From CNBC · Ryan Baker · · 2m
Williams-Sonoma defies housing slump with margin magic
The home furnishings retailer is thriving despite a weak housing market by cutting discounts, boosting e-commerce, and deploying AI.
In brief
The home furnishings retailer is thriving despite a weak housing market by cutting discounts, boosting e-commerce, and deploying AI. Williams-Sonoma proved it can stay profitable even when sales fall, which is why investors are backing it over competitors. Originally reported by CNBC.
Stock soars despite housing weakness
Williams-Sonoma shares climbed 23% year to date, outperforming home furnishings peers and the broader retail market even as the housing sector struggles.
Margins expanded dramatically
Operating margin jumped from 7.9% in 2019 to 17.6% by 2021, proving the company could sustain profitability even after the post-Covid housing boom ended and sales fell.
Fewer discounts, stronger margins
Williams-Sonoma stopped running heavy promotions and sold products at full price, spreading sales volume evenly and improving supply chain efficiency.
“When you're not running sales, it tends to spread your overall sales volume out quite evenly”
E-commerce powers profitability
More than two-thirds of sales come from e-commerce, which is more profitable than stores. The company is using AI to boost conversion rates even further.
AI assistant triples purchase rates
Williams-Sonoma launched an AI sales assistant called Olive in November. Customers who engage with it make purchases at three times the rate of those who don't.
“customers who engage with it make purchases at three times the rate of customers who don't”
B2B business emerging as growth engine
Business-to-business sales grew nearly 15% in the most recent quarter, expanding into cruise ships, senior living, and student housing. The company believes B2B could double from its current $1 billion in annual sales.
Pottery Barn turnaround underway
Pottery Barn, the company's largest brand, saw revenue fall over 15% from 2022 to 2025 but posted same-store sales growth of 5.1% in the most recent quarter, signaling a recovery.
Tariffs remain a major risk
Over 80% of Williams-Sonoma's merchandise comes from foreign manufacturers, making tariff policy a significant threat to future profitability and margins.
CEO seeks tariff stability
CEO Laura Alber said the company received a $200 million tariff refund after the Supreme Court ruled Trump lacked authority to impose the tariffs, but she wants policy to stabilize.
“I really am looking forward to the tariff stabilizing. If they just stay in one place, it's going to be a lot easier for everybody”
What to remember
Williams-Sonoma proved it can stay profitable even when sales fall, which is why investors are backing it over competitors.
