Executive Summary

Q4 2024 (14-week quarter) delivered a clean beat: revenue $2.46B vs S&P Global consensus $2.35B (+4.6%), diluted EPS $3.28 vs $2.94 (+11.5%), with record operating margin of 21.5% driven by higher merchandise margins, supply chain efficiencies, and occupancy leverage . Results benefited modestly from the 53rd week (+510bps to revenue growth, +60bps to operating margin) but underlying comps turned positive at +3.1% .
Full-year FY24 EPS $8.50 (ex freight adjustment) and record operating margin 17.9%, supported by gross margin expansion (+310–320bps YoY ex adjustment) and strong cash generation; quarterly dividend increased 16% to $0.66 per share .
FY25 guidance initiated: comps flat to +3%, net revenues -1.5% to +1.5% (53rd-week headwind), operating margin 17.4%–17.8% including tariff impacts (China 20%, Mexico/Canada 25%, steel/aluminum 25%); capex $275–$300M with 85% to e-com, retail optimization, supply chain .
The call emphasized AI-driven personalization/ops, improving furniture trends, B2B momentum (> $1B revenue, +10% comp), and omni-channel execution; S&P 500 inclusion announced Mar 24, 2025 provides an incremental stock narrative catalyst .

What Went Well and What Went Wrong

What Went Well

Positive comp (+3.1%) and market share gains; record Q4 operating margin 21.5% with EPS $3.28, driven by full-price selling, supply chain efficiencies, and occupancy leverage .
Brand strength: Williams Sonoma (+5.7% comp), West Elm (+4.2%), PB Kids/Teen (+3.5%); retail channel +7% comp vs e-commerce +1.3% as stores benefited from improved in-stocks and design services .
Management quote: “We are also incorporating AI into our digital capabilities like personalized e-mails and customized homepages… AI will be a key component in driving record sales and margin.” – Laura Alber .

What Went Wrong

Pottery Barn comp was slightly negative (-0.5%), though improved vs Q3; SG&A rate ticked higher YoY (+7.6% dollars, 25.8% rate), with higher incentive comp and advertising (partially offset by lower general expenses) .
FY25 faces tariff headwinds (China 20%, Mexico/Canada 25%, steel/aluminum 25%) pressuring gross margin; guidance embeds margin erosion with offsets from supply chain and SG&A savings .
FY24 included an out-of-period freight adjustment ($49M in Q1) and 53rd week tailwinds; management clearly quantified but investors should normalize for these effects when assessing run-rate margins and growth .

Financial Results

Metric	Q4 FY23	Q3 FY24	Q4 FY24	vs Est. (Q4 FY24)
Revenue ($USD Billions)	$2.279	$1.801	$2.462	$2.354*
Diluted EPS ($)	$2.72	$1.96	$3.28	$2.94*
Gross Margin %	46.0%	46.7%	47.3%	N/A
Operating Margin %	20.1%	17.8%	21.5%	N/A
SG&A % of Revenue	25.9%	28.9%	25.8%	N/A

Values with asterisk retrieved from S&P Global.

Notes:

Q4 FY24 additional week contributed +510bps to revenue growth and +60bps to operating margin .
Retail comp +7% and e-commerce +1.3% in Q4 .

Segment Breakdown (Q4)

Brand	Net Revenue Q4 FY23 ($MM)	Net Revenue Q4 FY24 ($MM)	Q4 FY23 Comp (%)	Q4 FY24 Comp (%)
Pottery Barn	$874	$919	-9.6%	-0.5%
West Elm	$453	$501	-15.3%	+4.2%
Williams Sonoma	$524	$573	+1.6%	+5.7%
PB Kids & Teen	$311	$339	-2.5%	+3.5%
Other	$117	$130	N/A	N/A
Total	$2,279	$2,462	-6.8%	+3.1%

KPIs

KPI	Q4 FY24	YoY/Context
Comparable Brand Revenue	+3.1%	vs -6.8% in Q4 FY23
Retail vs E-com Comp	Retail +7%; E-com +1.3%	E-com ~66% of FY24 revenue
ROIC	54.0%	Among best in retail (mgmt)
Cash & Equivalents	$1,213MM	No debt outstanding (mgmt)
Inventory	$1,332MM	Strategic China pull-forward for tariffs
Stores (End of Q4)	512 total	Net -6 YoY (518→512)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenues (YoY)	FY25	N/A	-1.5% to +1.5% (53rd-week impact)	New
Comparable Sales	FY25	N/A	Flat to +3%	New
Operating Margin	FY25	N/A	17.4%–17.8% (incl. ~20bps 53rd-week impact)	New
Tariff Assumptions	FY25	N/A	Includes China 20%, Mexico/Canada 25%, steel/aluminum 25%	New clarity
Capex	FY25	N/A	$275–$300MM; ~85% to e-com, retail optimization, supply chain	New
Dividend	FY25 (declared)	$0.57 (pre raise)	$0.66 quarterly (+16%)	Raised
Buyback Authorization	Ongoing	$1.2–$1.3B authorized (Q3/Q4 context)	$1.2B available (as of call)	Maintained
Long-term Targets	Multi-year	Mid-to-high single-digit revenue; mid-to-high teens margin	Reiterated	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q2 FY24)	Previous Mentions (Q-1: Q3 FY24)	Current Period (Q4 FY24)	Trend
AI/Technology Initiatives	Focus on profitability; limited AI detail in PR	Raised FY24 margin outlook; still ops-driven	AI in personalized emails, customized homepages; AI in omni-services and call centers to drive savings	Increasing emphasis
Supply Chain	+180bps efficiencies; gross margin +550bps YoY	+100bps efficiencies; gross margin +230bps YoY	Continued efficiencies; big & bulky scale; more room to improve returns/damages/replacements	Sustained improvement
Tariffs/Macro	FY24 outlook prudent; no explicit tariff detail	Raises FY24 outlook; macro cautious	FY25 margin guide includes China 20%, Mexico/Canada 25%, steel/aluminum 25%; resourcing and pricing actions	Headwind quantified, mitigation in place
Product Performance	Negative comps; improved margin	Comp -2.9%; improving trend	Comps positive; brand highlights: WSM +5.7%, West Elm +4.2%, PB Kids/Teen +3.5%, PB -0.5%	Positive inflection
Regional Trends	Not highlighted	Not highlighted	Growth in Canada, Mexico, India; UK partnerships (John Lewis, Fortnum & Mason)	Broadening international
B2B/Contract	Not highlighted	Not highlighted	Record year >$1B revenue; Q4 contract +12% comp; cruise/hospitality/multifamily wins	Strong momentum
Retail Optimization	Not highlighted	Not highlighted	Fleet optimization; ~17% closures since 2019; remodels driving DD growth (e.g., OKC)	Ongoing optimization

Management Commentary

“We are also incorporating AI into our digital capabilities like personalized e-mails and customized homepages… AI will be a key component in driving record sales and margin.” – Laura Alber .
“Q4 gross margin came in at 47.3%, 130bps higher than last year… merchandise margins, supply chain efficiencies and occupancy.” – Jeff Howie .
“Our guidance includes the additional 20% China tariffs, the 25% Mexico and Canada tariffs and the 25% tariff on steel and aluminum… we’ve offset most of the impact.” – Jeff Howie .
“Business-to-business had an exciting and record-breaking year, driving more than $1 billion in revenues with a 10% comp… contract’s largest quarter history to date.” – Laura Alber .
“We are proud to increase our quarterly dividend by 16% to $0.66 per share.” – Company press release .

Q&A Highlights

SG&A leverage: Management expects SG&A savings (variable employment, AI in back office/call centers, flexible ad spend) to partially offset gross margin tariff headwinds; margins guided at 17.4%–17.8% .
Gross margin/tariffs: Tariff impacts embedded; offsets via vendor concessions, resourcing, targeted price increases, supply chain efficiencies, SG&A reductions, expanding Made-in-USA (18% of sourcing) .
Demand trends: Early Q1 FY25 reads complicated by late Easter; strategies in non-furniture, seasonal, and collaborations driving customer response; furniture trend improving due to proprietary newness .
Retail footprint: Continued fleet optimization with strict ROI; ~17% closures since 2019; remodels/relocations producing double-digit lifts (e.g., OKC Pottery Barn) .
West Elm: Sequential comp improvement driven by newness, collaborations, stronger seasonal assortment, improved storytelling/imagery, and backroom inventory enabling take-home purchases .

Estimates Context

Q4 FY24 actuals vs consensus: Revenue $2.462B vs $2.354B*; EPS $3.28 vs $2.94*; EBITDA $555MM vs $550MM*; ~19 revenue and ~22 EPS estimates *.
Q3 FY24: Revenue $1.801B vs $1.785B*; EPS $1.96 vs $1.77*; EBITDA $381MM vs $375MM* *.
Q2 FY24: Revenue $1.788B vs $1.810B* (miss); EPS $1.74 vs $1.61* (beat); EBITDA $334MM vs $326MM* *.
FY24: Revenue $7.751B vs $7.698B*; EPS $7.425 reported vs $7.27* (note: full-year non-GAAP diluted EPS $8.79; EPS $8.50 ex Q1 freight adjustment per 8-K) * .

Values marked with asterisk retrieved from S&P Global.

Implication: Consensus likely moves up for FY25 margin durability given tariff offsets and Q4 strength; revenue estimates adjust for 53rd-week headwind and comps flat to +3%.

Key Takeaways for Investors

High-quality beat with record Q4 margin indicates resilient model; full-price selling and supply chain efficiencies remain durable levers .
FY25 guidance bakes in tariffs; watch management execution on resourcing, vendor concessions, targeted pricing, and AI-driven SG&A savings to protect margins .
Brand momentum and improving furniture trend (proprietary newness, in-stock) support comps trajectory; retail +7% comps highlight store execution .
B2B scaling (> $1B revenue) and emerging brands (Rejuvenation) add diversified growth vectors less tied to housing cycles .
Capital returns continue: dividend raised to $0.66; $1.2B buyback dry powder; strong liquidity ($1.213B cash) and no debt support opportunistic repurchases .
Operational catalysts: AI deployment across personalization, omni logistics, call centers; Arizona DC optimization for cost/speed .
Narrative catalyst: S&P 500 inclusion announcement (Mar 24, 2025) enhances investor visibility and potential passive flows .

WILLIAMS SONOMA INC (WSM)·Q4 2025 Earnings Summary