Williams-Sonoma Inc (NYSE:WSM) stock fell 0.63% (As on May 23, 11:25:54 AM UTC-4, Source: Google Finance) after the company posted better-than-expected quarterly earnings and revenue but missed analysts’ estimates on its gross margins. The gross margin was 44.3% (down from the projection of 44.5%), which contracted 60 basis points (bps) year over year (excluding a one-time freight adjustment in the first quarter of fiscal 2024). The decrease was due to lower merchandise margins, partially offset by occupancy leverage and supply-chain efficiencies. In the quarter, comps were up 3.4% against a negative 4.9% in the year-ago period. Comps at Williams-Sonoma increased 7.3% compared with 0.9% reported in the year-ago quarter. Comps at West Elm gained 0.2% against a 4.1% decline reported in the year-ago quarter. Pottery Barn Kids and Teens comps grew 3.8% compared with 2.8% reported in the year-ago quarter. On the other hand, Pottery Barn comps inched up 2% against a 10.8% decline reported in the year-ago quarter. As of May 4, 2025, Williams-Sonoma reported cash and cash equivalents of $1.05 billion, down from $1.21 billion at the fiscal 2024-end. Net cash from operating activities totaled $118.9 million in the first three months of fiscal 2025 compared with $226.8 million a year ago.

WSM in the first quarter of FY25 has reported the adjusted earnings per share of $1.85, beating the analysts’ estimates for the adjusted earnings per share of $1.73. The company had reported the adjusted revenue growth of 4.2 percent to $1.73 billion in the first quarter of FY25, beating the analysts’ estimates for revenue of $1.66 billion. The operating margin expanded 70 bps (excluding a one-time freight adjustment in the first quarter of fiscal 2024) from the year-ago figure to 16.8% for the quarter. Merchandise inventories +10.3% to the first quarter LY to $1.3 billion, including a strategic pull forward of receipts to reduce the potential impact of higher tariffs in FY25.

Williams-Sonoma reiterated its fiscal 2025 outlook, “even with absorbing incremental costs from the existing tariff environment,” it said. These costs include the additional tariffs on China of 30% and the global reciprocal tariff of 10%, along with the tariffs the company spoke about in March, including the tariff on Mexico and Canada of 25% and the tariff on steel and aluminum of 25%. The company sees full-year revenue ranging from down 1.5% to up 1.5%, with comparable sales expected to be flat to up 3%. Operating margin guidance stands between 17.4% and 17.8%. Over the long term, the company anticipates mid-to-high single-digit revenue growth and operating margins in the mid-to-high teens.