Williams-Sonoma Inc
Q1 2025 Earnings
Prior year Q1 FY24 included a $49 million out-of-period freight adjustment benefit ($0.29 per share), making YoY comparison unfavorable on a reported basis; excluding this prior-year item, EPS growth was +8.8%
Market Reaction
S&P 500 over the same 30 days: +4.12%.
Did WSM Beat Earnings? Q1 2025 Results
Williams-Sonoma posted a stronger-than-expected first quarter of fiscal 2025, with revenue climbing 4.2% year-over-year to $1.73 billion, beating the $1.67 billion consensus by 3.64%, as comparable brand revenue grew 3.4% with all five brands running positive comps. GAAP diluted EPS of $1.85 topped the $1.76 consensus estimate by 5.19%, though the reported figure declined year-over-year against a prior-year quarter that included a $49 million out-of-period freight adjustment, worth $0.29 per share, that had boosted Q1 FY24 results. Excluding that prior-year item, EPS grew 8.8%, with the underlying improvement driven by 130 basis points of SG&A leverage to 27.5% of revenue. The quarter was not without friction: gross margin contracted on both a reported and underlying basis, with analysts flagging outsized merchandising margin pressure that sent shares lower despite the headline beats. Looking ahead, management reiterated full-year guidance for comparable brand revenue growth of flat to 3.0% and an operating margin of 17.4% to 17.8%, a range the company said already absorbs incremental tariff costs including 30% additional duties on China.
- Comparable brand revenue growth of +3.4% with all brands running positive comps
- SG&A rate improvement of 130bps driven by lower advertising expense and employment leverage
- Supply chain efficiencies contributing 120bps of gross margin benefit
- Occupancy leverage of 40bps
- Lower performance-based incentive compensation
“We are proud to deliver strong results in the first quarter of 2025, driven by a positive top-line comp and continued strength in our profitability. In Q1, our comp came in above expectations at +3.4%. And, we exceeded profitability estimates with an operating margin of 16.8% and earnings per share of $1.85 with earnings growth of 8.8%. In the quarter, we saw an acceleration of the positive comp trend coming out of Q4, with all brands running positive comps.”
Williams Sonoma CEO, on the earnings call
Forward Guidance & Outlook
Williams-Sonoma reiterated its fiscal 2025 and long-term guidance. For fiscal 2025 (a 52-week year vs. 53 weeks in FY24), the company expects annual net revenues in the range of -1.5% to +1.5%, with comparable brand revenue growth of flat to +3.0%, and an operating margin between 17.4% and 17.8% (inclusive of a 20bps headwind from the 53rd week in fiscal 2024). This guidance absorbs incremental tariff costs including 30% additional tariffs on China, a 10% global reciprocal tariff, and 25% tariffs on Mexico, Canada, steel, and aluminum. If material changes in future tariffs occur, the company will revisit guidance. Long-term, the company continues to target mid-to-high single-digit annual net revenue growth with mid-to-high teens operating margins.
WSM YoY Financials
WSM Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.