Williams-Sonoma falls despite beating Q2 estimates

Investing.com -- Williams-Sonoma Inc. (NYSE: WSM) reported second-quarter results that exceeded analyst expectations, though shares fell 4.6% premarket.

The home furnishings retailer posted adjusted earnings per share of $2.10, beating the consensus estimate of $2.06, while revenue of $1.96 billion topped expectations of $1.92 billion. Revenue increased 6.7% YoY, with comparable brand revenue up 6.2%.

The company's adjusted operating margin came in at 17.3%, down 60 basis points from the prior year, primarily due to lower merchandise margins driven by tariff costs. This decline offset supply chain efficiencies and occupancy leverage. GAAP operating margin reached 22.9%, boosted by $167.8 million in refunds from previously paid International Emergency Economic Powers Act tariffs, though these items were excluded from adjusted results.

"We delivered a very strong second quarter," said Laura Alber, President and Chief Executive Officer. "In Q2, our comp came in at 6.2%, with total revenue growth of 6.7%, and we drove an operating margin of 17.3% with earnings per share of $2.10."

Williams-Sonoma raised its fiscal 2026 outlook, now expecting annual net revenue growth of 4.7% to 7.2%, with comparable sales growth of 4.0% to 6.5%. The midpoint of the revenue guidance of 5.95% suggests continued momentum. The company projects an adjusted operating margin between 17.8% and 18.2% for the full year.

The retailer's guidance assumes all current tariffs will remain in place for fiscal 2026, including Section 232 tariffs, existing and new Section 301 tariffs, and tariffs between Canada and the United States. The company also expects elevated oil prices to persist through year-end.

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