williams sonoma The company has been one of the best-performing retail stocks this year, even as sales of household goods have slowed due to the housing market downturn.
The company’s stock had risen about 23% since the beginning of the year as of Friday, outperforming the S&P 1500 Home Furnishing Index and its peers. wayfair, Alhaus, ethan allen and R.H.formerly known as Repair Hardware.
“We’ve been committed not only to product, service and quality, but also to storytelling,” Laura Alber, CEO of Williams-Sonoma, said in an interview on CNBC’s “Mad Money” in late August. “And that’s what attracts a lot of new customers to our brand and what keeps people coming back to our brand.”
We compared Williams-Sonoma stock to its peers and other retail giants.
Traditional investment theory regarding home furnishings often revolves around home sales, where people buy new furniture at the same time they buy a new home. In the United States, where Williams-Sonoma accounts for 96% of its sales, consumers are facing rising energy and food prices, as well as a depressed housing market due to high interest rates.
But Williams-Sonoma’s stock price has risen more than 200% in three years.
Fixing the underlying business fundamentals has been the key to the company’s success, which includes its namesake brand along with retailers like Pottery Barn and West Elm. The company’s operating margin, a key measure of profitability, was 7.9% in 2019. In 2021, it reached 17.6%.
After the coronavirus-induced housing boom, the market slumped. Williams-Sonoma’s sales declined accordingly, but it proved to investors that it could remain profitable.
“They made a number of smart moves, including reducing the amount of promotions and optimizing their supply chain with home delivery. As a result, their EBIT (earnings before interest and taxes) margins grew by more than 10% during a difficult period,” said Peter Keith, head of consumer research at Piper Sandler.
These moves continue to pay off for Williams-Sonoma. Revenue in 2025 was $7.81 billion, down from $8.25 billion in 2021, but operating income was about the same.
find growth
Williams-Sonoma is currently focused on capturing more of the existing home furnishings market while maintaining high profit margins.
One way the company can do that is by selling its products at full price when some of its competitors are running more promotions.
“When we’re not selling, our overall sales volume tends to be spread out pretty evenly. And we’ve actually had a positive carryout effect in our supply chain, driving margin growth there,” Keith said.
In addition, e-commerce, which is generally more profitable than brick-and-mortar stores, accounts for more than two-thirds of Williams Sonoma’s sales. The company is also leveraging AI to further grow that part of its business.
The company announced at its November earnings conference that it had introduced an AI sales assistant nicknamed “Olive.” In August, the company announced that engaged customers are three times more likely to make purchases than disengaged customers.
Williams-Sonoma is also using AI to reduce supply chain and shipping costs, Chief Technology Officer and Digital Officer Samir Hassan said during the company’s first-quarter earnings call in May.
Business-to-business (B2B) sales are also a bright spot for the company. In its most recent quarter, which ended in August, the company grew sales by nearly 15% in categories such as cruise ships, senior housing and student housing.
Williams-Sonoma said its B2B business, which currently has annual sales of about $1 billion, could double in the next few years.
Pottery Barn Rebirth
Keith said the company’s success with products such as candles, pillows and kitchenware is helping the company become less reliant on housing fundamentals.
Still, furniture is a breadwinner for many brands, and the company needed to take steps to improve its business.
Williams-Sonoma’s largest brand, Pottery Barn, saw sales decline by more than 15% from fiscal 2022 to fiscal 2025. In its fiscal 2025 fourth-quarter earnings report in March, the company said it had focused too heavily on decorative items to compensate for the decline in furniture due to the post-COVID-19 housing recession.
Pottery Barn’s same-store sales increased 5.1% in the most recent quarter ending in August.
“This is truly one of the most exciting parts of Williams-Sonoma today…the new growth of Pottery Barn,” Keith said.
Handling fee
Despite Williams-Sonoma’s relative strength in this area, it faces challenges. Tariffs are a risk for the company, as more than 80% of its 2025 purchases will come from overseas manufacturers.
“I’m really looking forward to stabilizing tariffs. It would be a lot easier for everyone, including investors, if they stayed in one place,” Alber said in an August “Mad Money” interview.
Williams-Sonoma received a $200 million tariff refund after the Supreme Court ruled in February that President Donald Trump did not have the authority to impose the tariffs under the International Emergency Economic Powers Act.
Alber said the company spent $10 million to repay vendors and contribute $1,000 to each employee’s 401(k). According to its second quarter earnings report, total payments to vendors were $47.5 million.
Unlike many other retailers, Williams-Sonoma has decided to keep tariff refunds separate from its reported revenue numbers, which highlights the company’s strong underlying fundamentals, Keith said.
“They’ve built a model here with multiple brands that have an opportunity for growth,” Keith said. “These are small, emerging brands with significant growth opportunities through an omnichannel approach through stores and e-commerce, which we believe is a strong competitive advantage for Williams-Sonoma in the highly fragmented furniture industry.”
