Williams-Sonoma raises outlook, unfazed by new tariff threat

Williams-Sonoma Inc. raised its full-year sales growth target as a strong second-quarter showing across all brands kept concerns of increased tariffs on imported furniture at bay.

The company raised its outlook despite seeing its incremental tariff rate double to 28% as it has successfully mitigated rising expenses through “select” price increases, cost concessions from suppliers and increasing its domestic production, Chief Executive Officer Laura Alber said during a call with analysts.

The San Francisco-based furniture maker no longer expects net revenue to decline this fiscal year, projecting a raise of 0.5% to 3.5%. That compares to a prior forecast of a 1.5% decline to 1.5% growth, and is ahead of an estimated 0.7% growth, which analysts polled by Bloomberg had expected.

The increased optimism comes even as U.S. President Donald Trump launched an investigation into furniture imports, earmarking the industry for increased tariffs. Alber is skeptical of how effective any such levies would be in the short term at restoring US-production.

“It’s going to be very difficult for the industry even if tariffs are put on to bring a huge amount back to the United States in a short window of time,” she said during the call, noting cheaper Asian imports will be especially hard hit.

The company, which operates under its namesake brand alongside the Pottery Barn and West Elm labels, kept its profit guidance steady – targeting a margin between 17.4% and 17.8% – as higher net revenues will be “pressured by incremental tariff costs,” Alber said in a Wednesday filing.

Comparable sales for the quarter grew 3.7%, ahead of the 2.5% estimate and its strongest showing since late 2022. That growth was driven mainly by demand for new product launches rather than consumers accelerating purchases to avoid tariffs, according to Chief Financial Officer Jeff Howie.

These results validate that tariff costs are manageable so far with mitigation efforts Bloomberg Intelligence analyst Lindsay Dutch wrote in a note. “The possibility for additional cost pressure in 2026, with a levy on furniture, could fuel further shifts in sourcing, but positive demand momentum heading into the pivotal holiday season and next year may provide an offset.”

Shares were flat after falling as much as 3.3% at 11:30 a.m. in New York. Peers Arhaus Inc. and RH traded higher following the results. Williams Sonoma was up 6.9% this year through market close Tuesday, trailing the 10% rise logged by the S&P 500 Index.