filings.toolsWilliams-Sonoma 10-Q 2026-08-02
Filed 2026-08-28. 8 sections, 116K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended August 2, 2026.
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-14077
WILLIAMS-SONOMA, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
3250 Van Ness Avenue, San Francisco, CA
(Address of principal executive offices)
94-2203880
(I.R.S. Employer
Identification No.)
94109
(Zip Code)
(415) 421-7900
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||||||||
| Common Stock, par value $.01 per share | WSM | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ¨ | ||||||||
| Non-accelerated filer | ¨ | Smaller reporting company | ☐ | ||||||||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of August 23, 2026, 117,779,173 shares of the registrant’s Common Stock were outstanding.
WILLIAMS-SONOMA, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED AUGUST 2, 2026
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | ||||||||
| PAGE | ||||||||
| Item 1. | Financial Statements (Unaudited) | 1 | ||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 20 | ||||||
| Item 4. | Controls and Procedures | 21 | ||||||
| PART II. OTHER INFORMATION | ||||||||
| Item 1. | Legal Proceedings | 22 | ||||||
| Item 1A. | Risk Factors | 22 | ||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 22 | ||||||
| Item 3. | Defaults Upon Senior Securities | 22 | ||||||
| Item 4. | Mine Safety Disclosures | 22 | ||||||
| Item 5. | Other Information | 23 | ||||||
| Item 6. | Exhibits | 24 |
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
| For the Thirteen Weeks Ended | For the Twenty-six Weeks Ended | ||||||||||||||||||||||
| (In thousands, except per share amounts) | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net revenues | $ | 1,959,757 | $ | 1,836,760 | $ | 3,765,213 | $ | 3,566,873 | |||||||||||||||
| Cost of goods sold | 947,809 | 972,137 | 1,959,839 | 1,936,441 | |||||||||||||||||||
| Gross profit | 1,011,948 | 864,623 | 1,805,374 | 1,630,432 | |||||||||||||||||||
| Selling, general and administrative expenses | 563,153 | 536,564 | 1,064,891 | 1,011,660 | |||||||||||||||||||
| Operating income | 448,795 | 328,059 | 740,483 | 618,772 | |||||||||||||||||||
| Interest income, net | 12,412 | 9,080 | 19,319 | 18,613 | |||||||||||||||||||
| Earnings before income taxes | 461,207 | 337,139 | 759,802 | 637,385 | |||||||||||||||||||
| Income taxes | 123,098 | 89,577 | 190,331 | 158,560 | |||||||||||||||||||
| Net earnings | $ | 338,109 | $ | 247,562 | $ | 569,471 | $ | 478,825 | |||||||||||||||
| Basic earnings per share | $ | 2.87 | $ | 2.03 | $ | 4.82 | $ | 3.91 | |||||||||||||||
| Diluted earnings per share | $ | 2.84 | $ | 2.00 | $ | 4.77 | $ | 3.86 | |||||||||||||||
| Shares used in calculation of earnings per share: | |||||||||||||||||||||||
| Basic | 117,765 | 122,121 | 118,075 | 122,614 | |||||||||||||||||||
| Diluted | 118,892 | 123,595 | 119,375 | 124,163 |
See Notes to Condensed Consolidated Financial Statements.
WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| For the Thirteen Weeks Ended | For the Twenty-six Weeks Ended | ||||||||||||||||||||||
| (In thousands) | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net earnings | $ | 338,109 | $ | 247,562 | $ | 569,471 | $ | 478,825 | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustments | (1,727) | 480 | (966) | 5,650 | |||||||||||||||||||
| Comprehensive income | $ | 336,382 | $ | 248,042 | $ | 568,505 | $ | 484,475 |
See Notes to Condensed Consolidated Financial Statements.
WILLIAMS-SONOMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| As of | |||||||||||||||||
| (In thousands, except per share amounts) | August 2, 2026 | February 1, 2026 | August 3, 2025 | ||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets | |||||||||||||||||
| Cash and cash equivalents | $ | 1,028,936 | $ | 1,019,801 | $ | 985,823 | |||||||||||
| Accounts receivable, net | 146,219 | 126,821 | 115,509 | ||||||||||||||
| Merchandise inventories, net | 1,447,423 | 1,462,849 | 1,433,605 | ||||||||||||||
| Prepaid expenses | 105,583 | 80,053 | 100,622 | ||||||||||||||
| Other current assets | 18,385 | 23,663 | 19,961 | ||||||||||||||
| Total current assets | 2,746,546 | 2,713,187 | 2,655,520 | ||||||||||||||
| Property and equipment, net | 1,121,677 | 1,095,158 | 1,029,526 | ||||||||||||||
| Operating lease right-of-use assets | 1,322,644 | 1,270,272 | 1,221,792 | ||||||||||||||
| Deferred income taxes, net | 74,433 | 99,161 | 95,797 | ||||||||||||||
| Goodwill | 77,369 | 77,398 | 77,374 | ||||||||||||||
| Other long-term assets, net | 163,637 | 156,736 | 148,359 | ||||||||||||||
| Total assets | $ | 5,506,306 | $ | 5,411,912 | $ | 5,228,368 | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Accounts payable | $ | 703,822 | $ | 637,985 | $ | 601,661 | |||||||||||
| Accrued expenses | 207,857 | 314,588 | 202,914 | ||||||||||||||
| Gift card and other deferred revenue | 618,926 | 602,940 | 578,192 | ||||||||||||||
| Income taxes payable | 62,098 | 78,943 | 74,329 | ||||||||||||||
| Operating lease liabilities | 217,032 | 221,356 | 222,572 | ||||||||||||||
| Other current liabilities | 88,843 | 98,318 | 86,641 | ||||||||||||||
| Total current liabilities | 1,898,578 | 1,954,130 | 1,766,309 | ||||||||||||||
| Long-term operating lease liabilities | 1,310,914 | 1,235,549 | 1,171,675 | ||||||||||||||
| Other long-term liabilities | 155,900 | 139,674 | 140,688 | ||||||||||||||
| Total liabilities | 3,365,392 | 3,329,353 | 3,078,672 | ||||||||||||||
| Commitments and contingencies – See Note F | |||||||||||||||||
| Stockholders’ equity | |||||||||||||||||
| Preferred stock: $0.01 par value; 7,500 shares authorized; none issued | — | — | — | ||||||||||||||
| Common stock: $0.01 par value; 253,125 shares authorized; 117,779, 118,770 and 121,790 shares issued and outstanding at August 2, 2026, February 1, 2026 and August 3, 2025, respectively | 1,178 | 1,188 | 1,219 | ||||||||||||||
| Additional paid-in capital | 543,931 | 587,433 | 544,244 | ||||||||||||||
| Retained earnings | 1,611,605 | 1,509,129 | 1,622,191 | ||||||||||||||
| Accumulated other comprehensive loss | (14,142) | (13,176) | (15,943) | ||||||||||||||
| Treasury stock, at cost: 11, 14 and 14 shares as of August 2, 2026, February 1, 2026 and August 3, 2025, respectively | (1,658) | (2,015) | (2,015) |
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our business and operating results to differ materially from those expressed or implied by such statements. Such forward-looking statements include, without limitation, statements related to: our ability to provide products that are designed and built for durability and longevity at competitive prices; changes in and the related impact of U.S. (federal, state and local) and international tax laws and trade policies and regulations; our ability to mitigate current and potential future tariffs; the complementary nature of our e-commerce and retail channels; the plans, strategies, initiatives and objectives of management for future operations; our ability to execute strategic priorities and growth initiatives, including those regarding digital leadership, product and technology innovation, cross-brand initiatives, retail transformation and operational excellence; the strength of our business and our brands; our marketing efforts; our ability to provide world-class customer service through supply chain improvements; our belief that our key differentiators, growth strategies and the efficiencies of our operating model will allow us to reduce costs and manage inventory levels in both the short- and long-term; the highly competitive nature of our industry; our beliefs about our competitive advantages and areas of potential future growth in the market; the seasonal variations in demand; our ability to recruit, retain and motivate skilled personnel; our ability to protect our intellectual property rights; our ability to comply with the laws, rules and regulations of the U.S. and multiple foreign jurisdictions in which we operate; factors, including but not limited to general economic conditions, inflationary pressures, consumer disposable income, rising fuel prices, recession and fears of recession, unemployment, war and fears of war, adverse weather, availability of consumer credit, conditions in the housing market, elevated interest rates, and consumer confidence in current and future economic conditions that can affect consumer spending; the impact of periods of decreased home purchases; challenges we may face growing our business-to-business division; our ability to anticipate consumer preferences and buying trends overall and as they relate to specific brands; effective inventory management; timely and effective sourcing of merchandise from our foreign and domestic suppliers and delivery of merchandise through our supply chain to our stores and customers; factors, including but not limited to fuel costs, labor disputes, union organizing activity, geopolitical instability, and acts of terrorism and war, that can affect the global supply chain, including our third-party providers; our belief in the adequacy of our facilities and the availability of suitable additional or substitute space; our ability to successfully manage our order-taking and fulfillment operations; our ability to protect our brand reputation; our ability to respond to the growing use of and also to adopt new technologies, including artificial intelligence; changes to our technology; uncertainties in e-marketing infrastructure and regulation; our belief in the reasonableness of the steps taken by us and our suppliers to protect the security and confidentiality of the information we collect; multi-channel and multi-brand complexities; our retail initiatives; our brands, products and related initiatives, including our ability to introduce new products, product lines, brands, and brand extensions, and bring in new customers; our belief in the ultimate resolution of current legal proceedings; challenges associated with our global presence and expansion efforts; shortages of raw materials used to make our products; the impact of non-adherence by our suppliers to our global compliance program and quality control standards; the effects of fluctuations in foreign currency rates and the impact of our hedging against such risks; our ability to maintain proper and effective internal controls; our compliance with financial covenants; disruptions in the financial markets; our ability to control employment, advertising, occupancy and other operating costs; the adequacy of our insurance coverage; our stock repurchase program; payment of dividends; the impact of new accounting pronouncements; our belief that our cash on hand and available credit facilities will provide adequate liquidity for our business operations; our belief regarding the effects of potential losses under our indemnification obligations; the effects of changes in our inventory reserves; our ability to deliver core-brand growth and growth from our emerging brands; our ability to drive long-term sustainable returns; our capital allocation strategy in fiscal 2026; our planned use of cash in fiscal 2026; projections of earnings, revenues, growth and other financial items; and statements of belief and statements of assumptions underlying any of the foregoing. You can identify these and other forward-looking statements by the use of words such as “will,” “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. The risks, uncertainties and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements include, but are not limited to, those discussed under the heading “Risk Factors” in this document and our Annual Report on Form 10-K for the fiscal year ended February 1, 2026, and the risks, uncertainties and assumptions discussed from time to time in our other public filings and public announcements. All forward-looking statements included in this document are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.
OVERVIEW
Williams-Sonoma, Inc., (the “Company”, “we”, or “us”) is a specialty retailer of high-quality products for the home. We are the world’s largest digital-first, design-led and sustainable home retailer. Our brands – Williams Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, West Elm, Williams Sonoma Home, Rejuvenation, Mark and Graham, GreenRow, and Dormify – 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.
The following discussion and analysis of our financial condition, results of operations, and liquidity and capital resources for the thirteen weeks ended August 2, 2026 (“second quarter of fiscal 2026”), as compared to the thirteen weeks ended August 3, 2025 (“second quarter of fiscal 2025”) and twenty-six weeks ended August 2, 2026 (“first half of fiscal 2026”), as compared to the twenty-six weeks ended August 3, 2025 (“first half of fiscal 2025”), should be read in conjunction with our Condensed Consolidated Financial Statements and the notes thereto. Explanations of changes in operational results are discussed in order of magnitude.
Beginning in fiscal 2025, the tariff landscape has evolved and impacted our business. While our tariff mitigation efforts reduced the overall effect, tariffs had a greater impact on our Condensed Consolidated Statement of Earnings in the first half of fiscal 2026 than in the first half of fiscal 2025 due to increased flow‑through of higher tariffs into cost of goods sold.
Tariff Refund
In April 2026, we filed for a refund of the tariffs we paid in fiscal 2025 and fiscal 2026 assessed under International Emergency Economic Powers Act (“IEEPA”) in an aggregate amount of $197.8 million. During the second quarter of fiscal 2026, we applied the loss recovery model and determined that the receipt of the IEEPA refund was probable and estimable and we recorded a refund receivable.
During the second quarter of fiscal 2026, we recorded (i) a reduction of cost of goods sold of $167.8 million related to refunds received for tariffs that have been previously expensed and (ii) related interest income of $6.3 million. This income was partially offset by (i) a provision of $47.5 million to reimburse certain merchandise vendors that previously provided tariff-related concessions to the Company and (ii) a one-time tariff-related employee recognition cost of $10.0 million, in the form of a discretionary 401(k) contribution to all eligible employees.
As of August 2, 2026, we deferred $29.3 million of the tariff refund income as a reduction of merchandise inventories in our Condensed Consolidated Balance Sheet, which we anticipate recognizing as a reduction to cost of goods sold in the third quarter of fiscal 2026. In the second quarter of fiscal 2026, we collected cash refunds of $200.2 million, which includes related interest, and substantially all of our initial refund claim of $197.8 million has been collected as of August 2, 2026, with a remaining tariff refund receivable of $3.2 million in our Condensed Consolidated Balance Sheet.
Second Quarter of Fiscal 2026 Financial Results
Net revenues in the second quarter of fiscal 2026 increased $123.0 million or 6.7%, due to (i) company comparable brand revenue (“company comp”) growth of $109.4 million, or 6.2% and (ii) non-comparable brand revenue growth of $13.6 million. From a channel perspective, the company comp growth of 6.2% was driven by comp growth of 6.5% in our e-commerce channel and comp growth of 5.5% in our retail channel.
In the second quarter of fiscal 2026, Pottery Barn, our largest brand, drove a comparable brand revenue (“brand comp”) of 5.1% with strength in furniture, textiles and lighting.
The Pottery Barn Kids and Teen brands delivered a brand comp of 3.5% in the second quarter of fiscal 2026 driven by strength in furniture and non-furniture categories, collaborations, baby offerings and dorm assortments.
West Elm drove a brand comp of 6.4% in the second quarter of fiscal 2026 with strength in retail, collaborations and new non-furniture and furniture products.
The Williams Sonoma brand drove a brand comp of 7.6% in the second quarter of fiscal 2026 with strength in the brand’s kitchen business supported by collaborations and exclusive products.
Finally, our emerging brands, Rejuvenation, Mark and Graham, and GreenRow, delivered double-digit brand comp growth on a combined basis.
For the second quarter of fiscal 2026, diluted earnings per share was $2.84, compared to $2.00 in the second quarter of fiscal 2025. The second quarter of fiscal 2026 diluted earnings per share of $2.84 included (i) tariff refund income of $1.06 recognized as a reduction to cost of goods sold and (ii) interest income on tariff refunds of $0.04, partially offset by (iii) reimbursements of $0.30 to certain merchandise vendors that previously provided tariff-related concessions and (iv) a one-time tariff-related employee recognition cost of $0.06.
As of August 2, 2026, we had $1.0 billion in cash and cash equivalents and generated operating cash flow of $695.9 million, inclusive of the collection of tariff refunds and the related interest of $200.2 million, in the first half of fiscal 2026. In addition to our cash balance, we also ended the second quarter of fiscal 2026 with no outstanding borrowings under our revolving line of credit. This strong liquidity position allowed us to fund the operations of the business, invest $116.4 million in capital expenditures and return $463.2 million through stock repurchases and dividends to stockholders in the first half of fiscal 2026.
Looking Ahead
We remain focused on our three key priorities of (i) accelerating growth, (ii) delivering world-class customer service and (iii) driving earnings. We believe these three key priorities will set us apart from our competition and support long-term growth and profitability. Growth creates leverage in our operating model, and improved service supports reinvestment in our business and delivers earnings growth. We have a powerful portfolio of brands, serving a wide range of categories, aesthetics, and life stages and we have built a strong omni-channel platform and infrastructure, which we believe positions us well for the next stage of growth.
However, the current uncertain macroeconomic environment, including war, higher oil prices, the evolving tariff and trade policy landscape, a stagnant housing market, elevated interest rates, layoffs, inflationary pressure, economic uncertainty and global geopolitical instability could continue to impact our business. The tariff environment has materially changed over the last year, and we expect that uncertainty to continue throughout fiscal 2026. For information on risks, please see “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 1, 2026.
NET REVENUES
Net revenues consist of sales of merchandise to our customers through our e-commerce websites and retail stores, and include shipping fees received from customers for delivery of merchandise to their homes. Our revenues also include sales to our business-to-business customers and franchisees, incentives received from credit card issuers in connection with our private label and co-branded credit cards and breakage income related to our stored-value cards. Revenue from the sale of merchandise is reported net of sales returns.
Second Quarter of Fiscal 2026 vs. Second Quarter of Fiscal 2025
Net revenues in the second quarter of fiscal 2026 increased $123.0 million or 6.7%, due to (i) company comp growth of $109.4 million, or 6.2% and (ii) non-comparable brand revenue growth of $13.6 million. From a channel perspective, the company comp growth of 6.2% was driven by comp growth of 6.5% in our e-commerce channel and comp growth of 5.5% in our retail channel.
First Half of Fiscal 2026 vs. First Half of Fiscal 2025
Net revenues in the first half of fiscal 2026 increased by $198.3 million, or 5.6%, due to (i) company comp growth of $188.0 million, or 5.5% and (ii) non-comparable brand revenue growth of $10.3 million. From a channel perspective, the company comp growth of 5.5% was driven by comp growth of 5.7% in our e-commerce channel and comp growth of 5.1% in our retail channel.
Comparable Brand Revenue
Comparable brand revenue includes comparable e-commerce sales, including through our direct-mail catalog, and store sales, as well as shipping fees, sales returns and other discounts associated with current period sales. Comparable stores are defined as permanent stores where gross square footage did not change by more than 20% in the previous 12 months, and which have been open for at least 12 consecutive months without closure for more than seven days within the same fiscal month. Outlet comparable store revenues are included in their respective brands. Business-to-business revenues are included in comparable brand revenue for each of our brands. Sales to our international franchisees are excluded from comparable brand revenue as their stores and e-commerce websites are not operated by us. Sales from certain operations are also excluded until such time that we believe those sales are meaningful to evaluating their performance. Additionally, comparable brand revenue for emerging brands is not separately disclosed until such time that we believe those sales are meaningful to evaluating the performance of the brand.
| For the Thirteen Weeks Ended 1 | For the Twenty-six Weeks Ended 1 | ||||||||||||||||
| Comparable brand revenue growth | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||
| Pottery Barn | 5.1 | % | 1.1 | % | 3.1 | % | 1.5 | % | |||||||||
| West Elm | 6.4 | 3.3 | 7.4 | 1.8 | |||||||||||||
| Williams Sonoma 2 | 7.6 | 5.1 | 6.3 | 6.2 | |||||||||||||
| Pottery Barn Kids and Teen | 3.5 | 5.3 | 4.0 | 4.6 | |||||||||||||
| Total 3 | 6.2 | % | 3.7 | % | 5.5 | % | 3.6 | % | |||||||||
| 1 Comparable brand revenue includes business-to-business revenues within each brand. | |||||||||||||||||
| 2 Includes results from Williams Sonoma Home. | |||||||||||||||||
| 3 Total comparable brand revenue growth includes the results of Rejuvenation, Mark and Graham, and GreenRow. |
RETAIL STORE DATA
| Store count | Average leased square footage per store | ||||||||||||||||||||||||||||||||||||||||
| May 3, 2026 | Openings | Closings | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||||||||||||||||||
| Pottery Barn | 180 | 2 | (1) | 181 | 181 | 14,900 | 15,000 | ||||||||||||||||||||||||||||||||||
| Williams Sonoma | 153 | — | — | 153 | 154 | 6,800 | 6,900 | ||||||||||||||||||||||||||||||||||
| West Elm | 116 | 1 | — | 117 | 119 | 13,400 | 13,300 | ||||||||||||||||||||||||||||||||||
| Pottery Barn Kids | 43 | — | — | 43 | 44 | 8,000 | 7,800 | ||||||||||||||||||||||||||||||||||
| Rejuvenation | 13 | — | — | 13 | 11 | 8,000 | 8,100 | ||||||||||||||||||||||||||||||||||
| GreenRow | 1 | — | — | 1 | — | 5,500 | — | ||||||||||||||||||||||||||||||||||
| Total | 506 | 3 | (1) | 508 | 509 | 11,300 | 11,400 | ||||||||||||||||||||||||||||||||||
| Store selling square footage at period-end | 3,764,000 | 3,779,000 | |||||||||||||||||||||||||||||||||||||||
| Store leased square footage at period-end | 5,760,000 | 5,799,000 |
GROSS PROFIT
Gross profit is equal to our net revenues less 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.
Our classification of costs in gross profit may not be comparable to other public companies, as we do not include non-occupancy-related costs associated with our distribution network in cost of goods sold. These costs, which include distribution network employment, third-party warehouse management and other distribution-related administrative expenses, are recorded in selling, general and administrative expenses (“SG&A”).
| For the Thirteen Weeks Ended | For the Twenty-six Weeks Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | August 2, 2026 | % Net revenues | August 3, 2025 | % Net revenues | August 2, 2026 | % Net revenues | August 3, 2025 | % Net revenues | |||||||||||||||||||||||||||||||||||||||
| Gross profit 1 | $ | 1,011,948 | 51.6 | % | $ | 864,623 | 47.1 | % | $ | 1,805,374 | 47.9 | % | $ | 1,630,432 | 45.7 | % |
1**Includes occupancy expenses of $208.0 million and $201.4 million for the second quarter of fiscal 2026 and fiscal 2025, respectively, and $411.6 million and $399.0 million for the first half of fiscal 2026 and fiscal 2025, respectively.
Second Quarter of Fiscal 2026 vs. Second Quarter of Fiscal 2025
Gross profit increased $147.3 million, or 17.0%, compared to the second quarter of fiscal 2025. Gross margin increased to 51.6% from 47.1% in the second quarter of fiscal 2025. This increase in gross margin of 450 basis points was driven by (i) IEEPA tariff refunds, net of reimbursements to certain merchandise vendors that previously provided tariff-related concessions, of 610 basis points, (ii) the leverage of occupancy costs of 40 basis points resulting from higher sales, and (iii) supply chain efficiencies of 30 basis points, including a lower shrink accrual, partially offset by (iv) lower merchandise margins of 230 basis points primarily due to the flow-through of tariffs into cost of goods sold.
First Half of Fiscal 2026 vs. First Half of Fiscal 2025
Gross profit increased $174.9 million, or 10.7%, compared to the first half of fiscal 2025. Gross margin increased to 47.9% from 45.7% in the first half of fiscal 2025. This increase in gross margin of 220 basis points was driven by (i) IEEPA tariff refunds, net of reimbursements to certain merchandise vendors that previously provided tariff-related concessions, of 310 basis points, (ii) supply chain efficiencies of 40 basis points, including a lower shrink accrual, and (iii) the leverage of occupancy costs of 30 basis points resulting from higher sales, partially offset by (iv) lower merchandise margins of 160 basis points primarily due to the flow-through of tariffs into cost of goods sold.
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.
| For the Thirteen Weeks Ended | For the Twenty-six Weeks Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | August 2, 2026 | % Net revenues | August 3, 2025 | % Net revenues | August 2, 2026 | % Net revenues | August 3, 2025 | % Net revenues | |||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 563,153 | 28.7 | % | $ | 536,564 | 29.2 | % | $ | 1,064,891 | 28.3 | % | $ | 1,011,660 | 28.4 | % |
Second Quarter of Fiscal 2026 vs. Second Quarter of Fiscal 2025
SG&A increased $26.6 million, or 5.0%, compared to the second quarter of fiscal 2025. SG&A as a percentage of net revenues decreased to 28.7% from 29.2% in the second quarter of fiscal 2025. This decrease of 50 basis points was driven by (i) employment expense leverage due to our disciplined payroll management and incentive compensation, net of one-time tariff-related employee recognition costs in the form of a discretionary 401(k) contribution, of 70 basis points, partially offset by (ii) an increase in general expenses of 10 basis points and (iii) an increase in advertising expenses of 10 basis points.
First Half of Fiscal 2026 vs. First Half of Fiscal 2025
SG&A increased $53.2 million, or 5.3%, compared to the first half of fiscal 2025. SG&A as a percentage of net revenues decreased to 28.3% from 28.4% in the first half of fiscal 2025. This decrease of 10 basis points was driven by (i) employment expense leverage due to our disciplined payroll management, net of one-time tariff-related employee recognition costs in the form of a discretionary 401(k) contribution, of 20 basis points, partially offset by (ii) an increase in general expenses of 10 basis points. Advertising expenses, as a percentage of net revenues, were flat compared to the first half of fiscal 2025.
INCOME TAXES
The effective tax rate was 25.1% for the first half of fiscal 2026, compared to 24.9% for the first half of fiscal 2025. This increase was primarily driven by (i) a higher disallowed executive compensation deduction in fiscal 2026, partially offset by (ii) higher excess tax benefit from stock-based compensation in the first half of fiscal 2026 and (iii) the tax effect of earnings mix change.
LIQUIDITY AND CAPITAL RESOURCES
Material Cash Requirements
There were no material changes during the quarter to the Company’s material cash requirements, commitments and contingencies that are described in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2026, which is incorporated herein by reference.
Stock Repurchase Program and Dividends
See Note G to our Condensed Consolidated Financial Statements, Stock Repurchase Program and Dividends, within Item 1 of this Quarterly Report on Form 10-Q for further information.
Liquidity Outlook
For the remainder of fiscal 2026, we plan to use our cash resources to fund our inventory purchases, employment-related costs, advertising costs, rental payments on our leases, capital expenditures, dividend payments, stock repurchases, and the payment of income taxes.
We believe our cash on hand, cash flows from operations and our available credit facilities will provide adequate liquidity for our business operations as well as dividends, capital expenditures, stock repurchases and other liquidity requirements associated with our business operations over the next 12 months. We are currently not aware of any other trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that would impact our capital needs during or beyond the next 12 months.
Sources of Liquidity
As of August 2, 2026, we held $1.0 billion in cash and cash equivalents, the majority of which was held in money market funds and interest-bearing demand deposit accounts, and of which $40.7 million was held by our international subsidiaries. Consistent with our industry, our cash balances are seasonal in nature, with the fourth quarter historically representing a significantly higher level of cash than other periods.
In addition to our cash balances on hand, we have a credit facility (the “Credit Facility”) which provides for a $600 million unsecured revolving line of credit. 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 the thirteen and twenty-six weeks ended August 2, 2026 and August 3, 2025, we had no borrowings under our Credit Facility. Additionally, as of August 2, 2026, issued but undrawn standby letters of credit of $13.6 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 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 August 2, 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 August 2, 2026, no amounts were outstanding under our letter of credit facilities. On August 6, 2026, 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, 2027, and the latest expiration date possible for future letters of credit issued under these facilities is January 15, 2028. 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.
Cash Flows from Operating Activities
For the first half of fiscal 2026, net cash provided by operating activities was $695.9 million compared to $401.7 million for the first half of fiscal 2025, and was primarily attributable to net earnings of $569.5 million (inclusive of the impact of tariff refunds and related interest of $174.1 million) adjusted for non-cash items, and an increase in accounts payable of $49.3 million (as a result of the provision of $47.5 million to reimburse certain merchandise vendors that previously provided tariff-related concessions), partially offset by a decrease in accrued expenses and other liabilities of $89.2 million.
Net cash provided by operating activities for the first half of fiscal 2026 compared to the first half of fiscal 2025 increased $294.2 million primarily due to an increase in net earnings adjusted for non-cash items, lower spending on merchandise inventories of $113.6 million and an increase in accounts payable of $98.3 million. This increase was primarily due to the collection of IEEPA tariff refunds of $200.2 million, which includes related interest.
Cash Flows from Investing Activities
For the first half of fiscal 2026, net cash used in investing activities was $116.4 million compared to $111.5 million for the first half of fiscal 2025, and was primarily attributable to purchases of property and equipment, including investments in retail stores of $47.8 million, technology of $45.8 million and supply chain enhancements of $16.1 million.
Cash Flows from Financing Activities
For the first half of fiscal 2026, net cash used in financing activities was $570.0 million compared to $521.1 million for the first half of fiscal 2025, primarily driven by repurchases of our common stock of $287.8 million, payment of dividends of $175.4 million and tax withholdings remittance related to stock-based awards of $99.1 million.
Net cash used in financing activities for the first half of fiscal 2026 increased by $48.9 million compared to the first half of fiscal 2025, primarily due to an increase in tax withholdings remittance related to stock-based awards of $31.2 million and an increase in payment of dividends of $19.5 million.
Seasonality
Our business is subject to substantial seasonal variations in demand. Historically, a significant portion of our revenues and net earnings have been realized during our peak selling season, the period from October through January, and levels of net revenues and net earnings have typically been lower during the period from February through September. We believe this is the general pattern within our industry. In preparation for and during our peak selling season, we hire a substantial number of additional temporary employees, primarily in our retail stores, distribution facilities and customer care centers.
CRITICAL ACCOUNTING ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Condensed Consolidated Financial Statements 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 significantly from these estimates. During the second quarter of fiscal 2026, there were no significant changes to the critical accounting estimates discussed in our Annual Report on Form 10-K for the fiscal year ended February 1, 2026.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, which include significant deterioration of the U.S. and foreign markets, changes in U.S. interest rates, foreign currency exchange rate fluctuations, inflation and the effects of economic uncertainty which may affect the prices we pay our suppliers in the foreign countries in which we do business. We do not engage in financial transactions for trading or speculative purposes.
Interest Rate Risk
Our Credit Facility has a variable interest rate which, when drawn upon, subjects us to risks associated with changes in that interest rate. During the second quarter of fiscal 2026, we had no borrowings under our Credit Facility.
In addition, we have fixed and variable income investments consisting of short-term investments classified as cash and cash equivalents, which are also affected by changes in market interest rates. As of August 2, 2026, our investments, made primarily in money market funds and interest-bearing demand deposit accounts, are stated at cost and approximate their fair values.
Foreign Currency Risk
We purchase the majority of our inventory from suppliers outside of the U.S. in transactions that are primarily denominated in U.S. dollars and, as such, any foreign currency impact related to these international purchase transactions was not significant to us during the second quarter of fiscal 2026 or the second quarter of fiscal 2025. Since we pay for the majority of our international purchases in U.S. dollars, however, a decline in the U.S. dollar relative to other foreign currencies would subject us to risks associated with increased purchasing costs from our suppliers in their effort to offset any lost profits associated with any currency devaluation. We cannot predict with certainty the effect these increased costs may have on our financial statements or results of operations.
In addition, our businesses in Canada, Australia and the United Kingdom, and our operations throughout Asia and Europe, expose us to market risk associated with foreign currency exchange rate fluctuations. Substantially all of our purchases and sales are denominated in U.S. dollars, which limits our exposure to this risk. However, some of our foreign operations have a functional currency other than the U.S. dollar. While the impact of foreign currency exchange rate fluctuations was not material to us in the second quarter of fiscal 2026 or the second quarter of fiscal 2025, we have continued to see volatility in the exchange rates in the countries in which we do business. Additionally, the effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our historical or current Condensed Consolidated Financial Statements. As we continue to expand globally, the foreign currency exchange risk related to our foreign operations may increase. To mitigate this risk, we may hedge a portion of our foreign currency exposure with foreign currency forward contracts in accordance with our risk management policies.
Inflation
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we have experienced varying levels of inflation, resulting in part from various supply chain disruptions, increased shipping and transportation costs, higher oil costs, war, increased product costs, increased labor costs in the supply chain and other disruptions caused by the uncertain economic environment and geopolitical climate. We cannot be assured that our results of operations and financial condition will not be materially impacted by inflation in the future.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of August 2, 2026, an evaluation was performed by management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for timely discussions regarding required disclosures, and that such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the second quarter of fiscal 2026, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information required by this Item is contained in Note F to our Condensed Consolidated Financial Statements within Part I of this Form 10-Q.
Item 1A. RISK FACTORS
See Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 1, 2026 for a description of the risks and uncertainties associated with our business. There were no material changes to such risk factors in the current quarterly reporting period.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information as of August 2, 2026 with respect to repurchases related to the $1.0 billion stock repurchase authorization announced in September 2024 (the “September 2024 authorization”).
| Fiscal period | Total number of shares purchased 1 | Average price paid per share | Total number of shares purchased as part of a publicly announced program 1 | Approximate dollar value of shares that may yet be purchased under the program | |||||||||||||||||||
| May 4, 2026 - May 31, 2026 | — | $ | — | — | $ | 50,756,000 | |||||||||||||||||
| June 1, 2026 - June 28, 2026 | — | $ | — | — | $ | 50,756,000 | |||||||||||||||||
| June 29, 2026 - August 2, 2026 | — | $ | — | — | $ | 50,756,000 | |||||||||||||||||
| Total | — | $ | — | — | $ | 50,756,000 |
1 Excludes shares withheld for employee taxes upon vesting of stock-based awards.
Additionally, in November 2025, we announced our Board of Directors approved a new $1.0 billion stock repurchase authorization (together with the September 2024 authorization, “our program”), which will become effective once our September 2024 authorization is fully utilized. For additional information, please see Note G to our Condensed Consolidated Financial Statements within Part I of this Form 10-Q.
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. The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
Insider Adoption or Termination of Trading Arrangements
During the second quarter of fiscal 2026, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as described in the table below:
| Name & title | Date adopted | Character of trading arrangement 1 | Aggregate number of shares of common stock to be purchased or sold pursuant to trading arrangement | Duration | Date terminated | |||||||||||||||
| Anne Finucane, Director | July 16, 2026 | Rule 10b5-1 Trading Arrangement | Up to 1,100 shares to be sold 2 | October 16, 2026 through December 31, 2026 | N/A | |||||||||||||||
| 1**Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended | ||||||||||||||||||||
| 2**The plan provides for the sale of the lesser of (i) 1,100 shares of common stock or (ii) a number of shares sufficient to generate $200,000 in gross proceeds. The actual number of shares to be sold is not currently determinable. |
Item 6. EXHIBITS
(a) Exhibits
| Exhibit Number | Exhibit Description | |||||||
| 10.1*+ | Separation Agreement and General Release with Ms. Bhargava dated May 18, 2026 | |||||||
| 10.2*+ | Williams-Sonoma, Inc. Director Compensation Policy | |||||||
| 31.1* | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended | |||||||
| 31.2* | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended | |||||||
| 32.1* | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.2* | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101* | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 2, 2026, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Earnings, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags | |||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted under Exhibit 101) |
| * | Filed herewith. | |||||||||||||||||||
| + | Indicates a management contract or compensation plan or arrangement. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WILLIAMS-SONOMA, INC. | ||||||||
| By: | /s/ Jeffrey E. Howie | |||||||
| Jeffrey E. Howie | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
| By: | /s/ Jeremy Brooks | |||||||
| Jeremy Brooks | ||||||||
| Senior Vice President and Chief Accounting Officer | ||||||||
| (Principal Accounting Officer) |
Date: August 28, 2026