Pottery Barn and West Elm Parent Company Shatters Expectations Despite Tariffs

Williams-Sonoma continues to face significant tariff challenges due to Section 232 tariffs on furniture and tariffs of up to 50% on products 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 partially offset by operating leverage.

“Williams-Sonoma delivered a strong third quarter, with consistent comparable sales growth, strong full-price sales and disciplined cost control that kept operating margins around 100,” Telsey Advisory Group analyst Cristina Fernandez said in a Benzinga report.

“However, the market reaction reflects growing concerns about sharply higher tariff bills, which are expected to reduce profitability heading into 2026.”

Fernandez provided a balanced view of the company’s prospects, reaffirming an Outperform rating and slightly lowering the price target to $220 from $225.

Related: Dollar Tree Sees a Change in Consumer Behavior

Although tariff expenses were lower than expected in the third quarter due to delayed increases, the company anticipates a notable increase in tariffs in the fourth quarter, with a sharp increase in the combined tariff rate to 35% from 6% a year ago, according to Fernández.

So far, supplier concessions, sourcing shifts, supply chain efficiencies and selective price increases have mitigated much of the impact, he 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 buybacks and $80 million in dividends.

The board also approved a new $1 billion stock repurchase authorization, which will begin once the current repurchase authorization is fully utilized.

Alber sees net revenue growth of between 0.5% and 3.5% over the next year, with comparable brand revenues of 2% to 5%. Williams-Sonoma’s operating margin guidance was raised to between 17.8% and 18.1%, reflecting expectations for continued margin expansion, despite tariff pressure.

“We continue to gain market share and outperform an industry that fell again in the third quarter,” Alber said. “Our continued commitment to innovation, product excellence and customer service positions us well for future growth.”

According to 2025 industry data from IBISWorld and other market research, Williams-Sonoma has a large presence in the home furnishings sector:

• TJX Companies Inc. is the largest home furnishings retailer with approximately 16.2% market share.

• Williams-Sonoma Inc. holds the second largest market share, around 7.4%.

• Bed Bath & Beyond Inc.Despite the challenges, it remains approximately 3.2% market share.

Related: Home Depot update on customer behavior coming

This story was originally reported by TheStreet on November 22, 2025, where it first appeared in the Retail section. Add TheStreet as a preferred source by clicking here.