Williams-Sonoma, Inc.

Strong Q2 performance; broad-based growth and market-share gains - Comp store growth: +6.2% (accelerated from +4.8% in Q1). - Total revenue growth: +6.7% YoY; net revenues: $1.96B. - All brands positive comps: Pottery Barn +5.1%, Williams Sonoma +7.6%, West Elm +6.4%; children’s +3.5%; emerging brands double-digit. - Channels: E-commerce comp +6.5%, retail comp +5.5%. - Industry context (surprising/important): Home furnishings industry was essentially flat, so their growth is framed as primarily share gain—not category demand tailwind—while also increasing penetration of full-price selling (i.e., less discounting).

Profitability held up despite tariff “peak”; operating margin beat and EPS growth - Operating margin: 17.3% in Q2. - Operating income: $338M (+3% YoY). - EPS: $2.10 (+5% YoY), with management emphasizing they grew earnings through the peak tariff quarter. - Gross margin headwind: 45.5%, down about 160 bps YoY, driven by tariff impacts on weighted-average COGS. - Offset factors (good): They cite about 70 bps of positive offsets (≈ 30 bps supply chain efficiencies; ≈ 40 bps occupancy leverage), leaving gross margin “in line” with expectations.

Updated annual guidance (raised on both growth and margin); still assumes no housing recovery - Comparable brand revenue growth: 4.0% to 6.5% (raised range). - Total net revenue growth: 4.7% to 7.2%. - Operating margin: 17.8% to 18.2% (raised range). - Key assumption/risk framing: guidance assumes no material macro changes (housing turnover and interest rates not improving); management says they are not baking in a housing recovery. - Back-half gross margin expectations: tariff pressure should moderate as they comp prior-year tariff payments; however, there are other negatives (see below).