A month has gone by since the last earnings report for Williams-Sonoma (WSM). Shares have added about 4.9% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Williams-Sonoma due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Williams-Sonoma, Inc. before we dive into how investors and analysts have reacted as of late.
Williams-Sonoma Q4 Earnings Top Estimates, Revenues Miss, Comps Up Y/Y
Williams-Sonoma reported mixed results for the fourth quarter of fiscal 2025 (ended Feb. 1), with earnings beating the Zacks Consensus Estimate and net revenues missing the same. On a year-over-year basis, both metrics declined.
The quarter’s performance reflects a balanced trend, with strength in operating execution and brand positioning partly offset by pressure on the top line. Margin performance remained solid, supported by cost discipline and supply-chain efficiencies, even as revenue trends softened in a challenging environment.
Going forward, the company remains focused on driving growth, enhancing customer experience and strengthening its market position, while navigating macroeconomic pressures, tariff headwinds and demand volatility.
WSM’s Q4 Earnings, Revenue & Comps Discussion
The company reported earnings of $3.04 per share, which topped the Zacks Consensus Estimate of $2.89 by 5.2%. In the prior-year quarter, it reported earnings per share (EPS) of $3.28.
Net revenues of $2.36 billion missed the consensus mark of $2.40 billion by 1.8% and declined 4.3% year over year.
In the quarter, comps were up 3.2% compared with 3.1% in the year-ago period. Our model expected comps to be up 3% year over year.
Comps at Williams-Sonoma (namesake brand) grew 7.2% compared with 5.7% reported in the year-ago quarter. Comps at West Elm gained 4.8% compared with 4.2% reported in the year-ago quarter.
Pottery Barn Kids and Teens comps grew 4% compared with 3.5% reported in the year-ago quarter. On the other hand, Pottery Barn comps inched down 2.3% compared with 0.5% decline reported in the year-ago quarter.
Operating Highlights of Williams-Sonoma
The gross margin was 46.9% (down from our projection of 48.2%), which contracted 40 basis points (bps) year over year. The downside was due to lower merchandise margins and occupancy deleverage, partially offset by favorable physical inventory and supply-chain efficiencies.
Selling, general and administrative expenses were 26.6% of net revenues (down from our projection of 28.2%), reflecting an increase of 80 bps year over year due to higher general expenses, partially offset by lower employment expenses and lower advertising expenses.
The operating margin contracted 120 bps from the year-ago figure to 20.3% for the quarter. Our model predicted an operating margin of 20% in the fiscal fourth quarter.
Williams-Sonoma’s Fiscal 2025 Summary
In fiscal 2025, WSM reported a 3.5% increase in comparable brand revenues compared with a 1.6% decline in fiscal 2024. The company delivered an operating margin of 18.1%, slightly lower than 18.6% in fiscal 2024. Full-year diluted EPS reached a record $8.84, rising 0.6% year over year. Net revenues increased 1.2% to $7.81 billion.
The company’s return on invested capital stood at 42.3%, while adjusted ROIC was 51.6%, reflecting strong capital efficiency.
Williams-Sonoma’s Financial Position
As of Feb. 1, 2026, Williams-Sonoma reported cash and cash equivalents of $1.02 billion, down from $1.21 billion at the fiscal 2024-end.
Net cash from operating activities totaled $1.31 billion in fiscal 2025 compared with $1.36 billion a year ago. This allowed the company to return nearly $1.2 billion to its shareholders through $854 million in stock repurchases and $316 million in dividends.
WSM Revised Fiscal 2025 Guidance
Fiscal 2025 is a 52-week year compared with 53 weeks in fiscal 2024. The company continues to project annual net revenues between +0.5% and +3.5%, with comparable brand revenue growth between +2% and +5%. Operating margin is now expected between 17.8% and 18.1% (from the 17.4-17.8% range expected earlier), which compares unfavorably with 18.5% reported in fiscal 2024.
The revised outlook considers the new Section 232 tariffs on furniture, the revised additional tariffs on China of 20%, India of 50% and Vietnam of 20%, average tariffs on the rest of the world of 18%, the steel and aluminum tariff of 50% and the copper tariff of 50%.
Over the long term, WSM continues to anticipate mid-to-high single-digit annual net revenue growth and operating margin growth in the mid-to-high teens.
WSM’s Fiscal 2026 Guidance
Fiscal 2026 is expected to reflect continued growth momentum. WSM projects annual net revenues between +2.7% and +6.7%, with comparable brand revenue growth expected between +2% and +6%. Operating margin guidance stands between 17.5% and 18.1%.
Over the long term, the company expects mid-to-high single-digit annual net revenue growth, with operating margins in the mid-to-high teens.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Williams-Sonoma has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock has a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Williams-Sonoma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Williams-Sonoma, Inc. (WSM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).