Williams-Sonoma (NYSE:WSM) shares fell Wednesday after the company reported fiscal second-quarter 2025 results.
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 (Y/Y).
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GAAP earnings per share of $2.00 beat the analyst consensus estimate of $1.80.
Williams-Sonoma posted a gross margin of 47.1%, an increase of 220 basis points from last year, fueled by a 190-basis-point lift in merchandise margins and a 30-basis-point gain from supply chain efficiencies.
The operating margin increased by 240 bps to 17.9% as the profit increased 18% to $328.1 million.
Occupancy rate remained flat Y/Y.
Occupancy expenses rose 2.1% Y/Y to $201 million.
Quarterly operating income was $328.06 million with a 17.9% margin, up by 240 basis points.
Williams-Sonoma increased inventories by 17.7% Y/Y to $1.4 billion, including a strategic pull forward of receipts to reduce the impact of higher tariffs in fiscal 2025.
The company ended the quarter with $986 million in cash and $283 million in operating cash flow, returning $280 million to shareholders through buybacks and dividends, with $903 million remaining in repurchase authorization.
CEO Laura Alber highlighted Williams-Sonoma's operating margin of 17.9% and strong performance across furniture, non-furniture, retail, and e-commerce channels, leading the company to raise top-line guidance despite macro and tariff pressures.
Alber credited company-wide execution, a diverse brand portfolio, and a robust omni-channel platform for positioning the business for its next growth stage.
Outlook
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.
The company reiterated its operating margin outlook of 17.4% and 17.8%.
The company expects higher net revenues to be offset by rising tariff costs, including 30% on China, 50% on India, 20% on Vietnam, 18% on other regions, and 50% on steel, aluminum, and copper.
The company continues to target mid-to-high single-digit annual revenue growth and operating margins in the mid-to-high teens.
Price Action: Williams-Sonoma shares are trading lower by 0.26% at $197.41 at last check Wednesday.
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