Williams-Sonoma Tops Q3 Estimates, Lifts Margin Outlook as Tariff Costs Build

Overview

• GAAP diluted EPS came in at $1.96 versus the $1.86 estimate, on revenue of $1.883 billion versus $1.866 billion expected.
• Comparable brand revenue rose 4.0% and gross margin improved to 46.1% (up 70 basis points), driving 4.8% year-over-year EPS growth.
• Full-year sales guidance was reaffirmed at $7.751 billion to $7.982 billion while operating margin guidance was raised to 17.8%–18.1%, with long-term targets unchanged.
• Management quantified tariff assumptions in guidance, including Section 232 furniture tariffs, China at 20%, India at 50%, Vietnam at 20%, roughly 18% elsewhere, and 50% on steel, aluminium and copper; inventories rose 9.6% to $1.5 billion due to pull-forward and higher costs.
• Williams-Sonoma ended the quarter with $885 million in cash and $316 million in operating cash flow, returned $347 million to shareholders, had $637 million remaining on its current buyback, approved a new $1 billion authorization, and shares reversed early gains to trade down about 2.8% to $175.65.