Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Williams-Sonoma, Inc.

Consolidated Statements of Earnings

			For the Fiscal Year Ended
(In thousands, except per share amounts)			February 1, 2026						February 2, 2025						January 28, 2024
Net revenues			$	7,806,816					$	7,711,541					$	7,750,652
Cost of goods sold			4,203,765						4,129,242						4,447,051
Gross profit			3,603,051						3,582,299						3,303,601
Selling, general and administrative expenses			2,187,329						2,152,115						2,059,408
Operating income			1,415,722						1,430,184						1,244,193
Interest income, net			36,838						55,548						29,162
Earnings before income taxes			1,452,560						1,485,732						1,273,355
Income taxes			364,123						360,481						323,593
Net earnings			$	1,088,437					$	1,125,251					$	949,762
Basic earnings per share			$	8.96					$	8.91					$	7.35
Diluted earnings per share			$	8.84					$	8.79					$	7.28
Shares used in calculation of earnings per share:
Basic			121,446						126,242						129,148
Diluted			123,153						128,041						130,543

See Notes to Consolidated Financial Statements.

Williams-Sonoma, Inc.

Consolidated Statements of Comprehensive Income

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
Net earnings			$	1,088,437					$	1,125,251					$	949,762
Other comprehensive income (loss):
Foreign currency translation adjustments			8,417						(6,136)						(999)
Change in fair value of derivative financial instruments, net of tax			—						1						160
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						94						(904)
Comprehensive income			$	1,096,854					$	1,119,210					$	948,019

See Notes to Consolidated Financial Statements.

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Williams-Sonoma, Inc.

Consolidated Balance Sheets

			As of
(In thousands, except per share amounts)			February 1, 2026						February 2, 2025
ASSETS
Current assets
Cash and cash equivalents			$	1,019,801					$	1,212,977
Accounts receivable, net			126,821						117,678
Merchandise inventories, net			1,462,849						1,332,429
Prepaid expenses			80,053						66,914
Other current assets			23,663						24,611
Total current assets			2,713,187						2,754,609
Property and equipment, net			1,095,158						1,033,934
Operating lease right-of-use assets			1,270,272						1,177,805
Deferred income taxes, net			99,161						120,657
Goodwill			77,398						77,260
Other long-term assets, net			156,736						137,342
Total assets			$	5,411,912					$	5,301,607
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	637,985					$	645,667
Accrued expenses			314,588						286,033
Gift card and other deferred revenue			602,940						584,791
Income taxes payable			78,943						67,696
Operating lease liabilities			221,356						234,180
Other current liabilities			98,318						93,607
Total current liabilities			1,954,130						1,911,974
Long-term operating lease liabilities			1,235,549						1,113,135
Other long-term liabilities			139,674						134,079
Total liabilities			3,329,353						3,159,188
Commitments and contingencies – See Note I
Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued			—						—
Common stock: $0.01 par value; 253,125 shares authorized; 118,770 and 123,125 shares issued and outstanding at February 1, 2026 and February 2, 2025, respectively			1,188						1,232
Additional paid-in capital			587,433						571,585
Retained earnings			1,509,129						1,591,630
Accumulated other comprehensive loss			(13,176)						(21,593)
Treasury stock, at cost: 14 and 4 shares as of February 1, 2026 and February 2, 2025, respectively			(2,015)						(435)
Total stockholders’ equity			2,082,559						2,142,419
Total liabilities and stockholders’ equity			$	5,411,912					$	5,301,607

See Notes to Consolidated Financial Statements.

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Williams-Sonoma, Inc.

Consolidated Statements of Stockholders’ Equity

			Common Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Total Stockholders’ Equity
(In thousands)			Shares						Amount
Balance at January 29, 2023			132,453						$	1,325					$	572,455					$	1,141,819					$	(13,809)					$	(739)					$	1,701,051
Net earnings			—						—						—						949,762						—						—						949,762
Foreign currency translation adjustments			—						—						—						—						(999)						—						(999)
Change in fair value of derivative financial instruments, net of tax			—						—						—						—						160						—						160
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						—						—						—						(904)						—						(904)
Release of stock-based awards1			1,075						11						(52,641)						—						—						(201)						(52,831)
Repurchases of common stock2			(5,227)						(52)						(15,456)						(298,985)						—						(1,000)						(315,493)
Reissuance of treasury stock under stock-based compensation plans1			—						—						(334)						(180)						—						514						—
Stock-based compensation expense			—						—						83,936						—						—						—						83,936
Dividends declared			—						—						—						(236,821)						—						—						(236,821)
Balance at January 28, 2024			128,301						1,284						587,960						1,555,595						(15,552)						(1,426)						2,127,861
Net earnings			—						—						—						1,125,251						—						—						1,125,251
Foreign currency translation adjustments			—						—						—						—						(6,136)						—						(6,136)
Change in fair value of derivative financial instruments, net of tax			—						—						—						—						1						—						1
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						—						—						—						94						—						94
Release of stock-based awards1			765						7						(93,994)						—						—						(227)						(94,214)
Repurchases of common stock2			(5,941)						(59)						(18,373)						(795,968)						—						—						(814,400)
Reissuance of treasury stock under stock-based compensation plans1			—						—						(1,218)						—						—						1,218						—
Stock-based compensation expense			—						—						97,210						—						—						—						97,210
Dividends declared			—						—						—						(293,248)						—						—						(293,248)
Balance at February 2, 2025			123,125						1,232						571,585						1,591,630						(21,593)						(435)						2,142,419
Net earnings			—						—						—						1,088,437						—						—						1,088,437
Foreign currency translation adjustments			—						—						—						—						8,417						—						8,417
Release of stock-based awards1			533						5						(73,513)						—						—						(290)						(73,798)
Repurchases of common stock2			(4,888)						(49)						(15,691)						(843,970)						—						(1,911)						(861,621)
Reissuance of treasury stock under stock-based compensation plans1			—						—						(448)						(173)						—						621						—
Stock-based compensation expense			—						—						105,500						—						—						—						105,500
Dividends declared			—						—						—						(326,795)						—						—						(326,795)
Balance at February 1, 2026			118,770						$	1,188					$	587,433					$	1,509,129					$	(13,176)					$	(2,015)					$	2,082,559

1**Amounts are shown net of shares withheld for associate taxes.

2**Repurchases of common stock include accrued excise taxes of $7.7 million, $6.9 million, and $2.5 million as of February 1, 2026, February 2, 2025 and January 28, 2024, respectively, which is recorded in retained earnings.

See Notes to Consolidated Financial Statements.

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Williams-Sonoma, Inc.

Consolidated Statements of Cash Flows

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
Cash flows from operating activities:
Net earnings			$	1,088,437					$	1,125,251					$	949,762
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization			231,449						229,802						232,590
Loss on disposal/impairment of assets			7,663						5,539						21,869
Non-cash lease expense			251,591						255,923						255,286
Deferred income taxes			20,315						(9,741)						(29,085)
Stock-based compensation expense			106,522						98,983						84,754
Other			(2,556)						(2,603)						(2,796)
Changes in:
Accounts receivable			(8,811)						5,004						(7,461)
Merchandise inventories			(125,876)						(88,085)						209,168
Prepaid expenses and other assets			(29,772)						(19,832)						1,016
Accounts payable			(31,802)						15,360						99,043
Accrued expenses and other liabilities			37,286						27,023						4,935
Gift card and other deferred revenue			17,443						11,587						95,005
Operating lease liabilities			(258,247)						(265,131)						(269,162)
Income taxes payable			11,247						(28,858)						35,349
Net cash provided by operating activities			1,314,889						1,360,222						1,680,273
Cash flows from investing activities:
Purchases of property and equipment			(259,438)						(221,567)						(188,458)
Other			(1,138)						360						201
Net cash used in investing activities			(260,576)						(221,207)						(188,257)
Cash flows from financing activities:
Repurchases of common stock			(853,962)						(807,477)						(313,001)
Payment of dividends			(316,484)						(280,058)						(232,475)
Tax withholdings related to stock-based awards			(73,798)						(94,214)						(52,831)
Debt issuance costs			(1,187)						—						—
Other			(6,941)						(2,474)						—
Net cash used in financing activities			(1,252,372)						(1,184,223)						(598,307)
Effect of exchange rates on cash and cash equivalents			4,883						(3,822)						954
Net (decrease) increase in cash and cash equivalents			(193,176)						(49,030)						894,663
Cash and cash equivalents at beginning of year			1,212,977						1,262,007						367,344
Cash and cash equivalents at end of year			$	1,019,801					$	1,212,977					$	1,262,007
Supplemental disclosure of cash flow information:
Cash paid during the year for interest			$	692					$	849					$	837
Cash paid during the year for income taxes, net of refunds			$	330,304					$	398,693					$	315,850
Non-cash investing activities:
Purchases of property and equipment not yet paid for at end of year			$	3,054					$	5,533					$	914

See Notes to Consolidated Financial Statements.

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Williams-Sonoma, Inc.

Notes to Consolidated Financial Statements

Note A: Summary of Significant Accounting Policies

Williams-Sonoma, Inc.’s (“Company”, “we”, or “us”) brands — Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, and GreenRow — represent distinct merchandise strategies that are marketed through e-commerce, direct-mail catalogs, retail stores, and business-to-business. These brands collectively support The Key Rewards, our loyalty and credit card program that offers members exclusive benefits. We operate in the U.S., Puerto Rico, Canada, Australia and the United Kingdom and have unaffiliated franchisees that operate stores in Mexico, South Korea, India and the Philippines, as well as e-commerce websites in certain locations.

Out-of-Period Freight Adjustment

Subsequent to the filing of our fiscal 2023 Form 10-K, in April 2024, we determined that we over-recognized freight expense in fiscal 2021, 2022 and 2023 for a cumulative amount of $49.0 million. We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. We then evaluated whether the cumulative amount of the over-accrual was material to our projected fiscal 2024 results, and determined the cumulative amount was not material. Therefore, the Consolidated Financial Statements for fiscal 2024 include an out-of-period adjustment of $49.0 million, recorded in the first quarter of fiscal 2024, to reduce cost of goods sold and accounts payable, which corrected the cumulative error on the Consolidated Balance Sheet as of January 28, 2024.

Consolidation

The Consolidated Financial Statements include the accounts of Williams-Sonoma, Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated.

Fiscal Year

Our fiscal year ends on the Sunday closest to January 31, based on a 52 or 53-week year. Fiscal 2025, a 52-week year, ended on February 1, 2026; Fiscal 2024, a 53-week year, ended on February 2, 2025; and Fiscal 2023, a 52-week year, ended on January 28, 2024.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. These estimates and assumptions are evaluated on an ongoing basis and are based on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ from these estimates.

Cash Equivalents

Cash equivalents include highly liquid investments with an original maturity of three months or less. As of February 1, 2026, we were invested primarily in money market funds and interest-bearing demand deposit accounts. Book cash overdrafts issued, but not yet presented to the bank for payment, are reclassified to accounts payable.

Accounts Receivable, Net

Accounts receivable are stated at their carrying values, net of an allowance for credit losses. Accounts receivable consist primarily of credit card, business-to-business and franchisee receivables for which collectability is reasonably assured. Receivables are evaluated for collectability on a regular basis and an allowance for credit losses is recorded, if necessary. Our allowance for credit losses was not material to our Consolidated Financial Statements as of February 1, 2026 and February 2, 2025.

Merchandise Inventories

Merchandise inventories, net of an allowance for shrinkage and obsolescence, are stated at the lower of cost (weighted-average method) or net realizable value. To determine if the value of our inventory should be reduced below cost, we consider current and anticipated demand, customer preferences and age of the merchandise. We reserve for obsolescence based on historical trends of inventory sold below cost and specific identification.

Reserves for shrinkage are estimated and recorded throughout the year based on historical shrinkage results, cycle count results within our distribution centers, expectations of future shrinkage and current inventory levels. Actual

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shrinkage is recorded at year-end based on the results of our year-end physical inventory counts and can vary from our estimates due to such factors as changes in operations, the mix of our inventory (which ranges from large furniture to small tabletop items), transaction processing errors, changes in our technology systems, and execution against loss prevention initiatives in our stores, distribution facilities, off-site storage locations, and with our third-party warehouse and transportation providers. Accordingly, there is no material shrinkage reserve at year-end. Historically, actual shrinkage has not differed materially from our estimates.

Our obsolescence and shrinkage reserve calculations contain estimates that require management to make assumptions and to apply judgment regarding a number of factors, including market conditions, the selling environment, historical results and current inventory trends. If actual obsolescence or shrinkage estimates change from our original estimate, we will adjust our reserves accordingly throughout the year. As of February 1, 2026 and February 2, 2025, our inventory obsolescence reserves were $20.7 million and $19.6 million, respectively.

Long-lived Assets

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

Leasehold improvements			Shorter of estimated useful life or lease term (generally 5 – 22 years)
Fixtures and equipment			2 – 15 years
Buildings and building improvements			10 – 40 years
Capitalized software			2 – 10 years
Corporate aircraft			24 years

We review the carrying value of all long-lived assets for impairment, primarily at an individual store level, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. Our impairment analyses determine whether projected cash flows from operations are sufficient to recover the carrying value of these assets. The asset group is comprised of both property and equipment and operating lease right-of-use assets. Impairment may result when the carrying value of the asset or asset group exceeds the estimated undiscounted future cash flows over its remaining useful life. For asset impairment, our estimate of undiscounted future cash flows over the lease term is based upon our experience, the historical operations and estimates of future profitability and economic conditions. The estimates of future profitability and economic conditions require estimating such factors as sales growth, gross margin, employment costs, lease escalations, inflation and the overall economics of the retail industry, and are therefore subject to variability and difficult to predict. For operating lease right-of-use assets, we determine the fair value of the assets by using estimated market rental rates. These estimates can be affected by factors such as future results, real estate supply and demand, closure plans and economic conditions that can be difficult to predict. Actual future results may differ from those estimates. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the excess of the asset or asset group’s net carrying value over its estimated fair value. We measure property and equipment at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy (see Note L). We measure operating lease right-of-use assets at fair value on a nonrecurring basis using Level 2 inputs, primarily market rental rates, that are corroborated by market data. Where Level 2 inputs are not readily available, we use Level 3 inputs. Fair value of these long-lived assets is based on the present value of estimated future cash flows using a discount rate commensurate with the risk. During fiscal 2025, fiscal 2024 and fiscal 2023, we recognized impairment charges, as a component of selling, general and administrative expenses (“SG&A”), of $1.6 million, $3.9 million and $14.5 million, respectively.

Leases

We lease store locations, distribution and manufacturing facilities, corporate facilities, customer care centers and certain equipment for our U.S. and international operations with initial terms generally ranging from 2 to 22 years. We determine whether an arrangement is or contains a lease at inception by evaluating potential lease agreements including services and operating agreements to determine whether an identified asset exists that we control over the term of the arrangement. Lease commencement is determined to be when the lessor provides us access to, and the right to control, the identified asset.

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The rental payments for our leases are typically structured as either fixed or variable payments. Our fixed rent payments include: stated minimum rent and stated minimum rent with stated increases. Other obligations under our lease agreements include: rent increases based on a future index; rent based on a percentage of store sales; rent based on a percentage of store sales if a specified store sales threshold or contractual obligation of the landlord has not been met; and payments made for pass-through costs for property taxes, insurance, utilities and common area maintenance. In instances where these other obligations are fixed, they are included in the measurement of our lease liabilities, and when variable, they are excluded and recognized in the period in which the obligation for those payments is incurred. We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are excluded from our calculation of lease liabilities.

Upon lease commencement, we recognize a right-of use asset and a corresponding lease liability measured at the present value of the fixed future minimum lease payments. We have elected the practical expedient to not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a right-of-use asset for an amount equal to the lease liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and right-of-use asset when a remeasurement event occurs.

Many of our leases contain renewal and early termination options. The option periods are generally not included in the lease term used to measure our lease liabilities and right-of-use assets upon commencement, as we do not believe the exercise of these options to be reasonably certain. We remeasure the lease liability and right-of-use asset once we are reasonably certain to exercise a renewal or an early termination option.

Our leases generally do not provide information about the rate implicit in the lease. Therefore, we utilize an incremental borrowing rate to calculate the present value of our future lease obligations. The incremental borrowing rate represents the rate of interest we would have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment. We use judgment in determining our incremental borrowing rate, which is applied to each lease based on the lease term. An increase or decrease in the incremental borrowing rate applied would impact the value of our right-of-use assets and lease liabilities.

We use judgment in determining lease classification, including our determination of the economic life and the fair market value of the identified asset. The fair market value of the identified asset is generally estimated based on comparable market data provided by third-party sources. All of our leases are currently classified as operating leases.

Goodwill

Goodwill is initially recorded as of the acquisition date and is measured as any excess of the purchase price over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized, but rather is subject to impairment testing annually (on the first day of the fourth quarter), or between annual tests whenever events or changes in circumstances indicate that the fair value of a reporting unit may be below its carrying amount. We first perform a qualitative assessment to evaluate goodwill for potential impairment. If based on that assessment it is more likely than not that the fair value of the reporting unit is below its carrying value, a quantitative impairment test is necessary. The quantitative impairment test requires determining the fair value of the reporting unit. We use the income approach, whereby we calculate the fair value based on the present value of estimated future cash flows, using a discount rate that approximates the reporting unit’s weighted-average cost of capital. The process of evaluating the potential impairment of goodwill is subjective and requires significant estimates and assumptions about the future such as sales growth, gross margins, employment costs, capital expenditures, inflation and future economic and market conditions. We measure the fair value using Level 3 inputs as defined in the fair value hierarchy (see Note L). Actual future results may differ from those estimates. If the carrying value of the reporting unit’s assets and liabilities, including goodwill, exceeds its fair value, impairment is recorded for the excess, not to exceed the total amount of goodwill allocated to the reporting unit.

As of February 1, 2026 and February 2, 2025, we had goodwill of $77.4 million and $77.3 million, respectively, primarily related to our fiscal 2017 acquisition of Outward and our fiscal 2011 acquisition of Rejuvenation. In fiscal 2025, fiscal 2024 and fiscal 2023, we performed our qualitative annual assessment of goodwill impairment and concluded that the fair value of each of our reporting units exceeded its carrying value. Accordingly, no further impairment testing of goodwill was performed and we did not recognize any goodwill impairment in fiscal 2025, fiscal 2024 or fiscal 2023.

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Self-Insured Liabilities

We are primarily self-insured for workers’ compensation, associate health benefits, product and other general liability claims. We record self-insurance liability reserves based on claims filed, including the development of those claims, and an estimate of claims incurred but not yet reported, based on an actuarial analysis of historical claims data. Factors affecting these estimates include future inflation rates, changes in severity, benefit level changes, medical costs and claim settlement patterns. Should a different number of claims occur compared to what was estimated, or costs of the claims increase or decrease beyond what was anticipated, reserves may need to be adjusted accordingly. Self-insurance reserves for workers’ compensation, associate health benefits, product and other general liability claims were $28.5 million and $30.7 million as of February 1, 2026 and February 2, 2025, respectively.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and debt (if any) approximate their estimated fair values.

Revenue from Merchandise Sales

Revenues from the sale of our merchandise through our e-commerce business, at our retail stores as well as to our business-to-business customers and franchisees are, in each case, recognized at a point in time when control of merchandise is transferred to the customer. Merchandise can either be picked up in our stores or delivered to the customer. For merchandise picked up in the store, control is transferred at the time of the sale to the customer. For merchandise delivered to the customer, control is transferred either when delivery has been completed, or when we have a present right to payment which, for certain merchandise, occurs upon conveyance of the merchandise to the carrier for delivery. We exclude from revenue any taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and are concurrent with revenue-generating activities. Our payment terms are primarily at the point of sale for merchandise sales and for most services. We have elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation.

Revenue from the sale of merchandise is reported net of sales returns. We estimate future returns based on historical return trends together with current product sales performance. As of February 1, 2026 and February 2, 2025, we recorded a liability for expected sales returns of $40.1 million and $42.7 million, respectively, within other current liabilities and a corresponding asset for the expected net realizable value of the merchandise inventory to be returned of $11.9 million and $12.1 million, respectively, within other current assets in our Consolidated Balance Sheets.

Gift Card and Other Deferred Revenue

We defer revenue and record a liability when cash payments are received in advance of satisfying performance obligations, primarily associated with our merchandise sales, stored-value cards, customer loyalty programs and incentives received from credit card issuers.

We issue stored-value cards that may be redeemed on future merchandise purchases. Our stored-value cards have no expiration dates. Revenue from stored-value cards is recognized at a point in time upon redemption of the card and as control of the merchandise is transferred to the customer. Breakage is recognized in a manner consistent with our historical redemption patterns, taking into consideration escheatment laws as applicable. Breakage is recognized over the estimated period of redemption of our cards of approximately four years, the majority of which is recognized within one year of the card issuance. Breakage income is not material to our Consolidated Financial Statements.

We offer a customer loyalty program, The Key Rewards, that allows members to earn points on qualifying purchases. Customers can earn points through spend on our private label and co-branded credit cards, or through non-credit card qualifying purchases. Points earned through either method enable members to receive certificates that may be redeemed on future merchandise purchases. This customer option is a material right and, accordingly, represents a separate performance obligation to the customer. The allocated consideration for the points or certificates earned by our loyalty program members is deferred based on the standalone selling price of the points and recorded within gift card and other deferred revenue within our Consolidated Balance Sheets. The measurement of standalone selling prices takes into consideration the discount the customer would receive in a separate transaction for the delivered item, as well as our estimate of certificates expected to be issued and redeemed, based on historical patterns. This measurement is applied to our portfolio of performance obligations for points or certificates earned, as all obligations have similar economic characteristics. We believe the impact to our Consolidated Financial Statements would not be materially different if this measurement was applied to each

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individual performance obligation. Revenue is recognized for these performance obligations at a point in time when certificates are redeemed by the customer. These obligations relate to contracts with terms less than one year, as our certificates generally expire within six months of issuance.

We enter into agreements with credit card issuers in connection with our private label and co-branded credit cards, whereby we receive cash incentives in exchange for promised services, such as licensing our brand names and marketing the credit card program to customers. These separate non-loyalty program related services promised under these agreements are interrelated and are thus considered a single performance obligation. Revenue is recognized over time as we transfer promised services throughout the contract term.

As of February 1, 2026 and February 2, 2025, we had recorded $602.9 million and $584.8 million, respectively, for gift card and other deferred revenue within current liabilities in our Consolidated Balance Sheets.

Supplier Allowances

We receive allowances or credits from certain suppliers for volume and other rebates. We treat such rebates as an offset to the cost of the product or services provided at the time the expense is recorded. These allowances and credits received are recorded in cost of goods sold.

Cost of Goods Sold

Cost of goods sold includes (i) cost of merchandise, tariffs, inbound freight costs, freight-to-store costs and other inventory-related costs such as replacements, damages, obsolescence and shrinkage, (ii) occupancy costs, which consists of rent, other costs (including property taxes, common area maintenance and utilities) and depreciation, and (iii) shipping costs, which consists of third-party delivery services and shipping materials.

Selling, General and Administrative Expenses

SG&A consists of non-occupancy-related costs associated with our retail stores and e-commerce websites, distribution and manufacturing facilities, customer care centers, supply chain operations (buying, receiving and inspection) and corporate administrative functions. These costs include employment, advertising, third-party credit card processing, impairment and other general expenses.

Stock-Based Compensation

We account for stock-based compensation arrangements by measuring and recognizing compensation expense for all stock-based awards using a fair value-based method. Restricted stock units are valued using the closing price of our stock on the date prior to the date of grant. The fair value of each stock-based award is amortized over the requisite service period, net of estimated forfeitures. Compensation expense for all performance-based restricted stock units is recognized over the requisite service period when achievement of the performance condition is deemed probable, net of estimated forfeitures. We estimate the forfeiture rate based on an analysis of historical experience as well as expected future trends.

Advertising Expenses

Advertising expenses consist of media, supplier and production costs related to digital advertising, catalog mailings, email and other marketing activities. Advertising costs are expensed as incurred.

Total advertising expenses were approximately $552.6 million, $567.7 million and $502.2 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

Foreign Currency Translation

Some of our foreign operations have a functional currency other than the U.S. dollar. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded as other comprehensive income within stockholders’ equity. Foreign currency exchange gains and losses are recorded in SG&A.

Earnings Per Share

Basic earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding plus common stock equivalents for the period using the treasury stock method. Common stock equivalents consist of shares subject to stock-based awards with exercise prices less than or equal to the average market price of our common stock for the period, to the extent their inclusion would be dilutive.

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Income Taxes

Income taxes are accounted for using the asset and liability method. Under this method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in our Consolidated Financial Statements. We record reserves for our estimates of the additional income tax liability that is more likely than not to result from the ultimate resolution of foreign and domestic tax examinations. At any point in time, many tax years are subject to examination by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. We review and update the estimates used in the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, upon completion of tax examinations, upon expiration of statutes of limitation, or upon occurrence of other events.

In order to compute income tax on an interim basis, we estimate what our effective tax rate will be for the full fiscal year and adjust these estimates throughout the year as necessary. Adjustments to our income tax provision due to changes in our estimated effective tax rate are recorded in the interim period in which the change occurs. The tax expense (or benefit) related to items other than ordinary income is individually computed and recognized when the items occur. Our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of our earnings in various taxing jurisdictions or changes in tax law.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The improvements in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The adoption of this standard had an impact on the income tax disclosures, but it did not result in a change to our current or previously reported financial results. We elected to adopt this guidance prospectively; therefore, the current-year effective tax rate reconciliation in Note D is presented in the new required format, while prior-year periods are presented using the previous guidance.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and ASU 2025-01*, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date*. The ASU requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory, employee compensation, and depreciation and amortization. This ASU is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The ASU amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. This ASU is effective for fiscal years and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The ASU establishes the recognition, measurement and presentation of government grants received by a business entity, including guidance for a grant related to an asset and a grant related to income. This ASU is effective for fiscal years beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

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Note B: Property and Equipment

Property and equipment consists of the following:

			As of
(In thousands)			February 1, 2026						February 2, 2025
Capitalized software			$	1,005,775					$	956,596
Leasehold improvements			898,320						883,414
Fixtures and equipment			894,423						869,371
Land and buildings			181,425						180,074
Corporate aircraft			52,710						—
Corporate systems projects in progress			76,387						43,158
Construction in progress 1			30,284						40,399
Total			3,139,324						2,973,012
Accumulated depreciation			(2,044,166)						(1,939,078)
Property and equipment, net			$	1,095,158					$	1,033,934

1**Construction in progress primarily consists of leasehold improvements and fixtures and equipment related to new, expanded or remodeled stores and distribution centers where construction had not been completed as of year-end. For the fiscal year ended February 2, 2025, construction in progress also included the corporate aircraft.

Note C: Borrowing Arrangements

Credit Facility

In June 2025, we amended our existing credit facility, which increased our unsecured revolving line of credit to $600 million, amended certain interest rates and extended the maturity date of the facility, in addition to other updates (the “Credit Facility”). Our Credit Facility may be used to borrow revolving loans or to request the issuance of letters of credit. We may, upon notice to the administrative agent, request existing or new lenders, at such lenders’ option, to increase the Credit Facility by up to $250 million to provide for a total of $850 million of unsecured revolving credit.

During fiscal 2025 and fiscal 2024, we had no borrowings under our Credit Facility. Additionally, as of February 1, 2026, issued but undrawn standby letters of credit of $14.1 million were outstanding under our Credit Facility. The standby letters of credit were primarily issued to secure the liabilities associated with workers’ compensation and other insurance programs. Our Credit Facility matures on June 26, 2030, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must be cash collateralized. We may elect to extend the maturity date, subject to lender approval.

The interest rate applicable to the Credit Facility is variable and may be elected by us as: (i) the Secured Overnight Financing Rate (“SOFR”) and an applicable margin based on our leverage ratio ranging from 0.91% to 1.55% or (ii) a base rate as defined in the Credit Facility, plus an applicable margin based on our leverage ratio, ranging from 0% to 0.55%.

Our Credit Facility contains certain restrictive loan covenants, including, among others, a financial covenant requiring a maximum leverage ratio (funded debt adjusted for operating lease liabilities to earnings before interest, income tax, depreciation, amortization and rent expense), and covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of assets. As of February 1, 2026, we were in compliance with our financial covenants under our Credit Facility and, based on our current projections, we expect to remain in compliance throughout the next 12 months.

Letter of Credit Facilities

We have three unsecured letter of credit facilities for a total of $35 million. Our letter of credit facilities contain covenants that are consistent with our Credit Facility. Interest on unreimbursed amounts under our letter of credit facilities accrues at a base rate as defined in the Credit Facility, plus an applicable margin based on our leverage ratio. As of February 1, 2026, no amounts were outstanding under our letter of credit facilities. On August 7, 2025, we renewed two of our letter of credit facilities totaling $30 million on substantially similar terms. The two letter of credit facilities mature on August 18, 2026, and the latest expiration date possible for future letters of credit issued under these facilities is January 15, 2027. One of the letter of credit facilities totaling $5 million matures on June 26, 2030, which is also the latest expiration date possible for future letters of credit issued under the facility.

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Note D: Income Taxes

The components of earnings before income taxes, by tax jurisdiction, are as follows:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
United States			$	1,253,410					$	1,301,017					$	1,154,160
Foreign			199,150						184,715						119,195
Total			$	1,452,560					$	1,485,732					$	1,273,355

The provision for income taxes consists of the following:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
Current
Federal			$	242,980					$	276,201					$	275,734
State			65,877						64,834						54,903
Foreign			34,951						29,187						22,041
Total current			$	343,808					$	370,222					$	352,678
Deferred
Federal			$	22,799					$	(7,608)					$	(30,632)
State			(2,024)						(1,925)						686
Foreign			(460)						(208)						861
Total deferred			$	20,315					$	(9,741)					$	(29,085)
Total provision			$	364,123					$	360,481					$	323,593

On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was signed into law in the United States. The OBBB includes a broad range of tax reform provisions, including permanently extending and modifying certain expiring provisions of the 2017 Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions becoming effective in fiscal 2025 and the majority taking effect in future years. The OBBB had a minimal impact on the effective tax rate but resulted in favorable cash tax impacts in fiscal 2025 as a result of certain accelerated tax deductions.

Since the Organization for Economic Co-operation and Development (“OECD”) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“Framework”) in 2021, a number of countries have begun to enact legislation to implement the Framework, including the Pillar Two minimum tax. Our subsidiaries were not subject to Pillar Two minimum tax in fiscal 2025. Pillar Two minimum tax will be treated as a period cost in future periods when it is applicable. We are continuing to evaluate the potential impact of the Framework on future periods and monitoring legislative developments by other countries, especially in the regions in which we operate.

For fiscal 2025, ASU 2023-09 requires an expanded view of the rate reconciliation as well as a summary of income taxes paid for material jurisdictions. We have elected a prospective presentation. The tables below represent the new standard for fiscal 2025 and revert to prior guidance for comparable years.

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A reconciliation of income taxes at the federal statutory corporate rate to the effective rate is as follows:

			For the Fiscal Year Ended
			February 1, 2026
(In thousands)			$						%
United States federal statutory tax rate			$	305,038					21.0		%
State and local income taxes, net of federal income tax effect 1			59,484						4.1
Foreign tax effects			(3,667)						(0.3)
Effect of changes in tax laws or rates enacted in the current period			—						—
Effect of cross-border tax laws			69						—
Tax credits			(397)						—
Changes in valuation allowance			—						—
Nontaxable or nondeductible items			6,818						0.5
Changes in unrecognized tax benefits			(1,907)						(0.1)
Other adjustments			(1,315)						(0.1)
Effective tax rate			$	364,123					25.1		%

1**State taxes in California, New York, New Jersey and Illinois make up the majority of the tax effect in this category.

A reconciliation of income taxes at the federal statutory corporate rate to the effective rate for prior fiscal years is as follows:

									For the Fiscal Year Ended
									February 2, 2025						January 28, 2024
Federal income taxes at the statutory rate									21.0		%				21.0		%
State income tax rate									4.1						4.4
Officer’s compensation under Sec.162(m)									0.9						0.9
Change in uncertain tax positions									0.2						(0.5)
Deferred true up									—						0.2
Stock-based compensation									(1.1)						(0.3)
Foreign rate differential									(0.5)						(0.3)
Credits									(0.1)						—
Other									(0.2)						—
Total									24.3		%				25.4		%

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The company’s income taxes paid (net of refunds received), are as follows:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026
Federal			$	226,000
State:
California			20,861
Other			53,227
Total State			74,088
Foreign			30,216
Total			$	330,304

Significant components of our deferred income tax accounts are as follows:

			As of
(In thousands)			February 1, 2026						February 2, 2025
Deferred tax assets (liabilities)
Operating lease liabilities			$	367,263					$	332,146
Merchandise inventories			38,056						36,935
Compensation			34,037						28,832
Gift cards			26,549						24,515
Accrued liabilities			15,845						16,879
Executive deferred compensation			13,472						12,204
Stock-based compensation			12,752						13,822
State taxes			9,298						7,956
Loyalty rewards			2,694						2,972
State net operating loss			929						977
Operating lease right-of-use assets			(318,480)						(294,216)
Property and equipment			(74,947)						(34,254)
Deferred lease incentives			(23,803)						(23,452)
Other			(5,403)						(7,587)
Valuation allowance			(743)						(1,198)
Total deferred tax assets, net			$	97,519					$	116,531

We had net state operating loss carry-forwards as of February 1, 2026. A valuation allowance has been provided against certain state net operating loss carry-forwards, as we do not expect to fully utilize the losses in future years.

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The following table summarizes the activity related to gross unrecognized tax benefits:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
Beginning balance			$	32,373					$	31,582					$	37,068
Increases related to current year tax positions			6,059						5,119						4,966
Increases for tax positions for prior years			276						271						194
Decrease for tax positions for prior years			(245)						(558)						(1,170)
Settlements			—						(370)						—
Lapse in statute of limitations			(3,415)						(3,671)						(9,476)
Ending balance			$	35,048					$	32,373					$	31,582

As of February 1, 2026, we had $35.0 million of gross unrecognized tax benefits, of which $28.1 million would, if recognized, affect the effective tax rate.

We accrue interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of February 1, 2026 and February 2, 2025, accruals for the payment of interest and penalties totaled $8.2 million and $6.7 million, respectively.

We file income tax returns in the U.S. and foreign jurisdictions. We are subject to examination by the tax authorities in these jurisdictions. U.S. federal taxable years for which the statute of limitations has not expired are fiscal years 2022 to 2025. Substantially all material state, local and foreign jurisdictions’ statutes of limitations are closed for taxable years prior to 2021.

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Note E: Leases

The components of our lease costs are as follows:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025			January 28, 2024
Operating lease costs			$	310,736					$	299,105		$	296,779
Variable lease costs			126,545						127,291			132,304
Total lease costs			$	437,281					$	426,396		$	429,083

Sublease income and short-term lease costs were not material to us for fiscal 2025, fiscal 2024 and fiscal 2023.

Supplemental cash flow information related to our leases are as follows:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025			January 28, 2024
Cash paid for amounts included in the measurement of operating lease liabilities			$	326,616					$	325,650		$	322,293

Our net additions to right-of-use assets were $340.3 million and $209.4 million in fiscal 2025 and fiscal 2024, respectively.

Additional information related to our leases is as follows:

			For the Fiscal Year Ended
			February 1, 2026						February 2, 2025
Weighted-average remaining lease term (years)			6.5						6.5
Weighted-average incremental borrowing rate			4.3		%				4.0		%

As of February 1, 2026, the future minimum lease payments under our operating lease liabilities are as follows:

(In thousands)
Fiscal 2026			$	325,743
Fiscal 2027			300,684
Fiscal 2028			257,483
Fiscal 2029			216,337
Fiscal 2030			178,403
Fiscal 2031 and thereafter			465,777
Total lease payments			1,744,427
Less: interest			(287,522)
Total operating lease liabilities			1,456,905
Less: current operating lease liabilities			(221,356)
Total non-current operating lease liabilities			$	1,235,549

Additionally, we have future payment obligations of $205.9 million relating to executed lease agreements for which the related lease terms had not yet commenced as of February 1, 2026, and, therefore, are not included in the table above.

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Note F: Earnings Per Share

Basic earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding and common stock equivalents outstanding for the period using the treasury stock method. Common stock equivalents consist of shares subject to stock-based awards to the extent their inclusion would be dilutive.

The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings per share computations:

(In thousands, except per share amounts)			Net Earnings						Weighted-Average Shares						Earnings Per Share
Fiscal 2025
Basic			$	1,088,437					121,446						$	8.96
Effect of dilutive stock-based awards									1,707
Diluted			$	1,088,437					123,153						$	8.84
Fiscal 2024
Basic			$	1,125,251					126,242						$	8.91
Effect of dilutive stock-based awards									1,799
Diluted			$	1,125,251					128,041						$	8.79
Fiscal 2023
Basic			$	949,762					129,148						$	7.35
Effect of dilutive stock-based awards									1,395
Diluted			$	949,762					130,543						$	7.28

The effect of anti-dilutive stock-based awards was not material for fiscal 2025, fiscal 2024 and fiscal 2023.

Note G: Stock-Based Compensation

Equity Award Programs

Our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, “option awards”), restricted stock awards, restricted stock units (including those that are performance-based), deferred stock awards (collectively, “stock awards”) and dividend equivalents up to an aggregate of approximately 85.4 million shares. As of February 1, 2026, there were approximately 7.6 million shares available for future grant. Awards may be granted under the Plan to officers, employees and non-employee members of the Board of Directors of the Company or any parent or subsidiary. Shares issued as a result of award exercises or releases are primarily funded with the issuance of new shares.

Stock Awards

Annual grants of stock awards are limited to two million shares on a per person basis. Stock awards granted to associates generally vest evenly over a period of four years for service-based awards. Certain performance-based awards, which have variable payout conditions based on predetermined financial targets, generally vest three years from the date of grant. Certain stock awards and other agreements contain vesting acceleration clauses resulting from events including, but not limited to, retirement, disability, death, merger or a similar corporate event. Stock awards granted to non-employee Board of Directors members generally vest in one year. Non-employee Board of Directors members automatically receive stock awards on the date of their initial election to the Board of Directors and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve as a non-employee Board of Directors member). Non-employee directors may also elect, on terms prescribed by the Company, to receive all of their annual cash compensation to be earned in respect of the applicable fiscal year either in the form of (i) fully vested stock units or (ii) fully vested deferred stock units.

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Stock-Based Compensation Expense

During fiscal 2025, fiscal 2024 and fiscal 2023, we recognized total stock-based compensation expense, as a component of SG&A, of $106.5 million, $99.0 million and $84.8 million, respectively. As of February 1, 2026, there was $157.2 million of unrecognized stock-based compensation expense (net of estimated forfeitures), which we expect to recognize on a straight-line basis over a weighted-average remaining service period of approximately 1.7 years. At each reporting period, all compensation expense attributable to vested awards has been fully recognized.

Restricted Stock Units

The following table summarizes our restricted stock unit activity during fiscal 2025:

			Shares						Weighted-Average Grant Date Fair Value						Weighted-Average Contractual Term Remaining (Years)						Intrinsic Value 1
Balance at February 2, 2025			2,185,605						$	92.97
Granted			489,419						145.58
Granted, with vesting subject to performance conditions			206,423						138.86
Released 2			(796,365)						86.23
Cancelled			(58,731)						105.11
Balance at February 1, 2026			2,026,351						$	112.64					1.09						$	414,693,000
Vested plus expected to vest at February 1, 2026 3			2,396,030						$	113.11					1.07						$	490,348,000

1**Intrinsic value for outstanding and unvested restricted stock units is based on the market value of our common stock on the last business day of the fiscal year (or $204.65).

2**Excludes 183,009 incremental shares released due to achievement of performance conditions above target.

3**Includes incremental shares above target for certain performance-based awards based on probable achievement of performance conditions.

The following table summarizes additional information about restricted stock units:

			For the Fiscal Year Ended
			February 1, 2026						February 2, 2025						January 28, 2024
Weighted-average grant date fair value per share of awards granted			$	143.58					$	159.77					$	60.91
Intrinsic value of awards released 1 2			$	161,817,000					$	207,510,000					$	118,417,000

1**Intrinsic value for releases is based on the market value on the date of release.

2**Includes 183,009, 200,852 and 417,340 incremental shares released due to achievement of performance conditions above target in fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

Tax Benefit

We record excess tax benefits and deficiencies resulting from the settlement of stock-based awards as a benefit or expense within income taxes in the period in which they occur. During fiscal 2025, fiscal 2024 and fiscal 2023, the current tax benefit related to stock-based awards totaled $23.9 million, $27.5 million and $16.6 million, respectively.

Note H: Williams-Sonoma, Inc. 401(k) Plan and Other Associate Benefits

We have a defined contribution retirement plan, the Williams-Sonoma, Inc. 401(k) Plan (the “401(k) Plan”), which permits eligible associates to make salary deferral contributions up to 75% of their eligible compensation each pay period up to the maximum limits allowable under the applicable provisions of the Internal Revenue Code. Each participant may choose to have their salary deferral contributions and earnings thereon invested in one or more investment funds, including the Williams-Sonoma, Inc. Stock Fund.

Our matching contribution is equal to 50% of each participant’s salary deferral contribution, taking into account only those contributions that do not exceed 6% of the participant’s eligible pay for the pay period. Our contributions

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to the plan were $10.7 million, $14.2 million and $13.6 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

The 401(k) Plan consists of two parts: a profit sharing plan portion and a stock bonus plan/associate stock ownership plan (the “ESOP”). The ESOP portion is the portion that is invested in the Williams-Sonoma, Inc. Stock Fund. The profit sharing and ESOP components of the 401(k) Plan are considered a single plan under Internal Revenue Code section 414(l).

We also have a nonqualified executive deferred compensation plan that provides supplemental retirement income benefits for a select group of management. This plan permits eligible associates to make salary and bonus deferrals that are 100% vested. We have an unsecured obligation to pay in the future the value of the deferred compensation adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. As of February 1, 2026 and February 2, 2025, $54.6 million and $49.4 million, respectively, is included in other long-term liabilities related to these deferred compensation obligations. Additionally, we have purchased life insurance policies on certain participants to potentially offset these unsecured obligations. The cash surrender value of these policies was $64.0 million and $53.6 million as of February 1, 2026 and February 2, 2025, respectively, and is included in other long-term assets, net.

Note I: Commitments and Contingencies

We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes, which are not currently material, have increased and continue to increase in number as our business expands and we grow as a company. We review the need for any loss contingency reserves and establish reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. In view of the inherent difficulty of predicting the outcome of these matters, it may not be possible to determine whether any loss is probable or to reasonably estimate the amount of the loss until the case is close to resolution, in which case no reserve is established until that time. Any claims against us, whether meritorious or not, could result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a material adverse effect on our Consolidated Financial Statements when taken as a whole.

Note J: Stock Repurchase Program and Dividends

Stock Repurchase Program

During fiscal 2025, pursuant to our stock repurchase program we repurchased 4,888,240 shares of our common stock at an average cost of $174.70 per share for an aggregate cost of $854.0 million, excluding excise taxes of $7.7 million. As of February 1, 2026, there was $338.6 million remaining under our September 2024 stock repurchase authorization. In November 2025, our Board of Directors approved a new $1.0 billion stock repurchase authorization, which will become effective once our September 2024 authorization is fully utilized. As of February 1, 2026, the total stock repurchase authorization remaining under the program was approximately $1.3 billion.

As of February 1, 2026, we held treasury stock of $2.0 million. We intend to satisfy future stock-based award settlements in certain foreign jurisdictions using this treasury stock.

During fiscal 2024, we repurchased 5,940,939 shares of our common stock at an average cost of $135.92 per share for an aggregate cost of $807.5 million, excluding excise taxes of $6.9 million. During fiscal 2023, we repurchased 5,243,722 shares of our common stock at an average cost of $59.69 per share for an aggregate cost of $313.0 million, excluding excise taxes of $2.5 million.

Stock repurchases under our program may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions.

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Dividends

Total cash dividends declared in fiscal 2025, fiscal 2024 and fiscal 2023, were $326.8 million, or $2.64 per common share, $293.2 million, or $2.28 per common share and $236.8 million, or $1.80 per common share, respectively. In March 2026, we announced that our Board of Directors authorized a 15% increase in our quarterly cash dividend, from $0.66 to $0.76 per common share, subject to capital availability. Our quarterly cash dividend may be limited or terminated at any time.

Note K: Segment Reporting

We identify our operating segments according to how our business activities are managed and evaluated. Each of our brands are operating segments. Because they share similar economic and other qualitative characteristics, we have aggregated our operating segments into a single reportable segment.

Our single reportable segment derives revenues from sales of merchandise through our e-commerce websites, direct-mail catalogs and retail stores, and includes shipping fees received from customers for delivery of merchandise to their homes. The accounting policies of our single reportable segment are described in the Summary of Significant Accounting Policies within Note A.

Our chief operating decision maker (“CODM”) is our Chief Executive Officer. The CODM assesses performance for our single reportable segment and decides how to allocate resources based on operating income, which is reported on the Consolidated Statements of Earnings. Segment balance sheet information is not regularly provided to the CODM. The CODM uses operating income to decide whether to reinvest profits into our operating segments or allocate to other purposes, such as for repurchases of common stock, payment of dividends or acquisitions.

Operating income is used to monitor budget versus actual results. The CODM also uses operating income in competitive analysis by benchmarking to our peers. The competitive analysis, along with the monitoring of budget versus actual results, is used in assessing performance of the segment.

The following table summarizes reported net revenues, significant segment expenses, operating income and earnings before income taxes for fiscal 2025, fiscal 2024 and fiscal 2023:

			For the Fiscal Year Ended
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
Net revenues			$	7,806,816					$	7,711,541					$	7,750,652
Less:
Cost of merchandise and shipping			3,383,429						3,336,102						3,632,761
Occupancy, excluding depreciation			591,678						567,602						584,469
Employment			1,254,658						1,227,305						1,167,024
Advertising			552,587						567,723						502,245
Other segment items 1			378,891						354,914						389,938
Depreciation and amortization expense			229,851						227,712						230,022
Operating income			$	1,415,722					$	1,430,184					$	1,244,193
Interest income, net			36,838						55,548						29,162
Earnings before income taxes			$	1,452,560					$	1,485,732					$	1,273,355

1**Other segment items within operating income include general expenses, which consist primarily of credit card fees, data processing expenses and administrative expenses.

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The following table summarizes our net revenues by brand for fiscal 2025, fiscal 2024 and fiscal 2023:

			For the Fiscal Year Ended 1
(In thousands)			February 1, 2026						February 2, 2025						January 28, 2024
Pottery Barn			$	2,999,332					$	3,039,939					$	3,206,167
West Elm			1,859,501						1,840,582						1,854,811
Williams Sonoma 2			1,362,308						1,302,821						1,260,045
Pottery Barn Kids and Teen			1,138,051						1,107,057						1,060,470
Other 3			447,624						421,142						369,159
Total 4			$	7,806,816					$	7,711,541					$	7,750,652

1**Includes business-to-business net revenues within each brand.

2**Includes Williams Sonoma Home net revenues.

3**Primarily consists of net revenues from Rejuvenation, Mark and Graham, our international franchise operations and GreenRow.

4**Includes net revenues related to our international operations (including our operations in Canada, Australia and the United Kingdom and our franchise businesses) of $321.3 million, $336.3 million and $328.9 million for fiscal 2025, fiscal 2024 and fiscal 2023, respectively.

Long-lived assets by geographic location, which excludes deferred income taxes, goodwill and intangible assets, are as follows:

(In thousands)			February 1, 2026						February 2, 2025
U.S.			$	2,448,273					$	2,268,691
International			57,552						68,425
Total			$	2,505,825					$	2,337,116

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Note L: Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy established by Accounting Standards Codification 820, Fair Value Measurement, which defines three levels of inputs that may be used to measure fair value, as follows:

• Level 1: inputs which include quoted prices in active markets for identical assets or liabilities;

• Level 2: inputs which include observable inputs other than Level 1 inputs, such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

• Level 3: inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability.

The fair values of our cash and cash equivalents are based on Level 1 inputs, which include quoted prices in active markets for identical assets.

Long-lived Assets

We review the carrying value of all long-lived assets for impairment, primarily at an individual store level, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We measure property and equipment at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. We measure right-of-use assets on a nonrecurring basis using Level 2 inputs that are corroborated by market data. Where Level 2 inputs are not readily available, we use Level 3 inputs. Fair value of these long-lived assets is based on the present value of estimated future cash flows using a discount rate commensurate with the risk.

The significant unobservable inputs used in the fair value measurement of our property and equipment and right-of-use assets are sales growth/decline, gross margin, employment costs, lease escalations, market rental rates, changes in local real estate markets in which we operate, inflation and the overall economics of the retail industry. Significant fluctuations in any of these inputs individually could significantly impact our measurement of fair value.

There were no transfers between Level 1, 2 or 3 categories during fiscal 2025 or fiscal 2024.

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Note M: Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows:

(In thousands)			Foreign Currency Translation						Cash Flow Hedges						Accumulated Other Comprehensive Income (Loss)
Balance at January 29, 2023			$	(14,458)					$	649					$	(13,809)
Foreign currency translation adjustments			(999)						—						(999)
Change in fair value of derivative financial instruments			—						160						160
Reclassification adjustment for realized (gain) loss on derivative financial instruments			—						(904)						(904)
Other comprehensive income (loss)			(999)						(744)						(1,743)
Balance at January 28, 2024			(15,457)						(95)						(15,552)
Foreign currency translation adjustments			(6,136)						—						(6,136)
Change in fair value of derivative financial instruments			—						1						1
Reclassification adjustment for realized (gain) loss on derivative financial instruments			—						94						94
Other comprehensive income (loss)			(6,136)						95						(6,041)
Balance at February 2, 2025			(21,593)						—						(21,593)
Foreign currency translation adjustments			8,417						—						8,417
Other comprehensive income (loss)			8,417						—						8,417
Balance at February 1, 2026			$	(13,176)					$	—					$	(13,176)

Note N: Subsequent Events

On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the tariffs imposed under IEEPA was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming the prior decision of the CIT in V.O.S. Selections, Inc. v. United States. As a result, on February 20, 2026, the U.S. President issued an executive order stating that the related tariffs were no longer in effect and ending the collection of these tariffs. However, the U.S. President then issued an additional executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective on February 24, 2026. The Supreme Court's ruling did not address whether importers who paid IEEPA tariffs are entitled to refunds, and that issue remains subject to further litigation before the CIT. We cannot predict whether or when any refunds will be available, or whether the administration will contest refund claims. We are currently assessing the impact of these actions on our operations and Consolidated Financial Statements, including our ability to recover certain tariffs paid.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Williams-Sonoma, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Williams-Sonoma, Inc. and subsidiaries (the “Company”) as of February 1, 2026 and February 2, 2025, the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended February 1, 2026, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of February 1, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 1, 2026 and February 2, 2025, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2026, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment for Store-level Long-lived Assets — Refer to Note A and L to the financial statements*.*

Critical Audit Matter Description

The Company performs an analysis of the carrying value of store-level long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the long-lived assets may not be recoverable. The Company’s evaluation of long-lived assets is primarily at the individual store level and involves the comparison of a store’s estimated future undiscounted cash flows over its remaining lease term to its carrying value. Impairment may result when the carrying value of the assets or asset group exceeds the estimated undiscounted future cash flows.

We identified the identification of indicators of impairment for store-level long-lived assets as a critical audit matter because the Company’s estimate of future store cash flows involves significant estimates and assumptions related to revenue growth rates and gross margin. Changes in these assumptions could have a significant impact on management’s conclusion on whether a store could be impaired and the impairment loss that is recorded.

Performing audit procedures to evaluate the appropriateness of the Company’s judgments used in these significant assumptions therefore involved a high degree of auditor judgment and an increased extent of effort, including the need to use more experienced audit professionals.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments regarding the forecasts of revenue growth and gross margin included the following, among others:

◦We tested the effectiveness of controls over the impairment of store-level long-lived assets, including those over management’s forecasts of future revenue growth and gross margin.

◦We evaluated management’s ability to accurately forecast revenue growth rates and gross margin by performing a retrospective lookback to compare actual results to management’s historical growth forecasts.

◦We evaluated the reasonableness of management’s revenue and gross margin by comparing the forecasts to (1) historical revenues and gross margins, (2) internal communications to management, (3) external communications made by management to analysts and investors, and (4) trends in the industry.

/s/ Deloitte & Touche LLP

San Francisco, CA

March 25, 2026

We have served as the Company’s auditor since 1980.

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