Williams-Sonoma, Inc. (NYSE:WSM) shares rose on Wednesday after the company reported fourth-quarter earnings that exceeded expectations, despite a revenue shortfall. The company also provided a stable outlook for fiscal 2026.
Fourth-Quarter Results: EPS Beat, Revenue Miss
Williams-Sonoma reported GAAP diluted EPS of $3.04, surpassing analyst estimates of $2.91. However, net revenue was $2.36 billion, below the $2.42 billion estimate and down from $2.46 billion a year ago, due to an extra week in the prior period.
Despite this, comparable brand revenue rose 3.2%. Operating income was $478 million, with an operating margin of 20.3%, down 120 basis points year over year.
Margins, Costs, and Tariff Effects
Turning to margins and costs, gross margin was 46.9%, down 40 basis points, primarily due to lower merchandise margins and occupancy deleverage.
Supply chain efficiencies and favorable inventory results partially offset these declines. SG&A expenses decreased 1.3% year over year to $627 million. Merchandise inventories increased 9.8% to $1.5 billion, including …