Key Highlights

● Net revenues rose 6.7% to $1,959.8 million, with comparable brand revenue up 6.2%.

● Diluted EPS was $2.84, including tariff refund income, against non-GAAP EPS of $2.10.

● Non-GAAP operating margin was 17.3%, 60 basis points lower than a year earlier.

● The board declared a quarterly cash dividend of $0.76 per share.

Williams-Sonoma, Inc. (NYSE:WSM), listed on the New York Stock Exchange as WSM, is a home-furnishings retailer whose brands include Pottery Barn, West Elm, Williams Sonoma, Pottery Barn Kids and Teen, and Rejuvenation. It ended the second quarter of fiscal 2026, on August 2, 2026, with 508 stores. On August 26, 2026 it reported net revenues of $1,959.8 million, up 6.7% from $1,836.8 million, with comparable brand revenue up 6.2%. The results were preliminary, pending the Form 10-Q.

Reported diluted earnings per share were $2.84, up 42.0%, but that figure includes tariff refund income. On a non-GAAP basis, excluding those items, earnings per share were $2.10 against $2.00, up 5.0%. Non-GAAP operating margin was 17.3%, 60 basis points lower than a year earlier, while the GAAP margin was 22.9%. Chief executive Laura Alber said the company delivered "a very strong second quarter" and that every brand delivered.

Brands, tariffs and the quality of earnings

Williams Sonoma brand comparable revenue rose 7.6%, West Elm 6.4%, Pottery Barn 5.1% and Pottery Barn Kids and Teen 3.5%. The gap between GAAP and non-GAAP profit comes from refunds of tariffs paid under the International Emergency Economic Powers Act. Cost of goods sold fell by $167.8 million from refunds, partly offset by a $47.5 million provision to reimburse vendors who had given tariff-related concessions and a $10.0 million discretionary 401(k) contribution. Of an initial refund claim of $197.8 million, substantially all had been collected by August 2, and $29.3 million was deferred against inventory, due to reduce cost of goods sold in the third quarter.

Merchandise margin was 230 basis points lower, primarily because of tariff costs according to the company.

Cash, capital returns and outlook

Operating cash flow for the 26 weeks was $695.9 million, which includes refund collections and related interest. Cash was $1.03 billion, and inventories were $1.45 billion, up 1.0%. The company repurchased $287.8 million of shares and paid $175.4 million of dividends over the 26 weeks, and shares outstanding were 117.8 million against 121.8 million a year earlier.

Management raised its fiscal 2026 outlook: net revenue growth of 4.7 to 7.2%, comparable brand revenue growth of 4.0 to 6.5% and a non-GAAP operating margin of 17.8 to 18.2%. The assumptions keep all current tariffs, including new Section 301 tariffs announced on July 23, and exclude any further refund benefit. This is guidance, not a result.

Dividend, sector and the S&P 500

In September 2026 the board declared a quarterly cash dividend of $0.76 per share, payable on November 20, 2026 to stockholders of record on October 16. Dividends paid of $175.4 million in the first half sit comfortably within operating cash flow of $695.9 million, although the latter was boosted by refunds. Williams-Sonoma joined the S&P 500 on March 24, 2025, replacing BorgWarner (NYSE:BWA). Home furnishings demand is sensitive to housing turnover, consumer confidence and import costs, so sector conditions can change quickly.

Tariff Policy and Merchandise Margin

Tariff policy is the central uncertainty: guidance assumes current rates stay in place, and new measures or reversals would change costs and refund prospects. Merchandise margin is already under pressure. Guidance also assumes that oil prices stay elevated. Inflation, freight costs and demand for big-ticket furniture could weigh on volumes. The October 16 record date for the dividend is the next confirmed shareholder event.