Williams-Sonoma (NYSE: WSM) reported fourth-quarter earnings that exceeded expectations, although revenue fell short of forecasts, and the company announced a 15% increase in its quarterly dividend. Shares rose more than 5% intra-day Wednesday.
The home furnishings retailer posted earnings of $3.04 per share, surpassing analysts’ estimates of $2.89. However, revenue totaled $2.36 billion, below the consensus estimate of $2.41 billion. Comparable brand revenue increased 3.2% during the quarter.
The company projected fiscal 2026 revenue growth between 2.7% and 6.7%, with comparable sales expected to rise between 2% and 6%. Operating margins are forecast to range from 17.5% to 18.1%.
Management noted that the outlook assumes current tariff levels remain in place, with a greater impact expected in the first half of the year as higher costs are reflected in inventory.
Operating margin for the quarter was 20.3%, down 120 basis points from the prior year, with approximately half of the decline attributed to an extra week in the previous year’s reporting period. Gross margin declined 40 basis points to 46.9%, as lower merchandise margins and higher occupancy costs offset gains from improved inventory management and supply chain efficiencies.
Selling, general and administrative expenses increased as a percentage of sales due to higher general costs, although total SG&A declined 1.3% to $627 million.
Net income translated to diluted earnings per share of $3.04, down 7.3% year over year. For the full year, the company reported record diluted EPS of $8.84.
Inventory rose 9.8% to $1.5 billion, primarily due to approximately $80 million in tariff-related costs.
