Tariff Pressures Prompt RBC to Cut Williams-Sonoma, Inc. (WSM) Price Target

Core Viewpoint - Williams-Sonoma, Inc. (NYSE:WSM) continues to show strong performance with revenue growth and positive operating margins, despite challenges in the consumer environment and rising tariff costs [2][3][4]. Financial Performance - In Q3 2025, Williams-Sonoma reported revenue of $1.88 billion, an increase of over 4.5% year-over-year [3]. - The operating margin was 17.0%, reflecting a 10 basis point improvement, while earnings per share reached $1.96, marking a 4.8% increase from the previous year [3]. - The company reaffirmed its full-year comparable brand revenue growth guidance of 2% to 5% and raised its operating margin guidance by 40 basis points to a range of 17.8% to 18.1% [4]. Market Position and Strategy - RBC Capital lowered its price target for Williams-Sonoma to $206 from $213 but maintained an Outperform rating, noting the company's market share gains and better-than-expected flow-through [2]. - The current momentum in the category appears to be largely price-driven amid a weakening consumer environment, with rising tariff costs being a concern [2]. Dividend and Shareholder Returns - Williams-Sonoma has a strong history of dividend growth, achieving 16 consecutive years of increases, and has returned over $4.1 billion to shareholders through dividends and share repurchases over the past five years [5]. - Management attributes the ability to provide enhanced returns to continued profitability and strong cash flow [5]. Company Overview - Williams-Sonoma is a retailer specializing in high-quality home goods, cookware, and gourmet foods, operating under its namesake brand as well as other brands like Pottery Barn and West Elm [6].