Kitchenware and home goods retailer Williams-Sonoma (NYSE: WSM) missed Wall Street’s revenue expectations in Q4 CY2025, with sales falling 4.3% year on year to $2.36 billion. Its GAAP profit of $3.04 per share was 4.5% above analysts’ consensus estimates.
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Williams-Sonoma (WSM) Q4 CY2025 Highlights:
- Revenue: $2.36 billion vs analyst estimates of $2.42 billion (4.3% year-on-year decline, 2.5% miss)
- EPS (GAAP): $3.04 vs analyst estimates of $2.91 (4.5% beat)
- Adjusted EBITDA: $568 million vs analyst estimates of $535.5 million (24.1% margin, 6.1% beat)
- Operating Margin: 20.3%, down from 21.5% in the same quarter last year
- Free Cash Flow Margin: 21.9%, down from 23% in the same quarter last year
- Locations: 506 at quarter end, down from 512 in the same quarter last year
- Same-Store Sales rose 3.2% year on year, in line with the same quarter last year
- Market Capitalization: $21.75 billion
“We are proud of our strong finish to 2025. In Q4, our comp came in at +3.2%, and we delivered an operating margin of 20.3% with earnings per share of $3.04. Normalizing for the 53rd week last year and the tariff impact this year, we delivered substantial operating margin improvement versus last year. As we look forward to 2026 and beyond, we are confident in our competitive advantages that have allowed us to take market share, and our focus is on widening that advantage,” said Laura Alber, President and Chief Executive Officer.
Company Overview
Started in 1956 as a store specializing in French cookware, Williams-Sonoma (NYSE: WSM) is a specialty retailer of higher-end kitchenware, home goods, and furniture.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $7.81 billion in revenue over the past 12 months, Williams-Sonoma is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.
As you can see below, Williams-Sonoma struggled to generate demand over the last three years. Its sales dropped by 3.5% annually as it closed stores.
This quarter, Williams-Sonoma missed Wall Street’s estimates and reported a rather uninspiring 4.3% year-on-year revenue decline, generating $2.36 billion of revenue.
Looking ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, an acceleration versus the last three years. This projection is admirable and indicates its newer products will catalyze better top-line performance.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Williams-Sonoma operated 506 locations in the latest quarter. Over the last two years, the company has generally closed its stores, averaging 1.9% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Williams-Sonoma’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and Williams-Sonoma is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Williams-Sonoma’s same-store sales rose 3.2% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Williams-Sonoma’s Q4 Results
We enjoyed seeing Williams-Sonoma beat analysts’ EBITDA expectations this quarter. We were also glad its gross margin outperformed Wall Street’s estimates. On the other hand, its revenue missed. Overall, this print was mixed. The stock remained flat at $181.00 immediately following the results.
Big picture, is Williams-Sonoma a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
