WSM

Williams-Sonoma (WSM) came into focus after reporting second quarter results on August 26, 2026, which showed higher sales and net income, as well as an updated earnings outlook reflecting stronger year-to-date performance. Despite a softer 1-day share price move, which declined 1.39% to US$235.09, Williams-Sonoma has had a stronger run over longer periods, with a 30-day share price return of 2.81% and a 90-day share price return of 16.30% pointing to building momentum helped by the raised 2026 earnings guidance and recent earnings beats. Over a longer horizon, total shareholder returns of 26.68% over 1 year and very large gains over 3 and 5 years indicate that long-term holders have already seen substantial value creation, while the latest guidance update gives the market fresh information to reassess both growth potential and risks. Scan how Williams-Sonoma’s momentum compares with other potential opportunities by reviewing hand picked 45 high quality undervalued stocks that pair resilient cash flows with stronger balance sheets. Bulls point to Williams-Sonoma’s stronger earnings and raised 2026 guidance, while bears focus on margin pressure and a cooling short term share move. Which side do the current valuation numbers support next? At a last close of $235.09 against a narrative fair value of $212.63, Williams-Sonoma is framed as pricing in a premium that the most followed narrative links to its digital model and margin profile. Read the complete narrative. Want to see how Williams-Sonoma’s fair value hangs on a specific revenue glide path and profit margin profile? The narrative focuses on steady top-line expansion, a slight lift in profitability and a future earnings multiple that sits above the broader specialty retail group. It examines which exact combination of growth and margins would need to align for that valuation to hold. Result: Fair Value of $212.63 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this Williams-Sonoma narrative still faces pressure from tariff volatility, which can squeeze margins, and from weak housing demand, which can drag on big-ticket home furnishing sales. Find out about the key risks to this Williams-Sonoma narrative. The most followed Williams-Sonoma narrative points to a fair value of $212.63 based on earnings, margins and a future P/E of 22.7x. Our DCF model tells a different story. On that framework, WSM at $235.09 is trading below an estimated future cash flow value of $246.58, which frames the stock as undervalued on cash flows even while earnings based arguments lean the other way. Which lens do you find more convincing when cash flow and earnings send different signals? Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Williams-Sonoma for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 45 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Sentiment around Williams-Sonoma is mixed, so this is a good moment to review the numbers yourself and decide quickly where you stand. To see how the current positives line up with the risks, take a closer look at the 2 key rewards. If Williams-Sonoma has sharpened your focus, do not stop there. Broaden your watchlist now or you risk missing other opportunities that may suit your style. Target dependable income by reviewing resilient payers through the 12 dividend fortresses. Spot potential value gaps early by checking the 19 high quality undiscovered gems before they attract wider attention. Strengthen your downside protection by focusing on companies highlighted in the 75 resilient stocks with low risk scores. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include WSM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wednesday, Aug. 26, 2026 at 10 a.m. ET Chief Accounting Officer and Head of Investor Relations - Jeremy Brooks President and Chief Executive Officer - Laura J. Alber Executive Vice President and Chief Financial Officer - Jeffrey E. Howie Operator: Welcome to the Williams Sonoma Inc Second Quarter Fiscal 26 Earnings Conference Call. At this time, all participants are in listen only mode. A question and answer session will follow the conclusion of the prepared remarks. I would now like to turn the call over to Jeremy Brooks chief accounting officer and head of investor relations. Please go ahead. Jeremy Brooks: Good morning, and thank you for joining our second quarter earnings call. Before we get started, I would like to remind you that during this call, we will make forward looking statements. with respect to future events and financial performance, Including our updated annual guidance for fiscal 26 and our long term outlook. We believe these statements reflect our best estimates. However, we cannot make any assurances that these statements will materialize. And actual results may differ significantly from our expectations. The company undertakes no obligation To publicly update or revise any of these statements to reflect events or circumstances that may arise after today's call. Additionally, we will refer to our Q2 results on a non GAAP basis. Which excludes the recognition of income from tariff refunds and other tariff-related adjustments. The amounts in detail of these adjustments along with a reconciliation of our GAAP to non GAAP results appears in Exhibit 1 to the press release we issued earlier this morning. Our non GAAP results should not be considered replacements for and should be read together with our GAAP results. This call should also be considered in conjunction with our filings with the SEC. Finally, a replay of this call will be available on our Investor Relations website. Now, I would like to turn the call over to Laura J. Alber, our president and chief executive officer. Laura J. Alber: Thank you, Jeremy. Good morning, everyone, and thank you for joining the call. We had a very strong second quarter. Our comp for Q2 came in at 6.2%, total revenue growth of 6.7%. This performance reflects strong execution by all of our brands across all of our channels and the hard work of our dedicated teams. I would like to thank everyone at the company for their commitment to our continued success. We are pleased that our strategies are continuing to gain momentum. Every brand delivered strong results in Q2, saw significant improvement in Pottery Barn, which had a 5.1% comp. Our Williams Sonoma brand had a 7.6% comp, and West Elm continued its strong performance with a 6.4% comp. Our children's businesses delivered 3.5% and our powerful emerging brands contributed double digit growth. And B2B grew 14.5% in Q2 with record breaking demand in the quarter. As you can tell, these results were broad based. We had strength in both DTC and retail and positive comps in both furniture and non furniture with an even stronger furniture comp than in Q1. Units and innovation delivered, supported by our product pipeline strategy. Collaborations were again a key contributor. And as a result, we gained market share in the quarter and we continue to outperform the industry. Our strategies are driving our success, and they continue to differentiate us from the competition. Across all of our brands, we have prioritized incremental newness innovative, higher quality product lines, and more inspiring photography, floor sets, and storytelling. All of which drive full price selling. In terms of profitability, we delivered an operating margin of 17.3% Earnings per share were $2.10 We delivered this profitability while continuing to manage through a volatile environment. Which includes war, ever changing tariffs, rising interest rates, and broader macro uncertainty. We continue to compound results quarter after quarter despite the stagnant housing market and the other uncertain macro events of today. We believe our strong brands, our execution, and our focus on customer service is why we are delivering and why we will continue to deliver in the balance of 2026 and over the long term. We have always been known for our high touch customer service model. And we are excited that the technology that we are using can take it to the next level. We are improving the customer journey. We are strengthening product discovery, and we are scaling personalization. We are also continuing to advance our design tools and improve the checkout experience to drive conversion. And we have recently launched our next AI powered shopping assistant, Auto, across the Pottery Barn family. Otto begins to bring the agentic discovery experience we are building with Williams Sonoma's Oliver to the furniture brands. Both Olive and Auto are helping our customers with product recommendations, and they are increasing consumer engagement with our content design tools and free design service offerings. AI is an accelerator to our strategy and our productivity. We are using it to drive sales, improve service, and make our teams more effective. So many aspects of our tactile and taste driven business cannot be replaced by AI. But our processes can certainly be enhanced by it. Especially in supply chain and inventory management and, therefore, customer service. On the supply chain front, we are pleased to see improvements in our metrics. Our transportation team has done a very good job at mitigating increasing supply chain costs. There is never a dull moment in the logistics world today and the whole team has been committed to minimizing the cost of war and fuel pressures by finding offsets, all whilst maintaining our high level of service. Now before we turn to guidance, let's talk about tariff refunds. We are pleased to have received a refund of $200 million. I want to thank the Williams Sonoma Inc team and our vendor community for all of their hard work navigating the tariff environment. The results that we have discussed so far exclude income of $174 million that we recognized in Q2 from tariff refunds. We are excited to be able to reimburse a total of $47 million to many of our vendors for the discounts they gave us to mitigate the tariff pressures. And another 10 million to our associates to their 401(k)s for all their work during this difficult time. Now let's discuss guidance. We are proud to be raising our annual outlook on both the top and bottom lines. We now expect comparable brand revenue growth of 4% to 6.5% and an operating margin in the range of 17.8% to 18.2%. Our raised guidance reflects the success of our current initiatives and our confidence in our ability to execute and also what we know today about the environment. Now let's review our brands Pottery Barn delivered another quarter of significant improvement. With a 5.1 comp in Q2. We are encouraged by the continued acceleration in the brand. Customers responding to our merchandising strategy and the brand saw strength across key categories including furniture, lighting, and textiles. The quarter reflected Pottery Barn's continued focus on newness, product innovation, and improving the customer experience across channels. Customers responded to expanded assortments, new product introductions, and compelling collaborations. At the channel level, DTC, gained traction as we enhance the digital shopping experience and made it easier for customers to discover and shop the assortment. Retail remains strong, with customers continuing to engage with our stores design services, and the in person shopping experience. Looking ahead, we are excited about Pottery Barn's fall collection and the pipeline of differentiated new products the brand will introduce throughout the back half of the year. We believe Pottery Barn's focus on compelling product, strong storytelling, and disciplined execution positions the brand for growth. Now let's turn to our Pottery Barn children's business which delivered another strong quarter with a 3.5% comp in Q2. Growth was driven by product innovation, life stage leadership, and differentiated collaborations. Love Shack Fancy and Christopher Loves Julia remain strong drivers and newer partnerships including Peppa Pig and our exclusive Nuna and Love Shack Fancy collection generated a very strong customer response. The brand also saw continued momentum in baby supported by product innovation, and expanded nursery assortments. Across categories, furniture built on its momentum from earlier in the year, and textiles delivered continued strength. In dorm, the customer response has also been strong with complete room solutions, exclusive collaborations, and an enhanced shopping experience. And we are very pleased with our relaunch of Dormify, This new brand is extending our reach with differentiated functional style driven solutions. Now let's review West Elm. West Elm delivered a positive 6.4% comp in quarter 2. The brand continued to make progress across product, brand heat, channel excellence. The results are compounding. New introductions in both furniture and nonfurniture fueled growth with summer and fall newness each delivering double digit comps. The strength of newness combined with promotional discipline drove full price selling. And this strong performance was broad based across both retail and direct to customer. Collaborations continue to be a big part of the West Elm strategy. In Q2, West Elm launched its second Pearson Ward collection with an expanded assortment following the success of last year's debut. Strategic marketing targeted both repeat and new customers drove higher social engagement, and earned strong press coverage. The Emma Chamberlain collection also continues to be 1 of the brand's most successful collaborations, exceeding expectations and attracting younger customers. Overall, we are thrilled with the momentum at West Elm. Brand is executing, and we feel good about the opportunity to build on this progress. Now let's review the Williams Sonoma brand. Williams Sonoma continued its strong performance Delivering a 7.6% comp in Q2. The brand saw strength throughout the assortment across categories and price points, Our summer assortment was strong with exciting exclusive collaborations, including Aerin, Sanderson and the newly launched collaboration with Hill House Home, for both Williams Sonoma and Williams Sonoma Home. Beyond product, our team remains committed to bringing the Williams Sonoma brand to life through experiences that deepen customer engagement and extend our reach. We continue to engage customers through culinary events, book signings, and our skill series classes. All of which create meaningful ways for customers to experience our brands and our products in person. Q2 also marked the launch of our 2020 no kid hungry campaign featuring celebrity design spatulas from Cher, Shakira, and leading food creators. The annual campaign increases awareness of childhood hunger in America. And together, our customers, vendors, and associates have helped us raise almost $23 million in support of the cause from its inception of the program in 2010. The Williams Sonoma brand continues to demonstrate its strength and relevance with sustained momentum across the business. Through differentiated and exclusive products, compelling collaborations, engaging brand experience, and continued investment in stores and marketing, we are creating more reasons for customers to shop with Williams Sonoma than ever before. Now I would like to update you on B2B. B2B had another record breaking quarter growing 14.5% with strength in both contract and trade. The team had an active quarter participating in many new marketing events and trade shows. We continue to expand into underserved but high growth markets including cruise ships, senior living, and student housing. Notable projects that closed during the quarter included the Virgin Hotel in New York City, Signature Aviation's Miami Executive Airport, the Hardin House, at the University of Texas at Austin, Napa's Carneros Resort and Spa, and a strong group of multifamily apartment and restaurant projects throughout the country. We are encouraged by the strength of our project pipeline across all industry segments and remain confident in the momentum our B2B team is building as we head into the second half of the year. Now I would like to update you on our emerging brands. Let's start with Rejuvenation. Rejuvenation delivered another outstanding quarter with a double digit comp and strong profitability. We saw continued strength across project led categories, including cabinet hardware, bath, lighting, utility, and mirrors. Customer acquisition accelerated, and we had strong engagement both consumer and trade customers and we saw continued momentum across DTC and retail. High quality and product innovation continues to differentiate this brand. Cabinet hardware, bath, and lighting all reached record levels in the quarter, with customers responding to innovative finishes, expanded assortments, and designed forward collections across the home. Rejuvenation continues to strengthen its leadership in whole home renovation, by combining premium craftsmanship customizable solutions, timeless design, and meaningful product innovation. Mark and Graham also delivered another strong quarter of double digit growth with momentum across their key categories. Our new product offerings and corporate gifting strategies were strong. The brand built upon its reputation for beautiful, personalized gifts for important occasions. And we saw strong growth in wedding and a successful launch of Mark and Graham dorm. And last but not least, GreenRow. We continue to be excited by the growth in GreenRow, which also delivered double digit growth in the quarter. And in May, the brand launched its first collaboration with the New York Botanical Garden. A beautiful collection of textiles, decor, and furniture was inspired by the archives of this historic garden. Finally, I would like to talk about our global business. In Q2, we delivered growth across our priority markets led by Canada, Mexico, and The UK. Performance was supported by continued DTC momentum, expansion of our brands in The UK, and further growth in our design and trade businesses abroad. In summary, we delivered a very strong second quarter. We drove strong top line growth, including 6.2 comp, and total revenue growth of 6.7% with every brand positive comping. We gained market share, and we continue to outperform the industry. We delivered operating margin ahead of expectations while managing through a volatile environment. And finally, we raised our annual outlook. This quarter reflected the power of our strategy and execution. We saw strength across brands, channels, furniture, and non furniture, B2B, and emerging brands. We saw significant improvement in Pottery Barn, continued strength in West Elm, and the Williams Sonoma brand, and strong momentum across our children's business. Our business is broad and diverse, A strong national real estate market with more turnover would certainly be a tailwind for us. But I believe that we have now proven that our business can succeed regardless of the housing market. Our goal is to continue to execute and build on the current strength of our business quarter after quarter and year after year. We are also continuing to invest in the customer experience using technology and AI to support our strong teams. We feel good about the first half of the year, and we remain confident in our priorities and strategies for the remainder of 2026. And while the external environment can shift quickly, we are prepared to navigate volatility and keep delivering. And with that, I want to thank our teams again for their hard work and their commitment. And I also wanna thank our vendors and our shareholders for their partnership and support And finally, a huge thank you to all of our customers for shopping our brands. And now, will turn it over to Jeffrey to walk you through the numbers and our outlook in more detail. Jeffrey E. Howie: Thank you, Laura. And good morning, everyone. Q2 was a quarter of acceleration. Our comp accelerated to 6.2%. We grew earnings per share through the peak of the tariff impact, and we are raising our outlook for the year on both the top and the bottom lines. I will cover 3 things this morning. First, the IEPA tariff refunds. Second, our Q2 results. And third, our raised guidance. I will start with the AIPA tariff refunds. Because they are the largest driver in our GAAP results and need the most explanation. First, what we received. As disclosed in our first quarter 10-Q, we filed for $198 million of AIPA tariff refunds. In the second quarter, received $200 million including interest. As of this call, we have received substantially all of our refunds. Second, we ran through the income statement this quarter. We recognized $174 million into income. $168 million of that was recorded as a reduction in cost of goods sold and $6 million was booked as interest income. Against that, we are using $47 million to reimburse many of our vendor partners for discounts they gave us to mitigate the IEPA tariffs. We also recorded $10 million in SG&A for a 1 time contribution to all eligible employees 401(k) accounts. In recognition of their efforts navigating the IEPA tariffs. So net, approximately $117 million of benefit to second quarter GAAP pretax results. Third, what is still to come? An unrecognized benefit of $29 million was recorded as a reduction of inventory on the balance sheet. And will flow through gross margin in the third quarter as the related inventory is sold. Finally, the presentation in our financial statements. These refunds are 1 time, and material. So we have excluded them from our second quarter non GAAP results and we plan to do the same in the third quarter. That will give investors a clean, comparable view of the operating business across fiscal 25, 2026, and 2027. The full GAAP to non GAAP reconciliation is in our press release. The second quarter operating results and guidance I discuss from here are all on a non GAAP basis. Turning now to our second quarter results. Second quarter net revenues were $1.96 billion up 6.7% year over year. Comparable brand revenue accelerated to 6.2% from 4.8% in the first quarter. The growth was broad based. Furniture led the quarter, and both furniture and non furniture posted positive comps. All brands posted positive comps including double digit comps across all our emerging brands as well as business to business. By channel, ecommerce comped up 6.5% and retail up 5.5%. Here's the thing I would highlight. The home furnishings industry was essentially flat in the quarter. So effectively, all our growth was market share gain. And we took that share while increasing our penetration of full price selling. We are driving growth and market share gains without discounting. Moving down the income statement. Q2 gross margin was 45.5%, down approximately 160 basis points versus last year. Merchandise margins declined approximately 230 basis points, as tariffs impacted our weighted average cost of goods sold. As we have guided, Q2 was the peak of the tariff impact on our gross margin. From here, expect the pressure to moderate. Offsetting this tariff pressure, were 70 basis points of supply chain efficiencies and occupancy leverage. Supply chain efficiencies including a lower shrink accrual, delivered approximately 30 basis points of benefit despite the headwinds from higher fuel prices on transportation costs. And occupancy leverage approximately 40 basis points. With our top line growth more than offsetting a 3% increase in occupancy dollars. Overall, our gross margin landed in line with our expectations, because our accelerating growth and supply chain efficiencies absorbed roughly a third of the hit from tariffs. Turning to s g and a. Q2 s and A ran at 28.2% of revenues. Approximately 100 basis points of leverage versus last year. Employment expense leveraged 120 basis points. Roughly half of that is due to our disciplined payroll management, and the balance from incentive compensation. Advertising expense was 7.4% of revenues. 10 basis points higher year over year. Strong returns on our advertising spend throughout the quarter, gave us confidence to continue investing especially in more content led channels like social, collaborations, and influencer partnerships. General expense deleveraged approximately 10 basis points. On the bottom line, operating income was $338 million. Up 3% year over year. With operating margin at 17.3%. Diluted earnings per share was $2.10, up 5% year over year. I wanna underline what that means. We grew operating income and we grew earnings per share through the peak quarter of tariff pressure. On the balance sheet, merchandise inventories were $1.45 billion up 1% to last year. Revenue was up 6.7% on inventory up 1%. We are chasing inventory in our best sellers. Across both core and newness. During the quarter, we invested $58 million in capital expenditures to support our long term growth and we paid $90 million in dividends. A 15% increase year over year. We did not repurchase shares in the quarter. Year to date, we have repurchased $288 million of stock. Or approximately 1.4% of shares outstanding. And we have approximately $1.1 billion remaining under our authorizations. We Summing up the quarter, we accelerated the top line, We took share in a flat industry and we grew earnings through peak tariff pressure. I want to thank our team for their execution this quarter. They are the ones making these results happen, and they deserve the credit. Now to our outlook. Based on our results and the momentum in our business, we are raising our full year guidance on both the top and the bottom lines. On the top line, we now expect comparable brand revenue growth of 4% to 6.5%, with total net revenue growth of 4.7% to 7.2%. On the bottom line, we now expect operating margin of 17.8% to 18.2%. Note that with both the top line and bottom line guidance, we have raised both ends of the range. Our guidance continues to assume no material changes the macroeconomic environment housing turnover, or interest rates. We are still not building in a housing recovery. Now I would like to update you on 3 topics related to guidance that I know are top of mind. Tariffs, oil, and the IEPA refunds. First, tariffs. Our guidance reflects all tariffs in place as of this call. The Section 32 tariffs, the existing section 3 zero 1 tariffs, The new Section 3 zero 1 tariffs announced on July 23 and the latest round of tariffs between Canada and The US. As I said earlier, Q2 was the peak. We continue to expect the impact to moderate across the back half as we begin to comp the tariffs we paid last year. Second, oil. Higher oil prices continue to pressure transportation and supplier costs. Fuel prices near today's levels are embedded in our guidance. And we continue to work with our suppliers to offset and reduce costs. The direction of oil prices is difficult to predict. Our guidance reflects our best estimate of the impact and third, IEPA refunds. To be explicit, our guidance is non GAAP. And does not contemplate any benefit from the AIPA refunds or the related interest. The raise you see is operational. Below operating income, we are guiding full year interest income of approximately $25 million and a full year effective tax rate of approximately 26%. On capital expenditures, our guidance is unchanged. We expect to spend approximately $275 million on capital expenditures for the year. About 95% of that investment goes to retail, ecommerce, and supply chain. We continue to expect year end store count to be essentially flat to last year, after which we anticipate 1% to 3% store count growth each year beginning in fiscal 27. Embedded in our fiscal 26 guidance, continues to be approximately 70 basis points of non comp growth from our retail investment. On returning cash, we will continue to pay our quarterly dividend of 76¢ per share. A 15% increase year over year. That marks our 17th consecutive year of increased dividend payouts. And we plan to continue to repurchase shares opportunistically. Against the $1.1 billion remaining under our authorizations. Looking beyond fiscal 26, we are reiterating our long term outlook. Mid to high single digit revenue growth with operating margins in the mid to high teens. This quarter, we operated at that algorithm, while absorbing the peak tariff impact. Wrapping up. The 5 reasons we are confident we will continue to outperform our peers have not changed. But this quarter gave you fresh evidence for each of them. 1, our ability to gain share in a fragmented industry. The industry was flat. And we comped 6.2%. 2, the strength of our in house proprietary design. Full price penetration went up, with all brands driving positive comps. 3, the advantage of our digital first but not digital only channel strategy. Ecommerce was up 6.5% Retail, up 5.5%. 4, the ongoing strength of our growth initiatives. Business to business, emerging brands, and our retail investment are driving growth. And 5, the resiliency of our fortress balance sheet. No debt, inventory up 1%, on revenue up 6.7%, and 1.1 billion of repurchase capacity in reserve. With that, I will open the call for questions. Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Kate McShane with Goldman Sachs. Kate, your line is open. Please go ahead. Kate McShane: Thank you. Good morning. I think the theme that we heard from the prepared comments from both Laura and Jeffrey today is that newness and collaborations are really working to drive demand So I wondered if you could talk a little bit about the pipeline of innovation that we could maybe see in second half of this year. But I know you cannot announce what collaborations might be coming out, but how does the cadence of those collaborations look versus the first half? And then finally, Holiday, I know last year faced a little bit of headwind. How are you viewing the merchandise and offering for holiday 26 versus last year? Laura J. Alber: Great questions. Thanks, Kate. In terms of our brand strategies, you know, we are very pleased to see all brands, making progress. And driving growth. And I really believe that is because we are we are approaching them similarly in terms of the initiatives to drive growth. So, you know, as you mentioned, 1 of the key ones is product. We are also going after, though, other things that I will talk about in a second, but back to product, Every category, every brand, we look at constantly and are looking at how do we improve vis a vis what we had last year and vis a vis the competition and bring innovative relevant products to market. And we have really been focused on making sure that the quality is higher than our competition and that we are at better and competitive pricing to our competition. And that also is, you know, part of the strategy that we have been firing on all year and that has been working. But in terms of specifically innovation and newness, there is still a lot of opportunity, frankly. I mean, we are happy with the numbers, but there is still a lot of categories that we think we can do a lot better in. We are very self critical. And we can see the white space very clearly. So as much as we have done well, and we are thrilled to see the broad based results across brands and particularly furniture coming around, there is still categories where I am quite critical and the teams are working hard to improve and bring even better product to market. We look at the back half, we get after some of those categories. More than we did in the front half. And then also, we do have some very exciting collaborations coming that I cannot talk about, as you said, but what we try to do is make sure by brand we have exciting collaborations every season. We are quite aware of what we had last year. And also, it is interesting to watch some of the names we have had for a long time continue to outperform. You know, and those collaborators work hard with us to bring new and exciting things to the customers that they already attracted. And in many cases, with these collaborations, whether it is Emma Chamberlain or Love Shack fancy or we tend to sell out quickly. It becomes an opportunity with the next season to bring in and have more stock again for those customers But the other thing that is important is that the work that we are doing on the storytelling and the channel execution is helping not only it is it is not just the newness, it is the core. So the core product is being lifted by the newness strategy but also by the channel strategies and the storytelling strategies. So we are seeing it not in just 1 category. You know, we look at newness year on year. We look at, you know, non comp newness that was you know, not new this season, but new last season. We look at core, we age the core, and we call that our layer cake. And we are thrilled to see strength and improvements across the layer cake. And when you have newness like we do that is working, it is also exciting because in the home furnishings business, know, different than fashion business, you can really build on it. So you start to see a new trend, You run out of some of the key things that you know, sold quickly, and then you can continue to chase the inventory, but also develop products in the aesthetic new aesthetic that is working. And I am I am really excited to tell everybody we are seeing that what we thought was gonna work is working and works out of build on it for years to come. Thank you. Operator: Your next question comes from the line of Peter Benedict with Baird. Peter, your line is open. Please go ahead. Analyst: Results. The acceleration in Pottery Barn is quite impressive. And I know you spoken to initiatives in the past around improving DTC and even some of the imaging. But maybe could you unpack what you saw in Q2 specifically that allowed for some of that healthy acceleration? Laura J. Alber: I would love to. We are seeing improvement across both channels, but in particular DTC, which was lagging a bit as you mentioned, and we have been very focused on product discovery, inspiration, and storytelling there. We have we have improved the photographic layer both with AI and our own you know, in real life shots. And have really you know, if you have looked at the fall assortment, the fall photography, you can see a warrant to Pottery Barn that is very dreamy. And very relevant and very much what you think about when you think of the best pottery barn in your, you know, your mind's What does it look like? And I think you start to see that in the film that we are showing the customers. The furniture category is has really improved. Which is a big part of the business, and we are we are thrilled to see that. We have worked on multistep finishes on our woods and authentic materials and bringing back some more quirky décor and patterns and know, I think when you go and you go to the stores right now, and you go online, you see a brand that has incredible design and quality, and the prices are better than the It really right now, my opinion, you start to see what we have been talking about when we say going back to our heritage aesthetic. And, you know, the other thing that is exciting is that, you know, that we mentioned the, collaborations. We are launching them all the time. So we launched fall, and then weeks later, we just launched our new Kravitz Design. Please go look at it, especially if you look at it, on social. You will see, the depth of color and know, fabrication across categories that Kravitz the Kravitz Design product offers. And then in terms of, stores, you know, the other thing that is exciting is our new stores are really performing. Our remodeled our repositioned stores are really performing, and that is another part of the flywheel. So in total, between iconic product introductions and better storytelling and better DTC you know, I think that is why we are starting to see the better results. And as I said earlier, is much as we are pleased with it, it is a lot of there is a lot more work to do. We look at the stack on a multiyear basis, We expect more. So that is what we are focused on. We are not, you know, doing round off saying we have hit it. We are saying we are on the right path, and we expect more. Okay. that is great. Thank you. Analyst: Second follow-up question for Jeffrey within the guidance. The EBIT margin guidance that you have raised both at the bottom end and the top end, Could you give us the puts and takes around that increase? Is it simply a function of the sales increase and the corresponding leverage, or are there other good guys and bad guys factored in there? Jeffrey E. Howie: Yeah. Good morning. You know, we raised our operating margin guidance to 17.8 to 18.2%. Reflecting the strength and momentum in our business. it is not just about the top line. Like you said, there is a lot of puts and takes underneath. there is 3 points I wanna make on gross margin for everybody to consider for the back half. 1 is Q2 was the peak impact of tariffs on our margins. We expect the pressure to moderate over the back half as we begin to comp the tariffs we paid last year. Remember, they go comp mid Q3 and are essentially comp in Q4. Second thing is higher oil prices. Fuel costs are impacting our overall gross margin. Absorbed those in both Q1 and in Q2. And our guidance embeds those higher fuel costs all through the back half. And finally, I wanna remind everyone of the impact of shrink accrual benefit from last year. So be a good guy in Q3, we come up against about a 150 basis points in Q4 that we have to anniversary that will eat up some of the good guy from lapping the tariffs. But here's the thing. We are not including any benefit from the AIPA tariff refunds in our guidance. This is purely an operational guide. A purely an operational raise on our guide. Very good. Thank you so much. Operator: To reach as many analysts as possible, we would like to advise to limit yourself to 1 question only. Your next question comes from the line of Christopher Horvers with Bank of America. Christopher, your line is open. Please go ahead. Analyst: Thanks, team. Good morning. I just wanna follow-up on the tariff refunds. How are you thinking about deploying the residual refunds outside of what you already communicated in terms of reimbursing some of the vendors and increasing the 4 zero 1 k contributions. Are there other revenue driving initiatives that you are planning doing to deploy the residual funds? Laura J. Alber: Thank you for the question. You know, I wanna say, first of all, we are so appreciative to have the money back and to be able to reward our employees with part of it. They have done such an amazing job. It was a very chaotic year. Moving products all over the world. And, trying to resource them and, teams did a great job also in supply chain offsetting some of these costs that the tariffs you know, forced upon us. So we are thrilled about that. It means a lot to the people. Who have done the work. The second piece is our vendor community has always been our they have been our key partners. And they have been there for us. We have known them for years. We have built our business together. And we thought it was really the right thing to do They gave us discounts, and when we got the money back, we gave them their money back. And that is, a big deal that I think is gonna really just continue to further solidify the special partnership we have with them versus our competitors. In terms of the rest, you know, we are always investing in our business. We look at ROI. You know, we have a very high ROIC. And we are always investing where we see returns. And it is not as if we have felt starved in doing so. We have we have been able to fund the initiatives that we see are important. And so there is not like some big step up thing that we have not done already. It more gives us more flexibility. We love cash. So why not have some more? And who knows? We may decide to do something, but right now there has been no other decisions made. To deploy any of it in any other way than we would normally. Which is just looking at the best-returning initiatives that we have to address. Your next question comes from the line of Michael Lasser with UBS. Operator: Michael, your line is open. Please go ahead. Michael Lasser: Good morning. Thank you so much for taking my question. It sounds like based on Jeffrey's comments that we should be modeling gross margin degradation in the back half of the year. So a, is that true? And b, as you look to 2027, presumably, you are going to be expecting that it is gonna be an algorithm year. Where do you think the model can generate expansion in the year ahead especially as you are gonna be lapping some of these complicated gyrations with tariffs and other factors this year? And is it really coming from more full price selling, the operating cost, or other areas. Thank you so much. Laura J. Alber: And Yes, Michael. I am gonna start with just the future. We are not here to give guidance next year. You know that. But I will tell you that we are very confident because our growth strategies are working, and so our operational strategies and there is still a lot of runway. When we think about the world of home furnishings and the TAM that is out there, the reality is that no 1 owns much share. We are not that big; there is a lot more room. If we have 2 percentage point more market share gains, it is 16 billion more. Right? We are 8 billion today. Ish. So imagine if we continue to gain share, which is what we are doing now, how much there is for us to gain out there with our amazing brands. Anybody else has a better portfolio of brands you know, aesthetically and across price points and strength and multichannel, and we have enough new brands also that are growing double digit, as we said earlier, to keep fueling the growth. We will come back to you on what that growth number looks like for next year, but let's just hold off on a specific range. On the bottom line, as I said, there is still a lot of room in supply chain. We are seeing opportunity also with, you know, AI implementation in service. And, when I think about maybe the biggest opportunity at all of all, it is something, that we have not really put enough we have we have not really deployed much against at all, which is our inventory accuracy. So as we think about the future, there is know, we told you we are gonna improve our customer metrics. We have been at it for years. We told you we are going to reduce our promotional selling. We have. that is really been a huge driver of margin. But as I look to the future, I see I see very big buckets, including inventory accuracy, more supply chain, more right price selling, and then, of course, leverage. On the base with sales. Okay. So, Jeffrey, back to the back half. Jeffrey E. Howie: The back half and the question about modeling the back half. As you know, Michael, we do not guide the specific lines, and we guide operating margin guidance, which we have raised both ends with our higher guidance today. And I think something I would point out is there is a lot of puts and takes between gross margin Certainly, the tariff impact will lessen over the back half of the year. We still have fuel prices. A way to shrink benefit. We also know the levers that we pull in SG&A to make results happen. The thing I would point out is if you take a look at the midpoint of our higher guide, you will notice it is actually slightly above last year's operating margin for the back half. Understood. Good luck. Thank you. Thanks. Operator: Your next question comes from the line of Chuck Grom with Gordon Haskett. Chuck, your line is open. Please go ahead. Chuck Grom: Thanks. Great. Thanks very much. Great quarter. Like you said, great gained a lot of market share in the quarter, but there is been a lot of volatility across your peer group. So I was hoping you could speak to the cadence of your comp throughout the quarter. And then when we think about the acceleration in unit growth next year to 1% to 3%, can we think about the banners you are going to look to lean into, and can you also double-click on when we would expect to see more store growth at Rejuvenation that you guys seem very excited about? Thank you. Jeffrey E. Howie: Yeah. Good morning, Chuck. So on cadence, I think everyone knows that we do not provide specific cadence by month. The fact is our comps accelerated from Q1 to Q2 on both the 1 and 2 year basis. If you if you zoom out, we have been positive comp for 6 years, I mean, sorry, 6 straight quarters. And, you know, it is been it is been pretty steady performance. So it is less about the month to month cadence of the comp and more about the consistency of the comps over time on both the 1 and 2 year basis. Pivoting to the store count question, the store count overall will end this year essentially flat, but we will see as we mentioned in our prepared remarks, 70 basis points of growth from new stores throughout the year. Minded everyone that most of our leases terminate at the end of every fiscal year, so there will be a number of closures at the end of this year. And then this store count starting in fiscal year 27 and for each year after that, we anticipate growing our store count by 1 to 3% per year in units. And we see this across all our banners. We have a lot of opportunity. there is opportunity in our big brands like Pottery Barn. there is still markets that we are not in. As well as West Elm. there is places that we can infill stores, major markets for these stores, even the Sonoma brand. Some of the smaller brands like kids and teen, there is still places that we are underrepresented. And in terms of rejuvenation, we will slowly and methodically build out the Rejuvenation brand. it is important to us to get the right location. And to build it over time. We still believe that brand can grow into a billion dollar opportunity and we believe retail is 1 piece of that puzzle to get them to a billion dollars. But we will do so very strategically and methodically. Operator: Your next question comes from the line of Jonathan Matuszewski with Jefferies. Jonathan, your line is open. Please go ahead. Analyst: Great. Good morning, and thanks for the time. My question was on the Sonoma banner, highest comp this quarter among the brands and also the hardest comparison. You mentioned some of the tactical things you are doing with collaborations and book signings and things like that. But maybe we could zoom out and bigger picture here. Are you seeing shifts in demand drivers for that kind of cookware/industry category? And as you think about your outperformance versus the industry, any context in terms of, you know, it being driven by new customer acquisition, or is this, you know, higher wallet share from existing shoppers? Just, you know, looking for more color in terms of the industry and share gains for the Sonoma banner? Thanks. Laura J. Alber: Yeah. Thanks, Jonathan, for noticing the great results in Sonoma. The team's been really delivering really across all categories, all kitchen divisions, positive, with food showing some nice improvement from Q1. Then the other thing that is very small but exciting is we are finally seeing some fantastic results from Williams Sonoma Home. Meaningful results this quarter with both furniture improving, but also littles improving, which drives customer acquisition. So, in terms of product and innovation, we have a lot more, exciting launches to come. We have some key launches that we are building upon and we have had these collaborations. Hill House was great. You know, we have Oakville Grocery. We have done some really great stuff with Le Creuset recently, and you know, we have also been very involved with community and showing up in places where taste makers are And, you know, 1 of the collaborations that I love that is not new, but has a new layer on it is Sanderson that you should look at. it is really beautiful. You know, and so as you look across, the product innovation, you see a lot of wins. And then when you look at the customer and brand initiatives, whether it was Bottle Rock or you know, what we did at Nantucket by Design or No Kid Hungry, We are very involved in being where our customer is and where the chefs are and there is a lot of good vibes going with the Williams cinema brand that I think you cannot put a price on. In terms of how people see the brand and their excitement about coming into our stores. Thank you. Operator: Your next question comes from the line of Christina Fernandez with Telsey. Christina, your line is open. Please go ahead. Cristina Fernandez: Hi. Good morning, and congratulations on a good quarter. I wanted to go back to the collaborations, which seem a big driver of market share gains along with everything else. But is there a way you could size for us the impact of collaborations in the business and how that has changed over the past couple of years or year over year. Whether it is the number of collaborations you are doing or the percentage of sales. Just trying to get a sense of their importance to the business and the brands. Thank you. Laura J. Alber: Yeah. I would say it is the icing on the cake. You know? it is not it is not gonna make the comp in and of itself. But it certainly brings it is a noticing value; It brings new customers in when done right. You know? They get to we get to attract their customer base because the collaborators have a following that may not necessarily be our following. So that is good both short term and long term. And Emma Chamberlain, for example, has brought younger customers to the West Elm brand, which is fantastic. And not to mention, you know, she had such great clever product that sold at multiple price points from furniture to décor that everyone could come in and get a piece of it. And so, you know, you see it hit on new customer acquisition. You see it be a traffic driver. and the social buzz and it is sales, you know? I mean but it is not, you know, as I talked about that layer cake, and the way it breaks down, it is it is not it is not the bulk of the comp. It is in some businesses bigger. So in kids and teen, which have been at it the longest. Have some mega collaborations that do very well. Roller Rabbit and LoveShackFancy and Harry Potter, which just came back. You know, these are these are big long term developed collaborations, but the other brands are just getting going. And it is so fun also for our internal teams to be able to think about a different aesthetic to the brand or something they might not have designed. it is just it is it is exactly what it sounds like it is, which is it is fun. it is fun for us, and it is fun for the customer, and it is it is resulted in good numbers. Operator: Your next question comes from the line of Steven Zaccone with Citi. Steven, your line is open. Please go ahead. Steven Zaccone: Thank you. Good morning. Thanks so much for taking my question. Congrats on the strong results. Could you talk about the second half outlook a bit more You clearly described the second quarter as an acceleration. Seems like the high end of the full year guide embeds a decel in the back half to get there. Maybe just talk through some of the puts and takes for the second half outlook from a sales perspective. Jeffrey E. Howie: Yeah. Sure, Steven. So, you know, we raised our top line guidance from comps of 2% to 6% to comps of 4% to 6.5%. We have a strong product lineup, as Laura's been talking about, exciting collaborations to drive buzz, and a lot of momentum in our growth initiatives. And as you know, we do not guide the specific quarters. I would just point to the framework as I usually do. The midpoint of our range reflects a continuation of our current 1 and 2 year trends. The high point of the range reflects some continued acceleration in those trends, driven by strong traction in our initiatives. And if we have a really strong holiday, we would wind up there. The low end of the guide kind of paints just less traction in our initiatives and maybe a softer holiday. But overall, I think the punch line is our business is strong. It accelerated from Q1 to Q2. And as a result, we have raised our guide. Operator: Next question comes from the line of Max Ryklenko with TD Cowen. Max, your line is open. Please go ahead. Max Rakhlenko: Great. Thanks a lot, and congrats on all the success. So my question is on B2B. Given the very impressive growth in both contract and trade, are you internally moving up the target for when the channel can reach $2 billion in revenues? And if you are ready to share that publicly when you think that could occur, And then did I miss this, but did you provide growth in both contracts as well as trade this quarter? Thanks. Jeffrey E. Howie: Nice try, Max. I think everyone knows B2B has been 1 of our key initiatives and I just wanna recognize the b 2 b team for their outstanding contribution, particularly this quarter. Delivered overall double digit growth at 14 and a half percent. In fact, it was our largest quarter largest volume quarter to date. To answer your question, contract grew 20% and trade grew 12%. So we are seeing both spectrums growing. Think everyone knows our focus is on the contract side of the business. It accounted for 36% of the b 2 b business, and we are just getting started. We continue to gain momentum across hotels, restaurants, multifamily, residential, education, sports, and entertainment. We do continue to see a clear path to grow 2 billion over the next several years. We have not given a timeline to that. We just continue to capture market share in the $80 billion fragmented b 2 b market. Okay and thank you. Got it. Thank you. Laura J. Alber: Before we end the call, I thought, I am gonna ask a question to Sameer, who is in the room. And because he is doing so many exciting things to support both the sales and the profits, what are you excited about in technology for Williams-Sonoma in the back half? Sameer Hassan: Yeah. Yeah. Thank you, Laura. Let's let's talk about AI because the results that we saw this quarter frankly, it is pretty incredible. And I think it is a testament and proof that our strategy is working. And we have talked about this before, but what we are doing is we are taking our advantages. Category authority, decades of expertise, proprietary tech platforms, secret sauce. Which is rich first party data that nobody else has. Connecting it with AI, and we are starting to drive some really, really impactful results. I will give you a few examples from the quarter. So all of our Williams Sonoma assistant is a great example. So expanded her capabilities. We brought her AI intelligence to customers while they are shopping. it is not just a chatbot. We are bringing this AI intelligence. We are connecting with the customers where they are in the shopping experience. The results are starting to show. Since the beginning of the year, engagement with Oliver is up 700%. Revenue is up 620%. And customers who engage with Oliver convert at 3x a higher rate. We took the same approach with the Pottery Barn brands with auto, which we are very excited to say we launched this month. OTTO will help you narrow down the right piece for your space, coordinate items that go together, soap and a rug. It works room by room. He knows rug sizing, outdoor materials, the way that our associates do. When the conversation calls for it, it will book you a design appointment or hand you straight to a Pottery Barn designer. Exciting capabilities and it is early, but the early results are following the same patterns as Oliver's. Almost or actually over 70% of engagements with Otto are able to be resolved without handing you over to a person. Similarly, excuse me, ecommerce site personalization is accelerating. A visit where we personalize the experience now generates roughly 9x the revenue of the visit of an average visit. Last year, that was 2x. So you are seeing that acceleration again. And everything I have talked about so far is customers, is customer facing. We are seeing similarly compelling results across supply chain, inventory, merchant corporate operations. Really, really exciting stuff, and we will keep, building on all this in the back half of the year. Thank you, Sameer. Laura J. Alber: Okay. Well, we are now headed off to our favorite season. Is the holiday season, and we are looking forward to having a strong holiday and talking to you guys on the other side of it. Thank you so much for your continued support. It means the world to us, and please go shop our store. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Williams-Sonoma, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Williams-Sonoma wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,710!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 31, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Williams-Sonoma. The Motley Fool has a disclosure policy. Williams-Sonoma (WSM) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Dollar General Corporation? Here are five stocks we like better. Many retailers beat earnings estimates last week, but one-time tariff refunds inflated results and masked underlying weakness in some cases. Dollar General and Best Buy delivered high-quality beats, with strong comp sales growth that held up even after stripping out minimal tariff-refund contributions. Williams-Sonoma outperformed a weak home furnishings sector with accelerating comp sales and raised margin guidance that excluded any assumed tariff refunds. The retail sector was one of the biggest winners in earnings season, which was especially evident in some of the reports that rolled in last week. Eight major retailers reported earnings within 48 hours, and nearly all beat on headline numbers. But headline numbers rarely tell the story, and this quarter was especially deceiving. Tariff refunds have done to earnings what steroids did to baseball players in the 1990s, and these juiced results can mask underlying weakness. Take Abercrombie and Fitch Co. (NYSE: ANF), for example, which soared more than 35% after its Q2 release on an impressive double beat and buyback increase. But the company accumulated about $100 million in tariff refunds during the period, boosting margin by 790 basis points (bps) and adding $1.75 to the $4.12 earnings per share (EPS) figure. Another $20 million in refunds is expected in Q3, but comps were weak, especially at Hollister. → Boeing's $131B F-15 Win: Mach 1 Momentum or Just Altitude? To find the real winners, we need to screen out earnings juiced by tariff refunds. That means focusing on comp sales and traffic instead of EPS and revenue, and parsing true operational improvement from one-time windfalls. Cash-strapped consumers trading down to discount stores has been a boon to Dollar General Corp. (NYSE: DG), which seems to impress the market every time a conference call rolls around. → From SaaS-pocalypse to Perfect Storm: Workday’s AI Growth Story Strengthens In fiscal Q2 2027 results released Aug. 27, the company once again beat top- and bottom-line estimates, with same-store sales (i.e., comps) up 3.5% and growth spread out across all four merchandise categories. Foot traffic was up for a fifth consecutive quarter, and gross margins expanded by 127 bps. → 3 Retail Stocks to Watch After a Big Consumer Earnings Week Crucially, the EPS beat wasn’t reliant on tariff refunds. The company earned $2.48 per share in the period, and management estimates that only 25 cents of that figure came from tariff refunds. Removing the one-time tariff boost leaves EPS of $2.23 per share, still well above the expected $2.01 and nearly 17% higher than fiscal Q2 2026’s number of $1.86. Management also raised full-year guidance on revenue, comps, and EPS. DG shares jumped as much as 12% following the earnings call before surrendering most of those gains later in the day. But the bounce off the May lows is confirmed, and the Relative Strength Index (RSI) refuses to dip much below 50. The stock is up 16% in the last three months, and a potential Golden Cross on the 50-day and 200-day moving averages could be the next technical catalyst. Best Buy Co. Inc. (NYSE: BBY) posted one of the better quarters in the retail sector but fell 4% after the release, despite only $34 million in tariff refunds. High memory costs continue to weigh heavily on computing prices, and management expects this tension to persist through year-end. But Best Buy’s fiscal Q2 2027 results deserve a closer look, since the beat was the cleanest in the cohort. EPS and revenue both easily beat expectations, but the eye-popping number was comps, which grew 4.1% year-over-year (YOY) versus management’s expectation of 1%. Despite soaring memory costs, computing and home theater product sales continued to grow, indicating that consumers are still willing to pay up for big-ticket home entertainment. Management lifted full-year comp sales guidance to a 1.9% to 3% range, and EPS to $6.70 to $6.90. BBY shares were up nearly 30% year-to-date (YTD) before earnings, so investors may have been looking for reasons in the report to hit the cash register. But this could be an opportunity for new investors to ride some technical and fundamental tailwinds. The stock is bumping up against its 50-day moving average, which has been a support area since the Golden Cross formed in July, and the RSI is back to its August lows. Few areas of the retail sector have seen more divergent consumer attitudes than the home furnishings industry. According to the most recent Census Bureau Retail Sales report, furniture and home furnishing sales in 2026 fell 1.7% from the same 7-month period last year. But not every home goods store is feeling the heat. The K-shaped economy is alive and well in this space, and Williams-Sonoma Inc. (NYSE: WSM) continues to grow comps while many competitors struggle. Williams-Sonoma reported fiscal Q2 2026 results on Aug. 26, and (of course), beat EPS and revenue estimates. But two numbers stand out in the report. First, comp sales grew 6.2% YOY, accelerating considerably above Q1’s 4.8% number. With furniture sales basically flat in 2026, comp growth of this magnitude shows Williams-Sonoma is taking massive share from competitors struggling to get traffic in the door. Second, management raised full-year operating margin guidance to 17.8% to 18% and said it did not factor in any tariff refunds, implying operational efficiency gains will do the heavy lifting. The WSM chart has a similar setup to BBY, with investors taking profits following an excellent quarter and a YTD run-up of over 30%. But the Golden Cross hints that the uptrend will take more than a little profit-taking to break, and the 50-day SMA could be another entry opportunity for new investors. The RSI is teetering near 50, but still hasn’t submerged into the bearish zone underneath. The article "3 Retail Stocks to Watch After a Big Consumer Earnings Week" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Discussing Williams-Sonoma, Inc. (NYSE:WSM) on the August 26 episode of Mad Money, Jim Cramer said: Williams-Sonoma, Inc. (NYSE:WSM) reported second-quarter revenue of nearly $1.96 billion, up 6.7% year over year, while comparable-brand revenue increased 6.2%. Non-GAAP diluted earnings per share were $2.10. Williams Sonoma comparable sales rose 7.6%, West Elm rose 6.4%, and Pottery Barn rose 5.1%. Management raised fiscal 2026 guidance to revenue growth of 4.7% to 7.2%, comparable-brand revenue growth of 4% to 6.5% and non-GAAP operating margin of 17.8% to 18.2%. CFO Jeff Howie said the outlook assumes no housing recovery or material change in housing turnover or interest rates. That makes the company's market-share gains important. Management said the home-furnishings industry was essentially flat. Howie also said the company increased full-price penetration without discounting. The problem is margin pressure. Non-GAAP gross margin fell to 45.5%, down 160 basis points year over year, while non-GAAP operating margin was 17.3%. Tariffs reduced merchandise margins by 230 basis points. Management expects tariff pressure to moderate after the second quarter, which it described as the peak period for tariff costs. But higher oil prices are still affecting transportation and supplier costs, leaving the timing of a full margin recovery uncertain. Williams-Sonoma, Inc. (NYSE:WSM) is gaining market share and growing without relying on a housing recovery, but sales growth has not yet translated into higher non-GAAP margins. If tariff-related pressure takes longer to ease, or other costs remain elevated, earnings could grow more slowly than revenue. Institutional positioning has improved. According to Insider Monkey's tracking of more than 1,000 hedge funds, 48 hedge funds held WSM in the second quarter, up from 39 in the first quarter. Short interest points to measured caution rather than an aggressively crowded bearish trade, at 4.55% of the public float. Williams-Sonoma, Inc. (NYSE:WSM) is gaining market share, growing without relying on discounting and raising guidance. But the stock now requires margin recovery to accompany that sales growth. Cramer may be right that the initial earnings-day selloff was misplaced. It remains to be seen whether the company's future earnings can grow fast enough to justify what investors are already paying for that execution. While we acknowledge the potential of WSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Jim Cramer Breaks Down McDonald's (MCD) Q2 Earnings and Execution Flaws and Jim Cramer Backs NVIDIA (NVDA) Compute Bonds. Disclosure: None. Follow Insider Monkey on Google News.

This article first appeared on GuruFocus. Revenue: Q2 net revenues were $1.96 billion, up 6.7% year-over-year. Comparable Brand Revenue Growth: Comp accelerated to 6.2% from 4.8% in Q1. Operating Margin: Delivered an operating margin of 17.3%. Earnings Per Share: Diluted EPS was $2.10, up 5% year-over-year. Gross Margin: Q2 gross margin was 45.5%, down approximately 160 basis points versus last year. Merchandise Margins: Declined approximately 230 basis points due to tariff impacts. SG&A: Ran at 28.2% of revenues, approximately 100 basis points of leverage versus last year. Brand Comps: Pottery Barn comped 5.1%, Williams-Sonoma comped 7.6%, West Elm comped 6.4%, and children's businesses comped 3.5%. B2B Growth: Grew 14.5% in Q2 with record-breaking demand. Channel Comps: E-commerce comped up 6.5% and retail up 5.5%. Merchandise Inventories: $1.45 billion, up 1% to last year. Capital Expenditures: Invested $58 million in Q2; full-year guidance unchanged at approximately $275 million. Dividends: Paid $90 million in dividends, a 15% increase year-over-year. Share Repurchases: No shares repurchased in Q2; year-to-date repurchased $288 million, with approximately $1.1 billion remaining under authorizations. Tariff Refunds: Received $200 million in IEPA tariff refunds; recognized $174 million into income in Q2. FY2026 Guidance: Raised outlook to comparable brand revenue growth of 4% to 6.5% and operating margin of 17.8% to 18.2%. Is WSM fairly valued? Test your thesis with our free DCF calculator. Release Date: August 26, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strong Q2 performance with comp sales up 6.2% and total revenue growth of 6.7%, exceeding expectations. All brands delivered positive comps, including significant improvement at Pottery Barn (5.1% comp) and continued strength at West Elm (6.4% comp). B2B segment grew 14.5% with record-breaking demand, driven by strength in both contract and trade. Raised full-year guidance for both top-line and bottom-line, reflecting confidence in momentum and execution. AI initiatives, such as the Olive and Otto shopping assistants, are driving higher engagement and conversion rates, with Olive engagement up 700% and revenue up 620%. Gross margin declined 160 basis points year-over-year due to tariff impacts, with merchandise margins down 230 basis points. Higher oil prices continue to pressure transportation and supplier costs, impacting overall profitability. The company faces ongoing macroeconomic uncertainty, including war, rising interest rates, and a stagnant housing market. Q4 will face a challenging comparison due to a 150 basis point benefit from a shrink accrual last year, which will partially offset tariff relief. Inventory levels are up only 1% despite revenue growth of 6.7%, indicating potential supply constraints and inability to fully meet demand. Q: Can you unpack what drove the significant acceleration at Pottery Barn in Q2, particularly in the DTC channel?A: Laura Alber, President and CEO, attributed the improvement to a multi-faceted strategy. The company focused on enhancing product discovery and storytelling on the DTC platform, improving the photographic layer with both AI and new in-house shots to create a warmer, more aspirational brand feel. The furniture category, a large part of the business, saw significant improvement with new multi-step finishes and authentic materials. This, combined with better pricing versus competition and the performance of new and remodeled stores, is driving the brand's momentum. Alber emphasized that while pleased, the company sees this as a multi-year path with more work to do. Q: How are you thinking about deploying the residual tariff refunds outside of the vendor reimbursements and 401(k) contributions?A: Laura Alber stated that the company is appreciative of the refund and felt it was right to reward employees and reimburse vendor partners for their support during the tariff crisis. Regarding the remaining funds, there are no specific new deployment plans. The company will continue its standard practice of investing in the highest-returning initiatives, and the refund provides more financial flexibility. Alber noted that the company has not felt starved for capital and will continue to look for the best ROI opportunities. Q: Should we model gross margin degradation in the back half of the year, and where do you see the model generating expansion in 2027?A: CFO Jeffrey Howie clarified that while they don't guide specific lines, the midpoint of their raised operating margin guidance is slightly above last year's back-half performance. The puts and takes include moderating tariff pressure, offset by higher fuel costs and a difficult comparison against a shrink accrual benefit in Q4. Laura Alber added that looking to the future, there is significant runway for growth and margin expansion through continued market share gains, supply chain efficiencies, AI implementation, and a major focus on improving inventory accuracy, which they have not yet fully deployed against. Q: Can you speak to the cadence of your comps throughout the quarter and the plans for the 1% to 3% store count growth next year?A: CFO Jeffrey Howie stated that while they don't provide monthly cadence, comps accelerated from Q1 to Q2 on both a one and two-year basis, marking six straight quarters of positive comps. On store growth, the company will end fiscal 2026 essentially flat, but expects 1% to 3% unit growth per year starting in fiscal 2027. This growth will be across all banners, including Pottery Barn, West Elm, and Williams Sonoma, with opportunities to infill major markets. For Rejuvenation, the company will build out the brand slowly and methodically, focusing on the right locations to achieve its goal of becoming a billion-dollar brand. Q: Can you provide more color on the Williams-Sonoma brand's outperformance and whether it's driven by new customer acquisition or higher wallet share?A: Laura Alber highlighted the brand's strong results across all kitchen divisions, with positive food trends and exciting results from Williams-Sonoma Home. The strategy includes a robust pipeline of product innovation and collaborations, such as Hill House and Sanderson, which drive buzz and new customer acquisition. The brand is also increasing its presence at tastemaker events like Bottlerock and Nantucket by Design, which builds brand equity and excitement that translates into store traffic and sales. Q: Can you size the impact of collaborations on the business and how that has changed over the past couple of years?A: Laura Alber described collaborations as the "icing on the cake," noting they are not the bulk of the comp but are crucial for attracting new customers and generating social buzz. Collaborators bring their own following, which helps with customer acquisition, as seen with Emma Chamberlain bringing younger customers to West Elm. While some brands like Kids and Teen have long-term mega collaborations, other brands are just getting started. The strategy is to have exciting collaborations every season, and they are seeing success in selling out quickly, creating opportunities for future seasons. Q: Can you discuss the puts and takes for the second-half sales outlook?A: CFO Jeffrey Howie explained that the raised top-line guidance reflects the strong momentum in the business. The midpoint of the range assumes a continuation of current one and two-year trends, while the high end assumes continued acceleration driven by strong traction in initiatives and a strong holiday season. The low end contemplates less traction and a softer holiday. Overall, the business is strong, and the guidance raise reflects the acceleration from Q1 to Q2. Q: Given the impressive growth in B2B, are you moving up the target for when the channel can reach $2 billion in revenues?A: CFO Jeffrey Howie acknowledged the B2B team's outstanding performance, with contract growing 20% and trade growing 12% in Q2. The company continues to see a clear path to grow to $2 billion over the next several years but has not provided a specific timeline. They are focused on capturing market share in the fragmented $80 billion B2B market, with a particular focus on the contract side, which accounted for 36% of the B2B business. Q: What are you excited about in technology for the back half of the year?A: Sameer Hassan, Chief Technology and Digital Officer, highlighted the impact of AI on the business. The AI-powered shopping assistant, Olive, has seen engagement up 700% and revenue up 620% since the beginning of the year, with customers converting at three times the rate. They also launched Otto for the Pottery Barn brands, which is showing early success with over 70% of engagements resolved without human intervention. E-commerce personalization is also accelerating, with personalized visits generating roughly nine times the revenue of an average visit, up from 2x last year. These AI initiatives are being applied across customer-facing and internal operations, driving significant results. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Williams-Sonoma, Inc. WSM posted second-quarter fiscal 2026 adjusted earnings of $2.10 per share, up 5% year over year and above the Zacks Consensus Estimate of $2.05 by 2.4%. Net revenues rose 6.7% to $1.96 billion and beat the consensus mark of $1.91 billion by 2.5%.Comparable brand revenues increased 6.2%, with every major brand posting positive growth. Broad-based brand gains and supply-chain efficiencies supported the quarter, while tariff costs weighed on merchandise margins. Our model predicted consolidated comps growth of 4% for the fiscal second quarter.However, WSM shares lost about 5% following the earnings release, likely reflecting investor concerns about profitability. Non-GAAP gross margin and operating margin contracted year over year, as lower merchandise margins, primarily due to tariff-related costs, pressured results. Investor sentiment may also have been tempered by the company’s outlook, which assumes that current tariffs will remain in place and oil prices will stay elevated for the remainder of fiscal 2026, potentially sustaining cost pressures. Pottery Barn remained the largest revenue contributor, generating $770.8 million in the quarter. Comparable brand revenues for Pottery Barn increased 5.1% from the year-ago period compared with 1.1% growth in the prior-year quarter.West Elm delivered $496.3 million of revenues, with comps up 6.4% compared with 3.3% a year ago. Williams Sonoma, including Williams Sonoma Home, generated $268.8 million and posted 7.6% comparable growth compared with 5.1%. Pottery Barn Kids and Teen recorded $297.4 million in revenues, while comps rose 3.5%. The Other category contributed $126.4 million. Non-GAAP gross profit totaled $891.6 million, with gross margin of 45.5%, down 160 basis points (bps) year over year. Lower merchandise margins reduced the rate by 230 bps, primarily because of tariff costs. Supply-chain efficiencies contributed 30 basis points of benefit, while occupancy leverage added 40 bps. Our model predicted a 180-bps year-over-year decline in the gross margin to 45.3% for the fiscal second quarter.Non-GAAP selling, general and administrative expenses were $553.2 million, up 3.1% year over year. The SG&A rate fell 100 bps to 28.2%, helped by 120 basis points of employment expense leverage. Higher general and advertising expenses each added 10 bps. Williams-Sonoma, Inc. price-consensus-eps-surprise-chart | Williams-Sonoma, Inc. Quote Non-GAAP operating income was $338.5 million, up from $328.06 million a year ago. The adjusted operating margin was 17.3%, down 60 bps from 17.9% in the prior-year quarter as gross-margin pressure offset expense leverage. We anticipated the adjusted operating income to drop 3.9% year over year and the operating margin to contract 140 bps to 16.5% for the fiscal second quarter.On a GAAP basis, operating income was $448.8 million and operating margin reached 22.9%. During the quarter, WSM recognized $167.8 million of tariff refund income as a reduction to cost of goods sold, partly offset by $47.5 million of vendor concessions and a $10.00 million employee recognition cost. The company excluded these items from non-GAAP results. It also excluded $6.4 million of interest income tied to the tariff refund. Cash and cash equivalents were $1.03 billion at Aug. 2, 2026, compared with $985.8 million a year earlier. Merchandise inventories were $1.45 billion, up 1.0% year over year, net of $29.3 million of deferred tariff refund income recorded as a reduction of inventory. The deferred amount is expected to be recognized as a reduction to cost of goods sold in the third quarter.For the first 26 weeks of fiscal 2026, net cash provided by operating activities totaled $695.9 million, up from $401.7 million in the year-ago period. WSM repurchased $287.8 million of common stock and paid $175.4 million in dividends over the same period. Purchases of property and equipment were $116.4 million. Williams-Sonoma raised its fiscal 2026 guidance after strong year-to-date performance. The company now expects annual net revenues to increase 4.7% to 7.2%, with comparable brand revenue growth of 4.0% to 6.5%. Non-GAAP operating margin is projected to be between 17.8% and 18.2%.The outlook assumes currently imposed tariffs remain in place for fiscal 2026, including Section 232 tariffs and existing and newly announced Section 301 tariffs. It also assumes oil prices stay elevated for the rest of the year and no benefit from tariff refunds or related interest. WSM expects annual interest income of approximately $25 million and an effective tax rate of approximately 26% on a non-GAAP basis. Its long-term targets remain mid-to-high single-digit annual net revenue growth and an operating margin in the mid-to-high teens. Williams-Sonoma currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Home Depot, Inc. HD has delivered solid second-quarter fiscal 2026 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. Adjusted earnings were $4.92 per share, up 5.1% year over year from $4.68. The figure topped the Zacks Consensus Estimate of $4.71.Home Depot reaffirmed its fiscal 2026 outlook, calling for total sales growth of 2.5-4.5% and comps growth of flat to 2%. The company anticipates earnings per share to be flat to up 4% from $14.23 in the year-ago quarter. Meanwhile, adjusted earnings per share are also projected to be flat to up 4% from the $14.69 reported in the year-ago quarter.Lowe’s Companies, Inc. LOW reported second-quarter fiscal 2026 adjusted earnings of $4.40 per share, up 1.6% year over year, surpassing the Zacks Consensus Estimate of $4.22. Revenues rose 8.3% to $25,956 million but missed the consensus estimate of $26,135 million.Lowe’s expects fiscal 2026 total sales of $92 billion compared with its prior range of $92-$94 billion. Comparable sales are projected to be flat, versus the previous expectation of flat to up 2%. The revision reflects first-half operating results and current demand trends.Wayfair W reported second-quarter 2026 earnings of 95 cents per share, which beat the Zacks Consensus Estimate of 94 cents. Net revenues for the second quarter of 2026 rose 7.5% year over year to $3.52 billion, surpassing the Zacks Consensus Estimate of $3.47 billion by 1.41%.For the third quarter of 2026, Wayfair expects revenues to grow in the high single digits year over year. Adjusted EBITDA margin is guided in the 6% to 7% range for the third quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report The Home Depot, Inc. (HD) : Free Stock Analysis Report Wayfair Inc. (W) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was broad-based with every brand delivering positive comps, led by the B2B segment at 14.5% and double-digit growth across emerging brands, while Williams-Sonoma and West Elm delivered comps of 7.6% and 6.4% respectively. Management attributed market share gains to a 'layer cake' strategy that combines incremental newness, high-profile collaborations, and a revitalized core product assortment. The Pottery Barn brand saw significant acceleration to a 5.1% comp, driven by improved digital storytelling, higher-quality furniture finishes, and a return to heritage aesthetics. B2B operations reached record volume with 14.5% growth, successfully expanding into high-growth niche markets like cruise ships, senior living, and student housing. Operational success was supported by a shift toward full-price selling and disciplined promotional activity, even as the broader home furnishings industry remained essentially flat. Management highlighted the successful integration of AI assistants, Olive and Otto, which have significantly increased conversion rates and customer engagement through personalized discovery. Supply chain efficiencies and occupancy leverage helped offset approximately one-third of the peak tariff impact experienced during the quarter. Annual guidance was raised to 4% to 6.5% comparable brand revenue growth, reflecting strong first-half momentum and confidence in the upcoming holiday product pipeline. Operating margin guidance was increased to a range of 17.8% to 18.2%, assuming that tariff pressures will moderate in the back half as the company laps last year's costs. The company's outlook assumes no material recovery in the housing market, stagnant housing turnover, and continued volatility in interest rates. Management plans to transition from flat store count to 1% to 3% annual unit growth beginning in fiscal 2027, focusing on infill opportunities and emerging brand expansion. Future margin expansion is expected to be driven by inventory accuracy improvements, AI-enhanced service productivity, and continued supply chain optimization. The company recognized $174 million in income from AIPA tariff refunds, which was excluded from non-GAAP results to maintain a clean view of core operations. Management proactively reimbursed $47 million to vendors who previously provided discounts to mitigate tariff pressures, strengthening long-term supply chain partnerships. A one-time $10 million contribution was made to employee 401(k) accounts in recognition of their efforts navigating the complex tariff environment. Higher oil and fuel prices remain a persistent headwind for transportation costs, with current elevated levels embedded in the full-year guidance. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while they cannot disclose specific names, the back half of the year features a robust cadence of new collaborations across all brands. The strategy focuses on using newness to lift the 'core' product layer, allowing the company to build on successful trends for multiple years rather than following short-term fashion cycles. Jeffrey Howie clarified that while tariff pressure peaks in Q2, Q4 will face a 150 basis point headwind as the company anniversaries a significant shrink accrual benefit from the prior year. The raised margin guide is purely operational and does not include any benefit from the one-time tariff refunds. Beyond vendor reimbursements and employee rewards, the company intends to maintain its high ROIC by investing in existing high-return initiatives. Laura Alber emphasized that the company 'loves cash' and will maintain flexibility, with no immediate plans for a major strategic pivot or unusual spending beyond normal operations. The B2B segment is seeing strong divergence in growth, with contract business up 20% and trade up 12%. Management reiterated a clear path to $2 billion in B2B revenue over the next several years by capturing share in the fragmented $80 billion market, though they declined to provide a specific date.

Interested in Williams-Sonoma, Inc.? Here are five stocks we like better. Sales accelerated broadly: Comparable brand revenue rose 6.2% and net revenue increased 6.7% to $1.96 billion, with every brand posting positive comparable sales and B2B revenue growing 14.5%. Tariffs pressured margins but provided a refund benefit: Gross margin fell 160 basis points to 45.5% as merchandise costs increased, while tariff refunds produced a net approximately $117 million benefit to second-quarter GAAP pretax results. Management expects tariff-related pressure to moderate in the second half. Full-year guidance was raised: Williams-Sonoma now expects comparable revenue growth of 4% to 6.5%, total revenue growth of 4.7% to 7.2%, and an operating margin of 17.8% to 18.2%, supported by market-share gains, cost discipline, and digital tools. Confidence Is Back, But Earnings Show the Consumer Is Being Picky Williams-Sonoma (NYSE:WSM) reported accelerating second-quarter fiscal 2026 sales growth across its brands and channels, raised its full-year revenue and operating-margin outlook, and said its performance reflected market-share gains in a home furnishings industry that was essentially flat during the period. Comparable brand revenue increased 6.2% in the quarter, accelerating from 4.8% in the first quarter, while net revenue rose 6.7% year over year to $1.96 billion. On a non-GAAP basis, operating income increased 3% to $338 million, operating margin was 17.3%, and diluted earnings per share rose 5% to $2.10. → What Rising Delivery Forecasts Say About Rivian's Stock Prospects 3 Retail Winners Using Cash Flow to Stay Ahead The company said its non-GAAP measures exclude income from tariff refunds and related adjustments. Chief Financial Officer Jeff Howie said Williams-Sonoma received $200 million in refunds, including interest, related to tariffs imposed under the International Emergency Economic Powers Act. The company recognized $174 million in second-quarter income from the refunds, including $168 million as a reduction in cost of goods sold and $6 million of interest income. Williams-Sonoma plans to reimburse vendors $47 million for discounts provided to help mitigate tariff costs and recorded a $10 million one-time contribution to eligible employees’ 401(k) accounts. Howie said the net effect was about $117 million of benefit to second-quarter GAAP pretax results. An additional $29 million benefit was recorded as a reduction to inventory and is expected to flow through gross margin in the third quarter as inventory is sold. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? Powerhouse Williams-Sonoma Heading to Fresh Highs in 2026 President and Chief Executive Officer Laura Alber said every brand posted a positive comparable-sales result. Pottery Barn’s comparable sales rose 5.1%, Williams Sonoma increased 7.6%, West Elm grew 6.4%, and the Pottery Barn children’s businesses increased 3.5%. The company’s emerging brands delivered double-digit growth, while business-to-business revenue increased 14.5%. E-commerce comparable sales rose 6.5%, while retail comparable sales grew 5.5%. Howie said growth was driven by market-share gains and occurred alongside increased full-price selling rather than deeper discounting. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding Alber attributed the performance to product newness, collaborations, stronger storytelling, expanded assortments, and higher-quality products. She said the company has focused on offering competitive prices while improving product quality and design. At Pottery Barn, management cited improvement in direct-to-customer sales, furniture, digital shopping features, product imagery, and store performance. Alber said new and repositioned stores have been performing well. At West Elm, new summer and fall merchandise each generated double-digit comparable sales, while the Pierce & Ward and Emma Chamberlain collaborations supported customer engagement and customer acquisition. The Williams Sonoma brand reported growth across its assortment, including kitchen divisions, food, and Williams Sonoma Home. The company also cited customer engagement initiatives including culinary events, book signings, skills classes, and its No Kid Hungry campaign. In B2B, contract revenue grew 20% and trade revenue rose 12%, according to Howie. Contract represented 36% of the B2B business. The company said it is expanding in markets including cruise ships, senior living, and student housing, and cited completed projects involving Virgin Hotels in New York City, Signature Aviation’s Miami Executive Airport, the University of Texas at Austin’s Hardin House, and Napa’s Carneros Inn. Second-quarter gross margin declined about 160 basis points year over year to 45.5%. Merchandise margins fell about 230 basis points as tariffs increased the weighted-average cost of goods sold. Howie described the second quarter as the peak of the tariff impact on gross margin and said the company expects that pressure to moderate in the second half as it begins to compare against tariffs paid in the prior year. Supply-chain efficiencies and occupancy leverage offset part of the tariff pressure. Supply-chain efficiencies, including a lower shrink accrual, contributed about 30 basis points despite higher fuel costs, while occupancy leverage added approximately 40 basis points as sales growth outpaced a 3% increase in occupancy dollars. SG&A expense was 28.2% of revenue, representing approximately 100 basis points of leverage from the prior year. Employment expenses leveraged by 120 basis points, which Howie attributed to payroll management and incentive compensation. Advertising expense was 7.4% of revenue, up 10 basis points, as the company continued investing in social, collaborations, influencer partnerships, and other content-led channels. Williams-Sonoma raised its fiscal 2026 outlook to comparable brand revenue growth of 4% to 6.5%, from its prior range of 2% to 6%. It now expects total net revenue growth of 4.7% to 7.2% and operating margin of 17.8% to 18.2%. Howie said the guidance incorporates tariffs in effect at the time of the call, including Section 232, existing and newly announced Section 301 tariffs, and the latest tariffs between Canada and the U.S. The forecast also incorporates higher fuel costs, but excludes any benefit from the tariff refunds. The company continues to assume no material change in macroeconomic conditions, housing turnover, or interest rates, and is not assuming a housing-market recovery. It expects approximately $275 million in capital expenditures for the year, with about 95% directed to retail, e-commerce, and supply chain. Store count is expected to be essentially flat this year before growing 1% to 3% annually beginning in fiscal 2027. Williams-Sonoma ended the quarter with inventories up 1% year over year to $1.45 billion. The company paid $90 million in dividends during the quarter, a 15% increase from a year earlier, and said it repurchased $288 million of stock year to date. About $1.1 billion remained under its repurchase authorizations. Chief Technology and Digital Officer Sameer Hassan said the company’s artificial-intelligence tools are supporting sales and customer service. Engagement with Olive, the Williams Sonoma shopping assistant, rose 700% since the beginning of the year, while revenue associated with Olive increased 620%. Customers who engage with Olive convert at three times the rate of other customers, Hassan said. The company also launched Otto, an AI-powered assistant for the Pottery Barn family of brands. Hassan said more than 70% of Otto engagements have been resolved without transferring customers to an employee. He added that visits with personalized e-commerce experiences generate roughly nine times the revenue of an average visit, compared with about two times last year. Williams‑Sonoma, Inc is a specialty retailer focused on the home and culinary markets, best known for premium cookware, kitchen tools and home furnishings. The company traces its roots to a single cookware store founded by Chuck Williams in 1956 in Sonoma, California, and has evolved into a multi‑brand home furnishings and housewares business. Its merchandise mix spans cookware and kitchen electrics, tabletop and food prep items, furniture, bedding, lighting and decorative accessories designed for both everyday use and higher‑end interiors. The company operates a portfolio of consumer brands that target distinct segments of the home market. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Williams-Sonoma Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.