Williams-Sonoma(WSM) - 2026 Q3 - Quarterly Report

Revenue Growth - Net revenues for the third quarter of fiscal 2025 increased by $82.1 million or 4.6%, with comparable company growth of 4.0% driven by strong non-furniture and furniture sales[86] - For the first thirty-nine weeks of fiscal 2025, net revenues increased by $200.4 million or 3.8%, with company comp growth of 3.7%[95] - Pottery Barn, the largest brand, experienced comparable brand revenue growth of 1.3%, supported by large-ticket items and improved store inventory availability[87] - The Williams Sonoma brand saw a significant brand comp growth of 7.3%, driven by strength in kitchen products, particularly electrics and cookware[89] - The retail channel achieved a comp growth of 8.5%, while the e-commerce channel saw a comp growth of 1.9% in the third quarter of fiscal 2025[86] - Emerging brands, including Rejuvenation, Mark and Graham, and GreenRow, delivered double-digit brand comp growth on a combined basis[89] Financial Performance - Gross profit for the third quarter of fiscal 2025 was $867.7 million, a 6.1% increase from $817.6 million in the same quarter of fiscal 2024, with a gross margin of 46.1% compared to 45.4%[104] - For the first thirty-nine weeks of fiscal 2025, gross profit increased by $81.5 million, or 3.4%, totaling $2.5 billion, while gross margin decreased to 45.8% from 46.0%[105] - Selling, general and administrative (SG&A) expenses for the third quarter of fiscal 2025 were $548.6 million, a 7.0% increase from $512.5 million in the same quarter of fiscal 2024, with SG&A as a percentage of net revenues rising to 29.1%[108] - SG&A expenses for the first thirty-nine weeks of fiscal 2025 increased by $43.6 million, or 2.9%, totaling $1.56 billion, while SG&A as a percentage of net revenues decreased to 28.6% from 28.9%[109] - The effective tax rate for the first thirty-nine weeks of fiscal 2025 was 25.4%, up from 24.2% in the same period of fiscal 2024, primarily due to lower excess tax benefits from stock-based compensation[110] Cash Flow and Investments - The company ended the third quarter of fiscal 2025 with $884.7 million in cash and cash equivalents and generated operating cash flow of $718.0 million[90] - The company invested $178.5 million in capital expenditures and returned $792.3 million to stockholders through stock repurchases and dividends in the first thirty-nine weeks of fiscal 2025[90] - Net cash provided by operating activities for the first thirty-nine weeks of fiscal 2025 was $718.0 million, a decrease from $726.7 million in the same period of fiscal 2024[122] - Net cash used in investing activities for the first thirty-nine weeks of fiscal 2025 was $179.7 million, compared to $154.0 million in the same period of fiscal 2024, primarily for technology and supply chain enhancements[123] - Net cash used in financing activities for the first thirty-nine weeks of fiscal 2025 was $870.1 million, a decrease from $1.0 billion in the same period of fiscal 2024, mainly due to reduced stock repurchases[124] Economic and Market Conditions - The tariff rate has increased from 14% in May 2025 to 29% as of the report date, potentially impacting costs for imported materials and finished goods[92] - The company remains focused on returning to growth, enhancing customer service, and driving earnings despite challenges from the macroeconomic environment[92] - Inflation has been experienced due to supply chain disruptions, increased shipping and transportation costs, and rising labor costs, but the impact on financial statements has been immaterial to date[132] - The company acknowledges the potential future impact of inflation on its financial condition and results of operations[132] Foreign Currency Exposure - The majority of inventory purchases are made in U.S. dollars, minimizing foreign currency impact during Q3 fiscal 2025 and Q3 fiscal 2024[130] - Foreign operations in Canada, Australia, the UK, and parts of Asia and Europe expose the company to foreign currency exchange rate fluctuations, but the impact has been immaterial[131] - A hypothetical 10% change in foreign currency exchange rates would not materially affect the company's financial statements[131] Credit Facilities - As of November 2, 2025, the company held $884.7 million in cash and cash equivalents, with $64.2 million held by international subsidiaries[117] - The company amended its credit facility in June 2025, increasing the unsecured revolving line of credit to $600 million, with the option to increase it by up to $250 million[118]