Williams-Sonoma (WSM) said it saw minimal impacts from tariffs in its second quarter results but expects tariffs to pressure its top-line growth and operating margins in the current quarter.
“Our incremental tariff rate has doubled since our last earnings call,” CFO Jeffrey Howie said in the company’s earnings call. “At our May earnings call, our incremental tariff rate was 14%. As of today’s call, it has doubled to 28%. This includes the additional 30% China tariffs, 50% India tariff, 20% via non-tariff and averaged 18% tariff on the rest of the world as well as the 50% steel and aluminum tariffs and a 50% copper tariff.”
The furniture company, which houses brands such as West Elm and Pottery Barn, reported better-than-expected earnings of $2.00 per share. Wall Street expected EPS of $1.80.
Williams-Sonoma stock was down 1.4% in early afternoon trading. The stock sank earlier this week, along with other furniture stocks, after President Trump posted on social media that his administration would open an investigation into furniture imports and impose additional tariffs on the sector.
“It’s early to speculate — I think we’re day 5 of a 50-day probe, there’s not a lot of information on this subject,” Laura Alber, Williams-Sonoma’s CEO, said about possible furniture tariffs. “But I will say that it’s going to be very difficult for the industry, even if tariffs are put on to bring a huge amount back to the United States in a short window of time, because there aren’t the factories available to do a lot of production.”
“For us, of course, we will be in a much better position than most if that were to happen because of our strong USA manufacturing capabilities already,” Alber continued. “We have … [a] good chunk of our upholstery in the United States as we speak, and we can do more there, and that would be something we’d really push.”
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