Williams-Sonoma, Inc. (NYSE:WSM) shares are trading lower on Thursday.
On Wednesday, the retailer reported revenue of $1.84 billion, a 2.7% increase from the same quarter last year and ahead of Wall Street’s estimate of $1.83 billion.
Comparable brand revenue rose 3.7% year over year.
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Williams-Sonoma raised its fiscal 2025 sales guidance to a range of $7.751 billion to $7.982 billion, up from the prior outlook of $7.596 billion to $7.827 billion, compared with the Street estimate of $7.761 billion.
Telsey Advisory Group analyst Cristina Fernández reiterated the Outperform rating, with a price forecast of $215.
Fernández said the quarter’s strong gross-margin upside was largely timing-related.
Selective price increases flowed through, while higher tariff costs had not yet hit cost of goods sold because of weighted-average cost accounting and the pull-forward of inventory at lower or zero tariffs, the analyst writes.
Fernández expects tariff expenses to step up in the third and fourth quarters of fiscal 2025.
Even so, the analyst believes Williams-Sonoma has multiple offsets, including vendor negotiations, re-sourcing, supply-chain efficiencies, tighter SG&A, and targeted price increases on new or differentiated items. Fernández noted the blended tariff burden has risen to 34% from 20% in May and 6% a year ago.
The analyst added that if additional furniture tariffs are enacted, roughly 35% of the assortment would be affected.
Fernández said that despite a volatile tariff backdrop, the company faces the coming quarters with clear structural advantages.
The analyst cited diversified revenue across brands and categories, roughly a 50/50 split between furniture and non-furniture, and a flexible model that can adjust advertising, labor, and corporate spend as needed. Fernández also pointed to scale (about $8 billion in sales last year), a clean balance sheet with roughly $1.0 billion in cash and no debt, and a strong execution track record.
The firm now projects 2025 EPS of $8.50, down from $8.60, noting that a second-quarter beat is more than offset by higher second-half tariff costs, lower interest expense, and a higher tax rate.
Price Action: WSM shares are trading lower by 2.72% to $187.16 at last check Thursday.
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