Williams-Sonoma raises full-year outlook after second-quarter beat

Williams-Sonoma, Inc. (NYSE: WSM ) reported better-than-expected second-quarter 2026 results Wednesday and raised its full-year outlook.

Net revenue rose 6.7% year over year to $1.96 billion, beating the $1.93 billion estimate.

Adjusted diluted earnings increased 5% to $2.10 per share, topping the $2.08 estimate.

GAAP diluted earnings jumped 42% to $2.84 per share.

Brand Growth Broadens Comparable brand revenue increased 6.2%, with growth across all major brands.

Pottery Barn revenue rose to $770.8 million, while comparable sales increased 5.1%.

West Elm revenue reached $496.3 million, with comparable sales up 6.4%.

Williams Sonoma revenue increased to $268.8 million, with comparable sales rising 7.6%.

Pottery Barn Kids and Teen revenue totaled $297.4 million, while comparable sales grew 3.5%.

Tariffs Shape Margins GAAP gross margin expanded 450 basis points to 51.6%.

IEEPA tariff refunds, occupancy leverage and supply chain efficiencies supported the increase.

However, adjusted gross margin fell 160 basis points to 45.5%.

Tariff costs drove a 230-basis-point decline in merchandise margins.

GAAP operating income rose to $448.8 million, producing a 22.9% operating margin.

Adjusted operating income totaled $338.5 million, while the adjusted margin fell 60 basis points to 17.3%.

The quarter included $167.8 million in IEEPA tariff refund income and $6.3 million in related interest.

A $47.5 million vendor reimbursement provision and a one-time $10 million employee recognition expense partly offset those benefits.

Williams-Sonoma deferred another $29.3 million in tariff refund income, which it expects to recognize in the third quarter.

Cash Flow And Inventory Merchandise inventories rose 1% year over year to $1.45 billion.

Williams-Sonoma ended the quarter with 508 stores, compared with 509 a year earlier.

Operating cash flow totaled $695.9 million during the first 26 weeks of the year.

That amount included $200.2 million in collected tariff refunds and related interest.

Cash and cash equivalents totaled $1.03 billion at the end of the quarter.

The company returned $90 million to shareholders through dividends.

Read Also: Williams-Sonoma Gears Up For Q2 Print; Here Are The Recent Forecast Changes From Wall Street's Most Accurate Analysts Williams-Sonoma Raises 2026 Outlook Williams-Sonoma raised its fiscal 2026 comparable revenue growth forecast to 4% to 6.5%.

It now expects net revenue to grow 4.7% to 7.2%.

The company lifted its sales forecast to $8.17 billion to $8.37 billion from $8.02 billion to $8.33 billion.

The midpoint is above the $8.18 billion analyst estimate.

Williams-Sonoma expects an adjusted operating margin of 17.8% to 18.2%.

Williams-Sonoma stressed that its upgraded outlook reflects underlying business momentum rather than its $200 million tariff refund.

The company said its non-GAAP guidance excludes the refund and related interest, calling the increase "operational." It now expects comparable brand revenue growth of 4% to 6.5% and an operating margin of 17.8% to 18.2%.

The forecast assumes current tariffs remain in place, oil prices stay elevated and the company receives no benefit from tariff refunds or related interest.

Over the long term, Williams-Sonoma continues to target mid- to high-single-digit annual net revenue growth and a mid- to high-teens operating margin.

Williams-Sonoma Price Action WSM Price Action: Williams-Sonoma shares were up 0.11% at $235.00 at the time of publication on Wednesday, according to Pro data.

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