Story Stocks^®

Williams-Sonoma (WSM) delivered solid results for Q3, highlighted by another EPS beat - the company's twelfth consecutive quarter of EPS upside - despite headwinds from tariffs and a challenging macro environment. The company also reaffirmed FY26 revenue guidance and raised operating margin expectations, showcasing resilience in a promotional retail climate.

• The 4.0% yr/yr comparable brand revenue growth reflected positive comps across all major brands: Williams-Sonoma (+7.3%), West Elm (+3.3%), and Pottery Barn (+1.3%), with accelerating comp momentum.
• Gross margin expanded by 70 bps to 46.1%, helped by higher merchandise margins, supply chain efficiencies, and an effective six-point tariff mitigation plan.
• WSM reaffirmed FY26 revenue guidance of $7.75-$7.98 bln and raised operating margin guidance to 17.8-18.1%, factoring in ongoing tariff impacts.
• The company’s competitive edge comes from its multi-brand portfolio with broad category exposure, digital-first retail channels, strength in customer service and innovation, and a resilient balance sheet.
• A new $1.0 bln stock repurchase authorization signals confidence and shareholder return commitment.
• Despite weak housing market conditions and macro uncertainties, WSM is offsetting these challenges through innovation, enhanced retail experiences, category expansion in furniture and emerging brands, and strong B2B growth.

Briefing.com Analyst Insight:

WSM continues to outperform peers like RH (RH) by leveraging its diversified brand portfolio, operational excellence, and digitally integrated customer experiences. Strong margin expansion and consistent EPS beats amid tariff pressures highlight its robust business model. The company’s focus on innovation, full-price selling, and customer service is enabling it to navigate a difficult retail environment, with solid guidance signaling confidence. While housing market softness remains a risk, WSM’s strategic agility and scale position it well for sustained growth and market share gains.