has raised its fiscal 2025 net revenue guidance to reflect higher trends, while reiterating its operating margin guidance, acknowledging pressure from incremental tariff costs, with the outlook also detailing expectations for interest income, effective tax rate, and the fiscal year structure Fiscal 2025 Guidance Summary | Metric | Fiscal 2025 Guidance | | :----------------------- | :------------------- | | Net Revenues | +0.5% to +3.5% | | Comparable Sales | +2.0% to +5.0% | | Operating Margin | 17.4% to 17.8% | | Annual Interest Income | ~$30 million | | Effective Tax Rate | ~26.5% | - Incremental flow-through from higher net revenues is expected to be pressured by increased tariff costs, including additional tariffs on goods from China (**30%**), India (**50%**), Vietnam (**20%**), and steel/aluminum/copper (**50%**)[8](index=8&type=chunk) - Fiscal 2025 is a 52-week year, compared to a 53-week year in fiscal 2024, with comparable sales reported on a 52-week versus 52-week basis[8](index=8&type=chunk) [Long-Term Financial Targets](index=2&type=section&id=Long_Term_Financial_Targets) The company maintains its long-term financial targets, expecting sustained annual net revenue growth and a stable operating margin - Long-term annual net revenue growth is expected to be in the **mid-to-high single digits**[8](index=8&type=chunk) - Long-term operating margin is targeted in the **mid-to-high teens**[8](index=8&type=chunk) [First Quarter 2024 Out-of-Period Freight Adjustment](index=2&type=section&id=First_Quarter_2024_Out_of_Period_Freight_Adjustment) The company identified an over-recognition of freight expense totaling $49 million across fiscal years 2021-2023, which was deemed immaterial to prior periods and corrected in the first quarter of fiscal 2024 by reducing cost of goods sold and accounts payable - Over-recognized freight expense of **$49 million** was identified for fiscal years 2021, 2022, and 2023[5](index=5&type=chunk) - The cumulative error was determined not to be materially misstated for prior periods or projected fiscal 2024 results[5](index=5&type=chunk) - An out-of-period adjustment of **$49 million** was recorded in Q1 fiscal 2024 to reduce cost of goods sold and accounts payable[5](index=5&type=chunk) [Company Information and Disclosures](index=2&type=section&id=Company_Information_and_Disclosures) Company information, non-GAAP disclosures, forward-looking statement risks, and conference call details are presented [About Williams-Sonoma, Inc.](index=5&type=section&id=About_Williams-Sonoma%2C%20Inc.) Williams-Sonoma, Inc. is recognized as the world's largest digital-first, design-led, and sustainable home retailer, operating a diverse portfolio of brands through e-commerce, catalogs, and retail stores, supported by a loyalty program and an international presence - Williams-Sonoma, Inc. is the world's largest digital-first, design-led, and sustainable home retailer[12](index=12&type=chunk) - The company's brand portfolio includes Williams Sonoma, Pottery Barn, West Elm, Pottery Barn Kids, Pottery Barn Teen, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow[12](index=12&type=chunk) - Brands are marketed through e-commerce, direct-mail catalogs, and retail stores, with operations in the U.S., Puerto Rico, Canada, Australia, and the United Kingdom, plus international franchisees[12](index=12&type=chunk) [SEC Regulation G — Non-GAAP Information](index=3&type=section&id=SEC%20Regulation%20G%20%E2%80%94%20Non-GAAP%20Information) This section clarifies the company's use of non-GAAP financial measures, stating they provide supplemental information for investors and management to analyze business performance, but are not a substitute for GAAP measures and may not be comparable to those of other companies - Non-GAAP financial measures are used to provide meaningful supplemental information for investors and facilitate evaluation of current period performance on a comparable basis with prior periods[9](index=9&type=chunk) - Management uses non-GAAP measures to analyze changes in underlying business from quarter to quarter[9](index=9&type=chunk) - Non-GAAP measures should be considered a supplement to, not a substitute for or superior to, GAAP financial measures and may not be comparable to similarly titled measures used by other companies[9](index=9&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements that are subject to risks and uncertainties, which could cause actual results to differ materially, with these risks including tariffs, economic conditions, consumer behavior, supply chain disruptions, and operating costs, as detailed in SEC filings - Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially[10](index=10&type=chunk) - Key risks include the impact of current and potential future tariffs, general economic conditions (inflation, recession fears, interest rates), consumer preferences and buying trends, and global supply chain factors[11](index=11&type=chunk) - All financial results described are preliminary and subject to change until the Form 10-Q for the quarter ended August 3, 2025, is filed[11](index=11&type=chunk) [Conference Call and Contact Information](index=2&type=section&id=Conference%20Call%20and%20Contact%20Information) Details for the live conference call and webcast regarding the Q2 2025 results are provided, along with contact information for key financial executives - A live conference call was scheduled for August 27, 2025, at 7:00 A.M. (PT), accessible via webcast[7](index=7&type=chunk) - Contact information for Jeff Howie (EVP, Chief Financial Officer) and Jeremy Brooks (SVP, Chief Accounting Officer & Head of Investor Relations) is provided[8](index=8&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Unaudited_Condensed_Consolidated_Financial_Statements) Unaudited condensed consolidated financial statements, including earnings, balance sheets, cash flows, and retail store data, are presented [Condensed Consolidated Statements of Earnings](index=6&type=section&id=Condensed_Consolidated_Statements_of_Earnings) The unaudited condensed consolidated statements of earnings present the company's financial performance for the thirteen and twenty-six weeks ended August 3, 2025, and July 28, 2024, showing increases in net revenues, gross profit, operating income, and net earnings for the recent quarter Condensed Consolidated Statements of Earnings (Thirteen and Twenty-six Weeks Ended, in thousands) **For the Thirteen Weeks Ended:** | Metric (in thousands) | August 3, 2025 | July 28, 2024 | | :-------------------- | :------------- | :------------ | | Net Revenues | $1,836,760 | $1,788,307 | | Gross Profit | $864,623 | $803,940 | | Operating Income | $328,059 | $277,900 | | Net Earnings | $247,562 | $216,855 | | Diluted EPS | $2.00 | $1.67 | **For the Twenty-six Weeks Ended:** | Metric (in thousands) | August 3, 2025 | July 28, 2024 | | :-------------------- | :------------- | :------------ | | Net Revenues | $3,566,873 | $3,448,655 | | Gross Profit | $1,630,432 | $1,599,108 | | Operating Income | $618,772 | $595,012 | | Net Earnings | $478,825 | $477,271 | | Diluted EPS | $3.86 | $3.67 | [Q2 Net Revenues and Comparable Brand Revenue Growth (Decline) by Brand](index=6&type=section&id=Q2_Net_Revenues_and_Comparable_Brand_Revenue_Growth_%28Decline%29_by_Brand) This table details net revenues and comparable brand revenue growth or decline for each brand during Q2 2025 and Q2 2024 | Brand | Q2 2025 Net Revenues (in thousands) | Q2 2024 Net Revenues (in thousands) | Q2 2025 Comparable Brand Revenue Growth (Decline) | Q2 2024 Comparable Brand Revenue Growth (Decline) | | :---------------------- | :---------------------------------- | :---------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Pottery Barn | $724,579 | $725,323 | 1.1% | (7.1)% | | West Elm | $468,550 | $458,779 | 3.3% | (4.8)% | | Williams Sonoma | $249,053 | $239,867 | 5.1% | (0.8)% | | Pottery Barn Kids and Teen | $286,749 | $259,408 | 5.3% | 1.5% | | Other | $107,829 | $104,930 | N/A | N/A | | **Total** | **$1,836,760** | **$1,788,307** | **3.7%** | **(3.3)%** | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed_Consolidated_Balance_Sheets) The unaudited condensed consolidated balance sheets provide a snapshot of the company's financial position at August 3, 2025, February 2, 2025, and July 28, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (As of, in thousands) | Item | August 3, 2025 | February 2, 2025 | July 28, 2024 | | :------------------------ | :------------- | :--------------- | :------------ | | **Assets** | | | | | Total Current Assets | $2,655,520 | $2,754,609 | $2,714,564 | | Total Assets | $5,228,368 | $5,301,607 | $5,181,939 | | **Liabilities & Equity** | | | | | Total Current Liabilities | $1,766,309 | $1,911,974 | $1,743,202 | | Total Liabilities | $3,078,672 | $3,159,188 | $2,945,849 | | Total Stockholders' Equity| $2,149,696 | $2,142,419 | $2,236,090 | - Merchandise inventories, net, increased from **$1,217,693 thousand** as of July 28, 2024, to **$1,433,605 thousand** as of August 3, 2025[18](index=18&type=chunk) - Cash and cash equivalents decreased from **$1,265,259 thousand** as of July 28, 2024, to **$985,823 thousand** as of August 3, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed_Consolidated_Statements_of_Cash_Flows) The unaudited condensed consolidated statements of cash flows detail the cash movements from operating, investing, and financing activities for the twenty-six weeks ended August 3, 2025, and July 28, 2024, showing a net decrease in cash and cash equivalents for the current period Condensed Consolidated Statements of Cash Flows (For the Twenty-six Weeks Ended, in thousands) | Cash Flow Activity | August 3, 2025 | July 28, 2024 | | :----------------------------- | :------------- | :------------ | | Net Cash Provided by Operating Activities | $401,678 | $473,283 | | Net Cash Used in Investing Activities | $(111,488) | $(70,959) | | Net Cash Used in Financing Activities | $(521,133) | $(398,222) | | Net (Decrease) Increase in Cash and Cash Equivalents | $(227,154) | $3,252 | | Cash and Cash Equivalents at End of Period | $985,823 | $1,265,259 | - Cash used in financing activities significantly increased, primarily due to higher repurchases of common stock (**$289,108 thousand** in 2025 vs. **$173,603 thousand** in 2024) and increased payment of dividends (**$155,994 thousand** in 2025 vs. **$135,768 thousand** in 2024)[21](index=21&type=chunk) - Purchases of property and equipment increased to **$110,293 thousand** for the twenty-six weeks ended August 3, 2025, from **$70,946 thousand** in the prior year period[21](index=21&type=chunk) [Retail Store Data](index=8&type=section&id=Retail_Store_Data) The unaudited retail store data provides a breakdown of store counts by brand at the beginning and end of the second quarter of fiscal 2025, showing a slight increase in total store count during the quarter but a decrease compared to the prior year Retail Store Data by Brand | Brand | Beginning of Quarter (May 4, 2025) | Openings | Closings | End of Quarter (August 3, 2025) | As of July 28, 2024 | | :---------------------- | :--------------------------------- | :------- | :------- | :------------------------------ | :------------------ | | Pottery Barn | 180 | 1 | — | 181 | 185 | | Williams Sonoma | 154 | — | — | 154 | 158 | | West Elm | 119 | — | — | 119 | 122 | | Pottery Barn Kids | 44 | — | — | 44 | 45 | | Rejuvenation | 11 | — | — | 11 | 11 | | **Total** | **508** | **1** | **—** | **509** | **521** | - One new Pottery Barn store was opened during the quarter, resulting in a net increase of **one store** for the total company from the beginning to the end of Q2 2025[19](index=19&type=chunk) - The total number of stores decreased from **521** as of July 28, 2024, to **509** as of August 3, 2025[19](index=19&type=chunk)

Core Insights - Williams-Sonoma, Inc. (WSM) is set to announce its second-quarter fiscal 2025 results on August 27, with expectations of continued earnings growth and revenue performance exceeding previous estimates [1][2] Revenue Performance - The Zacks Consensus Estimate for WSM's Q2 earnings per share (EPS) has increased to $1.79, reflecting a 2.9% rise from $1.74 in the same quarter last year [2] - Revenue expectations are pegged at $1.82 billion, indicating a 1.6% growth from $1.79 billion year-over-year [2] - The company's revenue growth is anticipated to be driven by increased non-furniture sales, improved furniture sales, and effective collaborations [3] Segment Analysis - Projected revenues for the Pottery Barn brand are $730.2 million, a 0.7% increase year-over-year [5] - West Elm brand revenues are expected to reach $472.2 million, up 2.9% from the prior year [5] - The namesake brand's revenues are forecasted at $247.4 million, indicating a 3.2% year-over-year increase [6] - Pottery Barn Kids and Teen brand revenues are projected at $268.2 million, reflecting a 3.4% increase year-over-year [6] Margin Expectations - WSM's bottom line and margins are expected to improve due to supply chain optimization and operational efficiency [7] - Selling, general and administrative expenses are projected to contract by 40 basis points year-over-year to 29% [8] - Gross profit is expected to increase by 1% year-over-year to $812.4 million [8] Comparable Sales Growth - Comps growth for Pottery Barn Kids and Teen is expected to be 3.4%, compared to a 1.5% increase a year ago [9] - Pottery Barn's comps are projected to grow by 1%, recovering from a 7.1% decline last year [10] - West Elm's comps are anticipated to increase by 2.1%, improving from a 4.8% decline a year ago [10] - The namesake brand's comps are expected to rise by 2.9%, recovering from a 0.8% decline last year [10] Earnings Prediction - The model predicts an earnings beat for WSM, supported by a positive Earnings ESP of +1.33% and a Zacks Rank of 2 (Buy) [11][12]

Core Insights - Williams-Sonoma, Inc. (WSM) is enhancing its presence in the home furnishings market through strategic expansions and brand development [1][9] - The opening of Rejuvenation's first Tennessee store in Nashville marks the brand's 12th retail location, showcasing its commitment to craftsmanship and quality [1][9] Expansion Initiatives - The new Green Hills store will offer a curated collection of handcrafted products, including customizable lighting and furniture, produced in Portland, OR [2] - Williams-Sonoma plans to grow its core brands by introducing new products and expanding into non-furniture categories such as textiles and housewares [4] - The company is set to open four new stores in Mexico, including the first West Elm in Puerto Vallarta, and anticipates growth in Canada and other key markets [4] Financial Performance - WSM shares have increased by 6.7% year-to-date, outperforming the Zacks Retail - Home Furnishings industry's growth of 4.2% [6][9] - The company's growth is attributed to its B2B initiatives and ongoing expansion plans [6] Brand Strategy - Williams-Sonoma's strategy focuses on blending design-driven innovation with exceptional customer service across its brand portfolio [3] - The company emphasizes the importance of aesthetically appealing stores located in prime areas to support its market presence [3]