Williams-Sonoma Q3 Earnings & Revenues Top, Comps Up Y/Y, Stock Dips

Williams-Sonoma Inc. WSM reported better-than-expected results for the third quarter of fiscal 2025 (ended Nov. 2), with earnings and net revenues beating the Zacks Consensus Estimate and increasing year over year.The quarter’s performance reflects benefits realized from an effective operating model, diversified brand portfolios and a robust e-commerce channel. For fiscal 2025, WSM holds onto its prior net revenue and comps outlook, while increasing the operating margin view. Going forward, the company remains focused on product development and customer service while navigating ongoing macroeconomic and geopolitical uncertainties.Following the earnings release, shares of this multi-channel specialty retailer of premium quality home products moved down 4.8% in today’s pre-market trading session.WSM’s Q3 Earnings, Revenues & Comps DiscussionThe company reported earnings of $1.96 per share, which topped the Zacks Consensus Estimate of $1.87 by 4.8%. In the prior-year quarter, it reported earnings per share (EPS) of $1.87.Net revenues of $1.88 billion also topped the consensus mark of $1.86 billion by 1.1% and grew 4.4% year over year.Williams-Sonoma, Inc. Price, Consensus and EPS Surprise Williams-Sonoma, Inc. price-consensus-eps-surprise-chart | Williams-Sonoma, Inc. QuoteIn the quarter, comps were up 4% against a negative 2.9% in the year-ago period. Our model expected the comps to be up 3% year over year.Comps at Williams-Sonoma (namesake brand) grew 7.3% against a 0.1% downturn reported in the year-ago quarter. Comps at West Elm gained 3.3% against a 3.5% decline reported in the year-ago quarter.Pottery Barn Kids and Teens comps grew 4.4% compared with 3.8% reported in the year-ago quarter. On the other hand, Pottery Barn comps inched up 1.3% against a 7.5% decline reported in the year-ago quarter.Operating Highlights of Williams-SonomaThe gross margin was 46.1% (up from our projection of 45.3%), which expanded 70 basis points (bps) year over year. The growth was driven by higher merchandise margins and supply-chain efficiencies, partially offset by higher occupancy costs.Selling, general and administrative expenses were 29.1% of net revenues (at par with our projection), reflecting an increase of 60 bps year over year due to higher advertising expense and elevated performance-based incentive compensation.The operating margin expanded 10 bps from the year-ago figure to 17% for the quarter. Our model predicted an operating margin of 16.1% in the fiscal third quarter.Williams-Sonoma’s Financial PositionAs of Nov. 2, 2025, Williams-Sonoma reported cash and cash equivalents of $884.7 million, down from $1.21 billion at the fiscal 2024-end.Net cash from operating activities totaled $718 million in the first nine months of fiscal 2025 compared with $726.7 million a year ago. This allowed the company to return nearly $165 million to its shareholders through $555.7 million in stock repurchases and $236.6 million in dividends.WSM Revised Fiscal 2025 GuidanceLooking ahead, fiscal 2025 will be a 52-week year compared with 53 weeks in fiscal 2024. The company continues to project annual net revenues in the range of +0.5% to +3.5%, with comparable brand revenue growth between +2.0% and +5.0%. Operating margin is now expected between 17.8% and 18.1% (from the 17.4-17.8% range expected earlier), which compares unfavorably with 18.5% reported in fiscal 2024.The revised outlook considers the new Section 232 tariffs on furniture; the revised additional tariffs on China of 20%, India of 50% and Vietnam of 20%; average tariffs on the rest of the world of 18%; the steel and aluminum tariff of 50% and the copper tariff of 50%.Over the long term, WSM continues to anticipate mid-to-high single-digit annual net revenue growth and operating margin growth in the mid-to-high teens.WSM’s Zacks Rank & Recent Peer ReleasesWilliams-Sonoma currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Home Depot Inc. HD reported third-quarter fiscal 2025 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line missed the same. However, sales and EPS improved year over year.The lower-than-expected EPS primarily reflects the absence of storm-related activity in the fiscal third quarter, which reduced demand in several key categories. Persistent consumer uncertainty and ongoing housing market pressure continued to weigh on home improvement spending, limiting The Home Depot’s ability to capture incremental demand in the quarter. For fiscal 2025, The Home Depot expects sales to increase 3% year over year, with EPS to decline 6%.Wayfair Inc. W reported third-quarter 2025 non-GAAP earnings of 70 cents per share, which beat the Zacks Consensus Estimate by 52.17% and increased 218.2% year over year. Net revenues for the third quarter of 2025 rose 8.1% year over year to $3.1 billion. Excluding the impact of Wayfair’s exit from Germany, revenue growth stood at about 9% year over year. The figure beat the Zacks Consensus Estimate by 3.62%.For the fourth quarter of 2025, Wayfair expects revenues to grow in the mid-single digits year over year, with gross margin to range between 30% and 31%. The company expects customer service and merchant fees to remain just below 4% of net revenues, while advertising expenses are projected to represent 11-12% of net revenues in the fourth quarter.A Stock With the Favorable CombinationAccording to our model, this company in the broader Retail-Wholesale sector possesses the right combination of elements to post an earnings beat in the upcoming quarter.Macy's, Inc. M currently has an Earnings ESP of +14.82% and a Zacks Rank #2 (Buy) at present.Macy's reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 25.8%. The company’s earnings for the third quarter of fiscal 2025 are expected to decline year over year by 450%.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Macy's, Inc. (M): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report Williams-Sonoma, Inc. (WSM): Free Stock Analysis Report Wayfair Inc. (W): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks