Q2 FY2026
Filed Aug 26, 2026Williams-Sonoma reports 6.7% net revenue growth and 6.2% comparable brand revenue growth, raises fiscal 2026 outlook, while GAAP results benefited from IEEPA tariff refunds.
All reported brands delivered positive comparable brand revenue growth, total net revenues grew 6.7%, and the company raised its fiscal 2026 revenue, comparable brand revenue, and non-GAAP operating-margin outlook. GAAP profitability was materially elevated by tariff-refund items, while non-GAAP operating margin declined 60 basis points and non-GAAP diluted EPS increased 5.0%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenuesGAAP | $1,959,757 (in thousands) | – | +6.7% |
| Comparable brand revenue growthother | 6.2% | – | – |
| Cost of goods soldGAAP | $947,809 (in thousands) | – | – |
| Gross profitGAAP | $1,011,948 (in thousands) | – | – |
| Gross marginGAAP | 51.6% | – | +450bps to LY |
| Gross profitnon-GAAP | $891,634 (in thousands) | – | – |
| Gross marginnon-GAAP | 45.5% | – | -160bps to LY |
| Selling, general and administrative expensesGAAP | $563,153 (in thousands) | – | +5.0% to LY |
| SG&A rateGAAP | 28.7% | – | -50bps to LY |
| Selling, general and administrative expensesnon-GAAP | $553,153 (in thousands) | – | +3.1% to LY |
| SG&A ratenon-GAAP | 28.2% | – | -100bps to LY |
| Operating incomeGAAP | $448,795 (in thousands) | – | – |
| Operating marginGAAP | 22.9% | – | +500bps to LY |
| Operating incomenon-GAAP | $338,481 (in thousands) | – | – |
| Operating marginnon-GAAP | 17.3% | – | -60bps to LY |
| Interest income, netGAAP | $12,412 (in thousands) | – | – |
| Interest income, netnon-GAAP | $6,066 (in thousands) | – | – |
| Earnings before income taxesGAAP | $461,207 (in thousands) | – | – |
| Earnings before income taxesnon-GAAP | $344,547 (in thousands) | – | – |
| Income taxesGAAP | $123,098 (in thousands) | – | – |
| Effective tax rateGAAP | 26.7% | – | – |
| Income taxesnon-GAAP | $94,292 (in thousands) | – | – |
| Effective tax ratenon-GAAP | 27.4% | – | – |
| Net earningsGAAP | $338,109 (in thousands) | – | – |
| Diluted EPSGAAP | $2.84 | – | +42.0% to LY |
| Diluted EPSnon-GAAP | $2.10 | – | +5.0% to LY |
| Merchandise inventories, netGAAP | $1,447,423 (in thousands) | – | +1.0% to the second quarter LY |
| Net cash provided by operating activitiesGAAP | $695,862 (in thousands) | – | – |
| Purchases of property and equipmentGAAP | $116,434 (in thousands) | – | – |
| Net cash used in investing activitiesGAAP | $116,372 (in thousands) | – | – |
| Repurchases of common stockGAAP | $287,805 (in thousands) | – | – |
| Payment of dividendsGAAP | $175,444 (in thousands) | – | – |
| Cash and cash equivalentsGAAP | $1,028,936 (in thousands) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Pottery BarnQ2 2025 net revenues were $724,579 (in thousands); Q2 2025 comparable brand revenue growth was 1.1%. | $770,808 (in thousands) | – | 5.1% comparable brand revenue growth |
| West ElmQ2 2025 net revenues were $468,550 (in thousands); Q2 2025 comparable brand revenue growth was 3.3%. | $496,251 (in thousands) | – | 6.4% comparable brand revenue growth |
| Williams SonomaIncludes Williams Sonoma Home net revenues. Q2 2025 net revenues were $249,053 (in thousands); Q2 2025 comparable brand revenue growth was 5.1%. | $268,828 (in thousands) | – | 7.6% comparable brand revenue growth |
| Pottery Barn Kids and TeenQ2 2025 net revenues were $286,749 (in thousands); Q2 2025 comparable brand revenue growth was 5.3%. | $297,438 (in thousands) | – | 3.5% comparable brand revenue growth |
| OtherPrimarily consists of net revenues from Rejuvenation, Mark and Graham, international franchise operations, GreenRow and Dormify. Q2 2025 net revenues were $107,829 (in thousands). | $126,432 (in thousands) | – | – |
Fiscal 2026 outlook
- RevenueAnnual net revenues in the range of +4.7% to +7.2%, with comps in the range of +4.0% to +6.5%
- Tax rateApproximately 26%, on a non-GAAP basis
- NoteNon-GAAP operating margin between 17.8% to 18.2%.
- NoteAnnual interest income of approximately $25 million, on a non-GAAP basis.
- NoteGuidance assumes all tariffs currently in place will remain for fiscal 2026, including Section 232 tariffs, existing Section 301 tariffs, new Section 301 tariffs announced on July 23rd, and the latest tariffs between Canada and the United States.
- NoteGuidance assumes oil prices will remain elevated for the remainder of the year.
- NoteGuidance assumes no benefit from tariff refunds or related interest.
- NoteLong-term expectation remains mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.
Capital returns
- Returned $90 million to stockholders through dividends during the second quarter.
- Repurchases of common stock were $287,805 (in thousands) for the twenty-six weeks ended August 2, 2026, compared with $289,108 (in thousands) for the twenty-six weeks ended August 3, 2025.
- Payment of dividends was $175,444 (in thousands) for the twenty-six weeks ended August 2, 2026, compared with $155,994 (in thousands) for the twenty-six weeks ended August 3, 2025.
- Shares issued and outstanding were 117,779 (in thousands) as of August 2, 2026, compared with 121,790 (in thousands) as of August 3, 2025.
What drove it
- Comparable brand revenue increased 6.2%, and each reported comparable brand delivered positive growth.
- GAAP gross margin increased 450 basis points to 51.6%, driven by IEEPA tariff refunds, net of tariff-related vendor concessions, of +610bps, occupancy leverage of +40bps, and supply chain efficiencies of +30bps, partially offset by lower merchandise margins of -230bps primarily driven by tariff costs.
- Non-GAAP gross margin declined 160 basis points to 45.5%, reflecting lower merchandise margins of -230bps primarily driven by tariff costs, partly offset by supply chain efficiencies and occupancy leverage.
- GAAP SG&A rate decreased 50 basis points to 28.7%, with employment expense leverage net of a one-time tariff-related employee recognition cost contributing -70bps.
- The company recognized a $167.8 million reduction of cost of goods sold related to previously expensed IEEPA tariff refunds and $6.3 million of related interest income.
- Tariff-refund income was partly offset by a $47.5 million provision to reimburse certain merchandise vendors and a $10.0 million discretionary 401(k) contribution for eligible employees.
Concerns
- Non-GAAP gross margin was -160bps to LY and non-GAAP operating margin was -60bps to LY, reflecting lower merchandise margins primarily driven by tariff costs.
- Fiscal 2026 guidance assumes all tariffs currently in place remain in effect, including Section 232 tariffs, existing and newly announced Section 301 tariffs, and the latest tariffs between Canada and the United States.
- Guidance assumes elevated oil prices for the remainder of the year and no benefit from tariff refunds or related interest.
- The company deferred $29.3 million of tariff refund income as a reduction of merchandise inventories and anticipates recognizing it as a reduction to cost of goods sold in the third quarter of fiscal 2026.
- The company stated that results are preliminary and subject to adjustment before filing its Form 10-Q for the quarter ended August 2, 2026.
What to watch
- Delivery against raised fiscal 2026 annual net revenue growth guidance of +4.7% to +7.2% and comparable brand revenue growth guidance of +4.0% to +6.5%.
- Whether non-GAAP operating margin reaches the guided 17.8% to 18.2% range despite tariff costs and elevated oil-price assumptions.
- Recognition of the deferred $29.3 million tariff refund income as a reduction to cost of goods sold in the third quarter of fiscal 2026.
- Merchandise-margin pressure from tariff costs, which reduced non-GAAP gross margin by 230 basis points in the second quarter.
- Sustained growth across Pottery Barn, West Elm, Williams Sonoma, and Pottery Barn Kids and Teen.
Balance sheet and cash flow
- Cash and cash equivalents were $1,028,936 (in thousands) as of August 2, 2026, versus $1,019,801 (in thousands) as of February 1, 2026 and $985,823 (in thousands) as of August 3, 2025.
- Merchandise inventories were $1,447,423 (in thousands), net of $29.3 million of deferred tariff refund income recorded as a reduction of inventory.
- Net cash provided by operating activities was $695,862 (in thousands) for the twenty-six weeks ended August 2, 2026, versus $401,678 (in thousands) in the prior-year period.
- Second-quarter operating cash flow was stated as $696 million, inclusive of collection of $200.2 million of tariff refunds and related interest.
- Purchases of property and equipment were $116,434 (in thousands) for the twenty-six weeks ended August 2, 2026.
- Substantially all of the initial $197.8 million tariff refund claim had been collected as of August 2, 2026, with a remaining tariff refund receivable of $3.2 million.
- No debt balance was reported in the provided condensed consolidated balance sheet.
Analysis
Williams-Sonoma delivered broad-based second-quarter demand strength. Net revenues were $1,959,757 (in thousands), up 6.7% to last year, while comparable brand revenue growth was 6.2%. Pottery Barn, West Elm, Williams Sonoma, and Pottery Barn Kids and Teen each posted positive comparable brand revenue growth of 5.1%, 6.4%, 7.6%, and 3.5%, respectively. The release states that every brand delivered in the quarter.
Reported GAAP profitability was significantly affected by IEEPA tariff-refund activity. GAAP gross margin expanded 450 basis points to 51.6%, GAAP operating margin increased 500 basis points to 22.9%, and GAAP diluted EPS increased 42.0% to $2.84. The company recognized a $167.8 million reduction to cost of goods sold from tariff refunds and $6.3 million of related interest income. These benefits were partly offset by a $47.5 million vendor-reimbursement provision and a $10.0 million employee recognition cost.
The non-GAAP figures provide the clearer read on underlying margins after excluding the tariff-related items. Non-GAAP gross margin was 45.5%, down 160 basis points to last year, as lower merchandise margins primarily driven by tariff costs reduced margin by 230 basis points. Supply chain efficiencies and occupancy leverage partly offset this pressure. Non-GAAP SG&A increased 3.1% while the rate declined 100 basis points to 28.2%, producing non-GAAP operating income of $338,481 (in thousands), a 17.3% operating margin, and non-GAAP diluted EPS of $2.10, up 5.0% to last year.
Cash generation and liquidity were strong in the reported period. Cash and cash equivalents ended at $1,028,936 (in thousands), and net cash provided by operating activities was $695,862 (in thousands) for the first twenty-six weeks. The company repurchased $287,805 (in thousands) of common stock and paid $175,444 (in thousands) in dividends over that period. Inventory was $1,447,423 (in thousands), up 1.0% to the second-quarter prior year, and includes $29.3 million of deferred tariff refund income that management expects to recognize in cost of goods sold during the third quarter.
Management raised fiscal 2026 guidance to annual net revenue growth of +4.7% to +7.2%, comparable brand revenue growth of +4.0% to +6.5%, and non-GAAP operating margin of 17.8% to 18.2%. The guide assumes all current tariffs remain in place, elevated oil prices for the remainder of the year, and no benefit from tariff refunds or related interest. This makes the trajectory of underlying merchandise margins, rather than the second-quarter GAAP tariff-refund benefit, the principal operating measure to follow.
Management, verbatim
We delivered a very strong second quarter. In Q2, our comp came in at 6.2%, with total revenue growth of 6.7%, and we drove an operating margin of 17.3% with earnings per share of $2.10. Every brand delivered again in the quarter, driven by strong execution across our brands, our channels, and our team.
Laura Alber, President and Chief Executive Officer
Our strategies continue to gain momentum, and our results reflect the power of our execution. We gained market share, continued to outperform the industry, and raised our annual outlook on both the top and bottom lines. We are delivering compounding results despite the housing market and other macroeconomic events, and we remain confident in our priorities and plans for the remainder of 2026 and beyond.
Laura Alber, President and Chief Executive Officer
Not in the filing
stated, not guessed- Previous-quarter outlook was not provided, so no comparison of reported results with prior guidance is available.
- Free cash flow was not reported.
- A debt balance was not reported.
- Quarterly share repurchases were not separately reported; repurchases were provided for the twenty-six weeks ended August 2, 2026.
- Fiscal 2026 gross-margin guidance and operating-expense guidance were not provided.
- A full segment operating-income or segment-margin breakout was not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.