WILLIAMS SONOMA INC - Quarter Report: 2025 August (Form 10-Q)

Operating lease liabilities Other current liabilities Total current liabilities Long-term operating lease liabilities Other long-term liabilities Total liabilities

Commitments and contingencies – See Note F

Stockholders’ equity

Preferred stock: $ par value; shares authorized; issued

Common stock: $ par value; shares authorized; , and shares issued and outstanding at August 3, 2025, February 2, 2025 and July 28, 2024, respectively

Additional paid-in capital Retained earnings Accumulated other comprehensive loss()()()

Treasury stock, at cost: , and shares as of August 3, 2025, February 2, 2025 and July 28, 2024, respectively

()()()Total stockholders’ equity Total liabilities and stockholders’ equity$ $ $

See Notes to Condensed Consolidated Financial Statements.

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WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

Common Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Total
Stockholders’
Equity

(In thousands)

Amount

Balance at February 2, 2025

()

Net earnings

—

Foreign currency translation adjustments

—

Release of stock-based awards 1

()

—

()

Repurchases of common stock 2

()

—

()

Reissuance of treasury stock under stock-based compensation plans 1

—

()

—

Stock-based compensation expense

—

Dividends declared

—

()

—

()

Balance at May 4, 2025

()

Net earnings

—

Foreign currency translation adjustments

—

Release of stock-based awards 1

—

()

—

()

Repurchases of common stock 2

()

—

()

Stock-based compensation expense

—

Dividends declared

—

()

—

()

Balance at August 3, 2025

()

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

The following table summarizes our net revenues by brand for the thirteen and twenty-six weeks ended August 3, 2025 and July 28, 2024.

For the Thirteen Weeks Ended 1

For the Twenty-six Weeks Ended 1

(In thousands)

August 3, 2025

July 28, 2024

August 3, 2025

July 28, 2024

Pottery Barn

West Elm

Williams Sonoma

Pottery Barn Kids and Teen

Other 2

Total 3

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

2Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham, and GreenRow.

3Includes net revenues related to our international operations (including our operations in Canada, Australia, the United Kingdom, and our franchise businesses) of approximately $ million and $ million for the thirteen weeks ended August 3, 2025 and July 28, 2024, respectively, and approximately $ million and $ million for the twenty-six weeks ended August 3, 2025 and July 28, 2024, respectively.

$ $ International Total$ $ $

NOTE F.

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NOTE G.

billion, which went into effect during the thirteen weeks ended August 3, 2025 once our prior authorization was fully utilized. During the thirteen weeks ended August 3, 2025, we repurchased shares of our common stock at an average cost of $ per share for an aggregate cost of $ million, excluding excise taxes on stock repurchases (net of issuances) of $ million. During the twenty-six weeks ended August 3, 2025, we repurchased shares of our common stock at an average cost of $ per share for an aggregate cost of $ million, excluding excise taxes on stock repurchases (net of issuances) of $ million. As of August 3, 2025, there was $ million remaining under our current stock repurchase program.

During the thirteen weeks ended July 28, 2024, we repurchased shares of our common stock at an average cost of $ per share for an aggregate cost of $ million, excluding excise taxes on stock repurchases (net of issuances) of $ million. During the twenty-six weeks ended July 28, 2024, we repurchased shares of our common stock at an average cost of $ per share for an aggregate cost of $ million, excluding excise taxes on stock repurchases (net of issuances) of $ million.

As of August 3, 2025, February 2, 2025 and July 28, 2024, we held treasury stock of $ million, $ million and $ million, respectively, that represents the cost of shares available for issuance intended to satisfy future stock-based award settlements in certain foreign jurisdictions.

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.

Dividends

We declared cash dividends of $ and $ per common share during the thirteen weeks ended August 3, 2025 and July 28, 2024, respectively.

We declared cash dividends of $ and $ during the twenty-six weeks ended August 3, 2025 and July 28, 2024, respectively. Our quarterly cash dividend may be limited or terminated at any time.

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NOTE H.

During the thirteen and twenty-six weeks ended August 3, 2025 and July 28, 2024, we recognized impairment charges of $ million and $ million, respectively.

There were transfers in and out of Level 3 categories during the thirteen and twenty-six weeks ended August 3, 2025 and July 28, 2024.

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NOTE I.

)$ $()Foreign currency translation adjustments — Other comprehensive income (loss) Balance at May 4, 2025$()$ $()Foreign currency translation adjustments — Other comprehensive income (loss) Balance at August 3, 2025$()$ $()

Balance at January 28, 2024

$()$()$()Foreign currency translation adjustments()— ()Change in fair value of derivative financial instruments— Other comprehensive income (loss)() ()Balance at April 28, 2024$()$()$()Foreign currency translation adjustments()— ()

Reclassification adjustment for realized (gain) loss on derivative financial instruments

— Other comprehensive income (loss)() Balance at July 28, 2024$()$ $()

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NOTE J.

As of August 3, 2025, February 2, 2025 and July 28, 2024, we recorded a liability for expected sales returns of approximately $ million, $ million and $ million, respectively, within other current liabilities and a corresponding asset for the expected net realizable value of the merchandise inventory to be returned of approximately $ million, $ million and $ million, respectively, within other current assets in our Condensed Consolidated Balance Sheets.

See Note E for the disclosure of our net revenues by operating segment.

, the majority of which is recognized within of the card issuance. Breakage revenue is not material to our Condensed Consolidated Financial Statements.

We have customer loyalty programs, which allow members to earn points for each qualifying purchase. Customers can earn points through spend on both our private label and co-branded credit cards, or can earn points as part of our non-credit card related loyalty program. Points earned through both loyalty programs 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 Condensed Consolidated Balance Sheet. 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 Condensed Consolidated Financial Statements would not be materially different if this measurement was applied to each 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 , as our certificates generally expire within 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 August 3, 2025, February 2, 2025 and July 28, 2024, we had recorded $ million, $ million and $ million, respectively, for gift card and other deferred revenue within current liabilities in our Condensed Consolidated Balance Sheets.

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NOTE K.

% for the first half of fiscal 2025, compared to % for the first half of fiscal 2024. The increase was primarily driven by (i) lower excess tax benefit from stock-based compensation in the first half of fiscal 2025 and (ii) the tax effect of the change in earnings mix.

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. We currently expect the OBBB to have a minimal impact on the effective tax rate but result 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 OECD international tax framework, including the Pillar Two minimum tax regime. Our subsidiaries were not subject to Pillar Two minimum tax in the first half of fiscal 2025. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, and monitoring legislative developments by other countries, especially in the regions in which we operate.

NOTE L.

$ $ $ $ $ Gross profit () () Selling, general and administrative expenses () ()

Operating income

() () Earnings before income taxes () () Income taxes () () Net earnings$ $()$ $ $()$ Basic earnings per share$ $()$ $ $()$ Diluted earnings per share$ $()$ $ $()$

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$()$ $ $()$ Comprehensive income$ $()$ $ $()$

Condensed Consolidated Balance Sheets (unaudited)

As of July 28, 2024

(In thousands)

As Previously Reported

Adjustments

As
Corrected

Merchandise inventories, net

()

Total current assets

()

Total assets

()

Accrued expenses

()

Income taxes payable

()

Total current liabilities

()

Total liabilities

()

Retained earnings

()

Total stockholders’ equity

()

Total liabilities and stockholders’ equity

()

Condensed Consolidated Statements of Stockholders' Equity (unaudited)


	Retained Earnings	Total Stockholders’ Equity
(In thousands)
As Previously Reported
Balance at January 28, 2024	$	$
Net earnings
Balance at April 28, 2024
Net earnings
Balance at July 28, 2024
Adjustments
Net earnings	()	()
Balance at April 28, 2024	()	()
Net earnings	()	()
Balance at July 28, 2024	()	()
As Corrected
Balance at January 28, 2024
Net earnings
Balance at April 28, 2024
Net earnings
Balance at July 28, 2024	$	$

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$()$ Changes in:Merchandise inventories() Accrued expenses and other liabilities()()()Income taxes payable()()()Net cash provided by operating activities$ $ $

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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 that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our business and results of operations to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements related to: changes in U.S. (federal, state and local) and international tax laws and trade policies and regulations; the impact of current and potential future tariffs and our ability to mitigate such impacts; 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 sustainable products at competitive prices; our ability to provide world-class customer service via supply chain improvements from reduced out-of-market and multiple shipments, fewer customer accommodations, lower returns and damages, and reduced replacements; 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; competition from companies with concepts or products similar to ours; 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; the impact of general economic conditions, inflationary pressures, consumer disposable income, fuel prices, recession and fears of recession, unemployment, war and fears of war, outbreaks of disease, adverse weather, availability of consumer credit, consumer debt levels, conditions in the housing market, elevated interest rates, sales tax rates and rate increases, consumer confidence in future economic and political conditions, and consumer perceptions of personal well-being and security; the impact of periods of decreased home and home furnishing purchases; our ability to grow our business-to-business division and the challenges we may face executing such growth; our ability to anticipate consumer preferences and buying trends overall and as they apply to specific brands; dependence on timely introduction and customer acceptance of our merchandise; 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, 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 improve our systems and processes; changes to our information technology infrastructure; shortages of raw materials used to make our products; uncertainties in e-marketing, infrastructure and regulation; our belief in the reasonableness of the steps taken to protect the security and confidentiality of the information we collect; multi-channel and multi-brand complexities; delays in store openings; 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 increasing global presence; our global business and expansion efforts, including franchise, other third-party arrangements and company-owned operations; 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; dependence on external funding sources for operating capital; our compliance with financial covenants; disruptions in the financial markets; our ability to control employment, occupancy, supply chain, product, transportation 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 organic, core-brand growth; growth from our emerging brands; our ability to drive long-term sustainable returns; our capital allocation strategy in fiscal 2025; our planned use of cash in fiscal 2025; projections of earnings, revenues, growth and other financial items; and other risks and uncertainties, as well as 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 “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 2, 2025, 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.

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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, and GreenRow – represent distinct merchandise strategies that are marketed through e-commerce, direct-mail catalogs and retail stores. 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 the Middle East, the Philippines, Mexico, South Korea and India, as well as e-commerce websites in certain locations.

The following discussion and analysis of financial condition, results of operations, and liquidity and capital resources for the thirteen weeks ended August 3, 2025 (“second quarter of fiscal 2025”), as compared to the thirteen weeks ended July 28, 2024 (“second quarter of fiscal 2024”) and twenty-six weeks ended August 3, 2025 ("first half of fiscal 2025"), as compared to the twenty-six weeks ended July 28, 2024 ("first half of fiscal 2024"), should be read in conjunction with our Condensed Consolidated Financial Statements and the notes thereto. All explanations of changes in operational results are discussed in order of magnitude.

Second Quarter of Fiscal 2025 Financial Results

Net revenues in the second quarter of fiscal 2025 increased $48.5 million or 2.7%, with company comparable brand revenue ("company comp") growth of 3.7%. This increase was driven by strong furniture and non-furniture sales, including new product introductions and collaborations as well as higher full-price selling. From a channel perspective, the company comp growth of 3.7% was driven by comp growth of 7.3% in our retail channel and comp growth of 2.0% in our e-commerce channel. Both channels benefited from improved in-stock inventory levels.

In the second quarter of fiscal 2025, Pottery Barn, our largest brand, saw comparable brand revenue (“brand comp”) growth of 1.1% driven by increased newness, strong retail performance from design services, and strong collaborations. The Pottery Barn Kids and Teen brands saw brand comp growth of 5.3% in the second quarter of fiscal 2025 driven by strength in our collaborations and dorm offerings.

West Elm saw brand comp growth of 3.3% in the second quarter of fiscal 2025, driven by strength in furniture and non-furniture categories including new product introductions and collaborations.

The Williams Sonoma brand saw brand comp growth of 5.1% in the second quarter of fiscal 2025 with strength in the brand's kitchen business driven by electrics, cookware and housewares, as well as through exclusive partnerships, partially offset by reduced furniture sales in the brand's home business.

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 2025, diluted earnings per share grew by 19.8% to $2.00, compared to $1.67 in the second quarter of fiscal 2024.

As of August 3, 2025, we had $985.8 million in cash and cash equivalents and generated operating cash flow of $401.7 million in the first half of fiscal 2025. In addition to our cash balance, we also ended the second quarter of fiscal 2025 with no outstanding borrowings under our revolving line of credit. This strong liquidity position allowed us to fund the operations of the business, invest $110.3 million in capital expenditures and return $445.1 million through stock repurchases and dividends to stockholders in the first half of fiscal 2025.

Out-of-Period Freight Adjustment in First Quarter of Fiscal 2024

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 Condensed Consolidated Financial Statements for the twenty-six weeks ended July 28, 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.

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Looking Ahead

As we look forward to the balance of the year, our focus will remain on our three key priorities of (i) returning to growth, (ii) elevating our world-class customer service and (iii) driving earnings. We believe these key priorities will set us apart from our competition and allow us to drive long-term growth and profitability. We believe we have a powerful portfolio of brands, serving a range of categories, aesthetics, and life stages and we have built a strong omni-channel platform and infrastructure, which will position us well for the next stage of growth. However, the current uncertain macroeconomic environment, including the evolving tariff and trade policy landscape, a weak housing market, elevated interest rates, layoffs, inflationary pressure, economic uncertainty and global geopolitical instability could negatively impact our business. Since the end of the first quarter of fiscal 2025, the tariff environment has materially evolved. Specifically, our incremental tariff rate has doubled from 14% to 28% since we filed our previous Quarterly Report on Form 10-Q for the thirteen weeks ended May 4, 2025. These tariffs, as well as any future tariffs, are expected to result in increased cost for imported materials and finished goods. While we believe that we can offset a portion of these costs, we do not expect to be able to offset all the additional costs. Our inability to minimize the impact of tariffs on our products, increase prices or find alternative sources for our products may have a material impact on our earnings. 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 2, 2025.

NET REVENUES

Net revenues primarily consist of sales of merchandise to our customers through our e-commerce websites, retail stores and direct-mail catalogs, 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 2025 vs. Second Quarter of Fiscal 2024

Net revenues in the second quarter of fiscal 2025 increased $48.5 million or 2.7%, with company comp growth of 3.7%. This increase was driven by strong furniture and non-furniture sales, including new product introductions and collaborations as well as higher full-price selling. From a channel perspective, the company comp growth of 3.7% was driven by comp growth of 7.3% in our retail channel and comp growth of 2.0% in our e-commerce channel.

First Half of Fiscal 2025 vs. First Half of Fiscal 2024

Net revenues in the first half of fiscal 2025 increased by $118.2 million, or 3.4%, with company comp growth of 3.6%. This was driven by strong furniture and non-furniture sales, including new product introductions and collaborations as well as higher full-price selling. From a channel perspective, the company comp growth of 3.6% was driven by comp growth of 6.8% in our retail channel and comp growth of 2.0% in our e-commerce channel. Both channels benefited from improved in-stock inventory levels.

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 new and emerging concepts 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 (decline)	August 3, 2025		July 28, 2024		August 3, 2025		July 28, 2024
Pottery Barn	1.1	%	(7.1)	%	1.5	%	(8.9)	%
West Elm	3.3		(4.8)		1.8		(4.4)
Williams Sonoma	5.1		(0.8)		6.2		0.1
Pottery Barn Kids and Teen	5.3		1.5		4.6		2.1
Total 2	3.7	%	(3.3)	%	3.6	%	(4.1)	%
1 Comparable brand revenue includes business-to-business revenues within each brand.
2 Total comparable brand revenue growth (decline) includes the results of Rejuvenation, Mark and Graham, and GreenRow.

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STORE DATA


	Store Count					Average Leased Square Footage Per Store
	May 4, 2025	Openings	Closings	August 3, 2025	July 28, 2024	August 3, 2025	July 28, 2024
Pottery Barn	180	1	—	181	185	15,000	15,100
Williams Sonoma	154	—	—	154	158	6,900	6,900
West Elm	119	—	—	119	122	13,300	13,200
Pottery Barn Kids	44	—	—	44	45	7,800	7,900
Rejuvenation	11	—	—	11	11	8,100	8,100
Total	508	1	—	509	521	11,400	11,400
Store selling square footage at period-end						3,779,000	3,855,000
Store leased square footage at period-end						5,799,000	5,948,000

GROSS PROFIT

Gross profit is equal to our net revenues less cost of goods sold. Cost of goods sold includes (i) cost of goods, which consists of cost of merchandise, inbound freight expenses, freight-to-store expenses and other inventory related costs such as replacements, damages, obsolescence and shrinkage; (ii) occupancy expenses, which consists of rent, other occupancy 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 expenses in cost of goods sold 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 3, 2025		% Net Revenues		July 28, 2024		% Net Revenues		August 3, 2025		% Net Revenues		July 28, 2024		% Net Revenues
Gross profit 1	$	864,623	47.1	%	$	803,940	44.9	%	$	1,630,432	45.7	%	$	1,599,108	46.4	%

1Includes occupancy expenses of $201.4 million and $197.2 million for the second quarter of fiscal 2025 and fiscal 2024, respectively, and $399.0 million and $393.4 million for the first half of fiscal 2025 and fiscal 2024, respectively.

Second Quarter of Fiscal 2025 vs. Second Quarter of Fiscal 2024

Gross profit increased $60.7 million, or 7.5%, compared to the second quarter of fiscal 2024. Gross margin increased to 47.1% from 44.9% in the second quarter of fiscal 2024. This increase in gross margin of 220 basis points was driven by (i) higher merchandise margins of 190 basis points due to select price increases and higher full-price selling and (ii) supply chain efficiencies of 30 basis points, including reductions in returns, damages, outbound shipping expense and accommodations. The occupancy rate was flat compared to the second quarter of fiscal 2024.

First Half of Fiscal 2025 vs. First Half of Fiscal 2024

Gross profit increased $31.3 million, or 2.0%, compared to the first half of fiscal 2024. Gross margin decreased to 45.7% from 46.4% in the first half of fiscal 2024. This decrease in gross margin of 70 basis points was driven by (i) the out-of-period freight adjustment in the first quarter of fiscal 2024 of 140 basis points and (ii) lower merchandise margins of 10 basis points, partially offset by (iii) supply chain efficiencies of 60 basis points, including reductions in returns, accommodations, damages and replacements and (iv) the leverage of occupancy costs of 20 basis points resulting from higher sales.

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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 3, 2025		% Net Revenues		July 28, 2024		% Net Revenues		August 3, 2025		% Net Revenues		July 28, 2024		% Net Revenues
Selling, general and administrative expenses	$	536,564	29.2	%	$	526,040	29.4	%	$	1,011,660	28.4	%	$	1,004,096	29.1	%

Second Quarter of Fiscal 2025 vs. Second Quarter of Fiscal 2024

SG&A increased $10.5 million, or 2.0%, compared to the second quarter of fiscal 2024. SG&A as a percentage of net revenues decreased to 29.2% from 29.4% in the second quarter of fiscal 2024. This leverage of 20 basis points was primarily driven by (i) lower advertising expenses of 80 basis points and (ii) lower general expenses of 40 basis points, partially offset by (iii) an increase in employment expense of 100 basis points due to higher performance-based incentive compensation.

First Half of Fiscal 2025 vs. First Half of Fiscal 2024

SG&A increased $7.6 million, or 0.8%, compared to the first half of fiscal 2024. SG&A as a percentage of net revenues decreased to 28.4% from 29.1% in the first half of fiscal 2024. This leverage of 70 basis points was primarily driven by (i) lower advertising expenses of 70 basis points and (ii) lower general expenses of 30 basis points, partially offset by (iii) an increase in employment expense of 30 basis points due to higher performance-based incentive compensation.

INCOME TAXES

The effective tax rate was 24.9% for the first half of fiscal 2025, compared to 23.8% for the first half of fiscal 2024. The increase was primarily driven by (i) lower excess tax benefit from stock-based compensation in the first half of fiscal 2025 and (ii) the tax effect of the change in earnings mix.

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 2, 2025, 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 2025, we plan to use our cash resources to fund our inventory purchases, employment-related costs, advertising and marketing initiatives, dividend payments, capital expenditures, stock repurchases, rental payments on our leases and the payment of income taxes.

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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 3, 2025, we held $985.8 million in cash and cash equivalents, the majority of which was held in money market funds and interest-bearing demand deposit accounts, and of which $66.9 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, 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 to June 26, 2030, 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 up to $850 million of unsecured revolving credit.

During the thirteen and twenty-six weeks ended August 3, 2025 and July 28, 2024, we had no borrowings under our Credit Facility. Additionally, as of August 3, 2025, issued but undrawn standby letters of credit of $11.9 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 3, 2025, 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 3, 2025, the aggregate amount outstanding under our letter of credit facilities was $0.8 million, which represents only a future commitment to fund inventory purchases to which we had not taken legal title. 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.

Cash Flows from Operating Activities

For the first half of fiscal 2025, net cash provided by operating activities was $401.7 million compared to $473.3 million for the first half of fiscal 2024, and was primarily attributable to net earnings adjusted for non-cash items, partially offset by higher spending on merchandise inventories (as a result of increased tariff costs and timing of receipts) and a decrease in accrued expenses and other liabilities. Net cash provided by operating activities compared to the first half of fiscal 2024 decreased primarily due to higher spending on merchandise inventories, partially offset by an increase in income taxes payable.

Cash Flows from Investing Activities

For the first half of fiscal 2025, net cash used in investing activities was $111.5 million compared to $71.0 million for the first half of fiscal 2024, and was primarily attributable to purchases of property and equipment related to technology, store construction and supply chain enhancements.

Cash Flows from Financing Activities

For the first half of fiscal 2025, net cash used in financing activities was $521.1 million compared to $398.2 million for the first half of fiscal 2024, primarily driven by repurchases of our common stock, payment of dividends and tax withholdings remittance related to stock-based awards. Net cash used in financing activities for the first half of fiscal 2025 increased compared to the first half of fiscal 2024, primarily due to an increase in repurchases of our common stock.

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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 associates, 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 2025, 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 2, 2025.

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 2025, 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 3, 2025, 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 Risks

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 2025 or the second quarter of fiscal 2024. 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 2025 or the second quarter of fiscal 2024, 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.

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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, increased product costs, increased labor costs in the supply chain and other disruptions caused by the uncertain economic environment. We believe the effects of inflation, if any, on our financial statements and results of operations have been immaterial to date. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future, including by the heightened levels of inflation experienced globally during the second quarter of fiscal 2025 and the second quarter of fiscal 2024. Global trends, including inflationary pressures, are weakening customer sentiment, negatively impacting consumer spending behavior and slowing down consumer demand for our products. However, our unique operating model and pricing power helped mitigate these increased costs during the second quarter of fiscal 2025 and the second quarter of fiscal 2024. Our inability or failure to offset the impact of inflation could harm our business, financial condition and results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of August 3, 2025, 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 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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 2, 2025 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

In September 2024, our Board of Directors authorized a stock repurchase program for $1.0 billion, which went into effect during the thirteen weeks ended August 3, 2025 once our prior authorization was fully utilized.

The following table provides information as of August 3, 2025 with respect to shares of common stock we repurchased during the second quarter of fiscal 2025. For additional information, please see Note G to our Condensed Consolidated Financial Statements within Part I of this Form 10-Q.


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 5, 2025 - June 1, 2025	754,597	$	164.51	754,597	$	978,415,000
June 2, 2025 - June 29, 2025	473,002	$	158.56	473,002	$	903,415,000
June 30, 2025 - August 3, 2025	—	$	—	—	$	903,415,000
Total	1,227,599	$	162.22	1,227,599	$	903,415,000

1 Excludes shares withheld for employee taxes upon vesting of stock-based awards.

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 2025, none of our directors or officers or a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

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ITEM 6. EXHIBITS

(a) Exhibits


Exhibit Number						Exhibit Description

10.1*						Ninth Amended and Restated Credit Agreement, dated June 26, 2025, among the Company and Bank of America, N.A., as administrative agent, letter of credit issuer and swingline lender, U .S . Bank National Association and Wells Fargo Bank, National Association, as co-syndication agent s and the lenders party

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 3, 2025, 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.

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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 29, 2025

WILLIAMS SONOMA INC - Quarter Report: 2025 August (Form 10-Q)

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