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WSM
Earnings call · Jul 2026 (Q2 FY27)

WILLIAMS SONOMA Q2 FY27 earnings call WSM

Aug 26, 2026 Source

Executive summary

Williams-Sonoma Q2 FY27 — Strong Broad-Based Growth and Raised Outlook

Williams-Sonoma delivered a very strong quarter with broad-based growth across all brands and channels, driven by newness, product innovation, and effective digital strategies. The company successfully navigated a volatile macroeconomic environment and significant tariff impacts, leading to a raised annual outlook. AI-powered tools are enhancing customer experience and driving productivity, further differentiating the company in the market.

Highlights

5

  • Comparable brand revenue accelerated to 6.2% in Q2 FY27, up from 4.8% in Q1 FY27.

  • Operating margin reached 17.3% in Q2 FY27, exceeding expectations despite tariff pressures.

  • Diluted earnings per share (non-GAAP) grew 5% year-over-year to $2.10.

  • B2B segment achieved record-breaking demand, growing 14.5% in Q2 FY27.

  • The company gained market share in a flat home furnishings industry, with total net revenues up 6.7% year-over-year to $1.96 billion.

Concerns

3

  • Merchandise margins declined approximately 230 basis points year-over-year due to tariff impacts, though Q2 was the peak.

  • Higher oil prices continue to pressure transportation and supplier costs, embedded in guidance.

  • The company did not repurchase shares in Q2 FY27, despite having $1.1 billion remaining under authorizations.

Guidance & targets

CategoryTargetConfidence
Full-year FY27 Comparable Brand Revenue Growth (non-GAAP)
4% to 6.5%
high materiality
High
Full-year FY27 Total Net Revenue Growth (non-GAAP)
4.7% to 7.2%
high materiality
High
Full-year FY27 Operating Margin (non-GAAP)
17.8% to 18.2%
high materiality
High
Full-year FY27 Interest Income
approximately $25 million
medium materiality
High
Full-year FY27 Effective Tax Rate
approximately 26%
medium materiality
High
Full-year FY27 Capital Expenditures
approximately $275 million
medium materiality
High
Store Count Growth
1% to 3% per year
medium materiality
Medium
Long-term Revenue Growth
mid to high single-digit
high materiality
High
Long-term Operating Margins
mid to high teens
high materiality
High
B2B Revenue Target
$2 billion
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Company-wide
Total net revenues for Q2 FY27.
$1.96B6.7%——
Pottery Barn
Significant improvement and continued acceleration in comp. Strength across key categories including furniture, lighting, and textiles. DTC gained traction, retail remains strong.
—5.1%——
Williams Sonoma
Strong performance across assortment, categories, and price points. Summer assortment strong with exclusive collaborations. Engaging customers through culinary events, book signings, and Skills Series classes.
—7.6%——
West Elm
Positive comp, making progress across product, brand heat, and channel excellence. New introductions in furniture and non-furniture fueled growth, with summer and fall newness delivering double-digit comps. Strong performance across retail and direct to customer.
—6.4%——
Pottery Barn Children's
Strong quarter driven by product innovation, life stage leadership, and differentiated collaborations. Continued momentum in baby and strong customer response in dorm. Relaunch of Dormify extending reach.
—3.5%——
B2B
Record-breaking quarter with strength in both contract and trade. Expanding into underserved markets like cruise ships, senior living, and student housing. Largest volume quarter to date for B2B.
Contract growth: 20%Trade growth: 12%Contract share of B2B: 36%
—14.5%——
Emerging Brands
All emerging brands delivered double-digit growth.
—double-digit growth——
Rejuvenation
Outstanding quarter with strong profitability. Continued strength across project-led categories. Customer acquisition accelerated, strong engagement from consumer and trade customers. Strong momentum across DTC and retail.
—double-digit comp—strong profitability
Mark and Graham
Strong quarter with momentum across key categories. New product offerings and corporate gifting strategies were strong. Strong growth in wedding and successful launch of Mark and Graham Dorm.
—double-digit growth——
GreenRow
Excited by the growth. Launched first collaboration with the New York Botanical Garden.
—double-digit growth——

WSM operating KPIs by quarter

WSM operating KPIs stated on its earnings calls, by fiscal quarter
KPI Aug 2025 Q2 FY26 Nov 2025 Q3 FY26 Feb 2026 Q4 FY26 May 2026 Q1 FY27Change vs prior quarter
Stores Rejuvenation
11 We currently have 11 Rejuvenation stores and we'll be opening up our 12th store in Nashville in September. Source transcript
13 This quarter, we expanded our Rejuvenation store count to 13, with the opening of 2 new storefronts, one in Nashville and one in Salt Lake City. Source transcript
13 With only 13 stores and great online growth, we are thrilled with the progress in Rejuve, and we continue to believe in the potential for Rejuvenation to be our next billion-dollar brand. Source transcript
13 With only 13 stores and great online growth, we are thrilled with the progress in Rejuvenation, and we continue to believe in the opportunity for Rejuvenation to be our next billion-dollar brand. Source transcript
0%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Ottolaunch
Dormifylaunch
Pierce & Ward collectionlaunch
Emma Chamberlain collectionupdate
AERIN, Sanderson, Hill House collaborationslaunch
New York Botanical Garden collaborationlaunch

Risks & headwinds

Volatile macroeconomic environment ongoing

war, ever-changing tariffs, rising interest rates and broader macro uncertainty

Mitigation:Strong brands, execution, focus on customer service, and ability to compound results quarter after quarter.

Stagnant housing market ongoing

no housing recovery built into guidance

Mitigation:Business can succeed regardless of housing market; strong brands and execution allow outperformance.

Tariff impact on gross margin Q2 FY27 (peak), moderating in H2 FY27

Merchandise margins declined approximately 230 basis points; Q2 was the peak impact

Mitigation:Expect pressure to moderate as company begins to comp tariffs paid last year; supply chain efficiencies and occupancy leverage absorbed roughly 1/3 of the hit.

Higher oil prices ongoing, embedded in guidance

pressure transportation and supplier costs

Mitigation:Working with suppliers to offset and reduce costs; guidance reflects best estimate of impact.

Anniversary of shrink accrual benefit Q4 FY27

150 basis points in Q4 FY27

Mitigation:Factored into gross margin expectations for the back half of the year.

What to watch in Q3 FY27

Gross Margin Trajectory

Q3 FY27 and Q4 FY27
Current 45.5% (Q2 FY27)
Target Moderation of tariff impact, shrink accrual benefit in Q3, 150 bps anniversary in Q4

Why it matters

Gross margin is a key profitability driver, and its trajectory will indicate the effectiveness of tariff mitigation and cost management strategies.

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. ... Should be a good guy in Q3, but we come up against about 150 basis points in Q4 that we have to anniversary that will eat up some of the good guy from lapping the tariffs.

Q&A highlights

What is the pipeline for innovation and collaborations in the second half, and how is holiday merchandising viewed?

Management emphasized continuous improvement in product quality and innovation across all categories, with specific focus on white space opportunities. Exciting collaborations are planned for every season, acting as a 'noticing value' to attract new customers and generate buzz, though not the primary driver of comp. Holiday merchandising will build on successful strategies.

“I mean we're happy with the numbers, but there's still a lot of categories that we think we can do a lot better in. We're very self-critical and we can see the white space very clearly.”

asked by Katharine McShane · answered by Laura Alber

2 min read 6 chapters

Detailed narrative

Strong Q2 Performance and Market Share Gains

Williams-Sonoma reported a very strong second quarter with comparable brand revenue accelerating to 6.2% and total revenue growth of 6.7% to $1.96 billion. This performance reflects broad-based strength across all brands and channels, including positive comps in both furniture and non-furniture. The company gained significant market share in a flat home furnishings industry, attributing growth to full-price selling and outperformance against competitors.

Tariff Refunds and Financial Impact

The company received $200 million in IEEPA tariff refunds, including interest, in Q2. Of this, $174 million was recognized into income, with $168 million reducing COGS and $6 million as interest income. The company is reimbursing $47 million to vendor partners and contributing $10 million to employee 401(k) accounts. An additional $29 million benefit, recorded as an inventory reduction, will flow through gross margin in Q3. These refunds are excluded from non-GAAP results for comparability.

Brand-Specific Highlights

Pottery Barn saw significant improvement with a 5.1% comp, driven by newness, product innovation, and enhanced digital experience. Williams Sonoma delivered a strong 7.6% comp, benefiting from exclusive collaborations and engaging brand experiences. West Elm continued its strong performance with a 6.4% comp, fueled by new introductions and promotional discipline. Children's businesses grew 3.5%, and emerging brands (Rejuvenation, Mark and Graham, GreenRow) all achieved double-digit growth.

B2B Segment and Growth Initiatives

The B2B segment had a record-breaking quarter, growing 14.5%, with contract business up 20% and trade up 12%. The company continues to expand into underserved markets like cruise ships, senior living, and student housing, and sees a clear path to grow B2B to $2 billion. Growth initiatives, including B2B, emerging brands, and retail investments, are key drivers of overall performance.

AI and Technology Integration

Williams-Sonoma is leveraging AI to accelerate strategy and productivity. The AI-powered shopping assistant 'Olive' (Williams Sonoma) saw engagement up 700% and revenue up 620%, with users converting 3x higher. A new AI assistant, 'Otto,' launched for Pottery Barn, resolving over 70% of engagements. E-commerce site personalization now generates 9x the revenue of an average visit, up from 2x last year, demonstrating significant impact on sales and customer experience.

Inventory Management and Balance Sheet Strength

Merchandise inventories were $1.45 billion, up only 1% year-over-year, while revenue grew 6.7%, indicating efficient inventory management. The company is actively chasing inventory in bestsellers. The balance sheet remains strong with no debt and $1.1 billion in share repurchase capacity, providing financial flexibility.

AI-generated summary of the company's earnings call. Not investment advice.