During the Covid pandemic, millions of Americans of all income levels hunkered down in their homes and spent billions of dollars making their nests cozy, to the benefit of retailers ranging from Walmart and Home Goods to RH and Pottery Barn.
But the last couple of years have not looked so rosy for many companies in the home goods sector.
At Home filed for bankruptcy June 2025 and announced the closure of 30 locations by September 30, 2025. Source: Pacer Monitor
American Freight Furniture, Mattress, Appliancebegan full chain closure of all 328 stores nationwide starting late 2024 amid its bankruptcy filing. Source: Pacer Monitor
But this week, Williams-Sonoma Inc. defied the odds. The parent company of well-known home furnishing brands Pottery Barn and West Elm, among many other brands in the home-decor space, reported robust third-quarter 2025 earnings.
These results beat Wall Street expectations, despite persistent tariff-related cost pressures. The San Francisco-based retailer posted a 4.0% increase in comparable brand revenue, expanded operating margins, and raised its full-year profit guidance — a notable display of resilience amid a challenging economic landscape in the home improvement and home furnishings sectors.
Pottery Barn is one of Williams-Sonoma’s best-known brands. Jonathan Weiss / Shutterstock
Williams-Sonoma posted operating income of $319 million with an operating margin of 17.0%, an improvement of 10 basis points year over year for the quarter that ended on November 2. Diluted earnings per share rose 4.8% to $1.96, exceeding analyst estimates projected at around $1.87 per share.
The company’s net revenue reached $1.88 billion, 1.08% above forecast, driven by gains across all brands, led by the flagship Williams-Sonoma brand.
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“Our continued strong results reflect the power of our operating model, industry-leading channel experiences, and strong portfolio of brands,” CEO Laura Alber said in the most recent earnings call on November 19, 2025.
”Each day, we prioritize innovation, product design, and exceptional customer service. These qualities set us apart in a fragmented industry and position us to capture additional market share,” Alber said.
Williams-Sonoma continues to face significant tariff challenges due to Section 232 tariffs on furniture, and tariffs of up to 50% on goods from China, India, and Vietnam. Despite these pressures, gross margin expanded 70 basis points to 46.1%.
Alber said higher merchandise margins and supply chain efficiencies helped. The company’s operating expenses increased primarily due to incentive compensation and marketing investments, but were partly offset by operational leverage.
“Williams-Sonoma delivered a solid third quarter, with consistent comparable sales growth, strong full-price selling, and disciplined cost control that kept operating margins in the high teens,” Telsey Advisory Group Analyst Cristina Fernández said in a Benzinga report.
“However, the market reaction reflects growing concerns about sharply higher tariff bills, which are expected to squeeze profitability heading into 2026.”
Fernández provided a balanced take on the company’s prospects, reaffirming an outperform rating while lowering the price target slightly to $220 from $225.
Although tariff expenses were lower than expected in Q3 due to delayed increases, the company anticipates a notable tariff spike in the fourth quarter, with the blended tariff rate rising steeply to 35% from 6% a year ago, according to Fernández.
So far, vendor concessions, sourcing shifts, supply-chain efficiencies, and selective price increases have mitigated much of the impact, she said.
Williams-Sonoma ended the quarter with $885 million in cash. It also generated $316 million in operating cash flow. The company returned $347 million to shareholders through $267 million in share repurchases and $80 million in dividends.
The board also approved a new $1 billion stock buyback authorization, to begin once the current repurchase authorization is fully utilized.
Alber anticipates net revenue growth between 0.5% and 3.5% in the coming year, with comparable brand revenue comps of 2% to 5%. Williams-Sonoma’s operating margin guidance was raised to between 17.8% and 18.1%, reflecting expectations for ongoing margin expansion, despite the pressure from tariffs.
“We continue to gain market share and outperform an industry that declined again in the third quarter,” Alber said. “Our ongoing commitment to innovation, product excellence, and customer service positions us well for future growth.”
Based on the 2025 industry data from IBISWorld and other market research, Williams-Sonoma has a big presence in the home goods sector:
The TJX Companies Inc. is the largest home furnishings retailer with approximately 16.2% market share.
Williams-Sonoma Inc. holds the second-largest market share of around 7.4%.
