Williams-Sonoma's stock has soared in a sluggish housing market. Here's how it won over Wall Street

Williams-Sonoma stock rises in sluggish housing market Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points Investors have reacted favorably to Williams-Sonoma's ability to grow operating margins and maintain its business profitability even after sales fell following the post-Covid housing boom. The company is fueling growth through its ability to sell products without discounts, strong business-to-business sales, and AI integration for both the consumer-facing and backend of its business operations. Analysts say recent momentum at its largest brand, Pottery Barn, could be a catalyst for future growth. Over 80% of the company's merchandise is imported, so tariff uncertainty is still a potential headwind. In this article WSM Follow your favorite stocks CREATE FREE ACCOUNT watch now VIDEO 6:59 06:59 Why investors love Williams-Sonoma Digital Original Williams-Sonoma is one of the top-performing retail stocks of the year, despite weakness in the housing market that has dampened sales of home goods. The company's share price had climbed about 23% year to date as of Friday, outperforming the S&P 1500 Home Furnishings index as well as competitors such as Wayfair , Arhaus , Ethan Allen and RH , formerly known as Restoration Hardware. "We've been working on the product, we've been working on the service and the quality, but also the storytelling," said Williams-Sonoma CEO Laura Alber in a late August interview on CNBC's "Mad Money. " "And that is also what's attracting ... many new customers to our brands, and then bringing people back to our brands." Stock Chart Icon Stock chart icon Williams-Sonoma stock compared to peers and other retail giants. The traditional investing thesis around home furnishings often revolves around home sales: As people buy new homes, they also purchase new furniture. In the U.S., which accounts for 96% of Williams-Sonoma's sales, consumers face a sluggish housing market driven by high interest rates , along with rising energy and food costs. Yet over a three-year period, Williams-Sonoma shares have climbed more than 200%. Fixing the underlying business fundamentals has been key to the success of the company, which includes its namesake brand along with retailers such as Pottery Barn and West Elm. In 2019, the company's operating margin, which is a key measure of profitability, was 7.9%. By 2021, it reached 17.6%. After a Covid-fueled housing boom, the market slumped. Williams-Sonoma's sales fell accordingly, but it proved to investors that it could sustain profitability. "They made a number of savvy moves, including reducing the amount of promotions and also optimizing their supply chain with home deliveries and, all in, they drove over 10% expansion in their EBIT [earnings before interest and taxes] margin during those tough years," said Peter Keith, head of consumer research at Piper Sandler. Those moves continue to pay off for Williams-Sonoma. Revenue was $7.81 billion in 2025, down from $8.25 billion in 2021, but its operating income was nearly the same. Finding growth Williams-Sonoma is now focused on capturing more of the existing home furnishings market, while maintaining strong profit margins. One of the ways it's been able to do that is selling its products at full price at a time when some rivals have run more promotions. "When you're not running sales, it tends to spread your overall sales volume out quite evenly ... it's really also had some positive carryout effects to their supply chain and driven margin expansion there," Keith said. On top of that, e-commerce — which is generally more profitable than brick-and-mortar — makes up more than two-thirds of Williams-Sonoma's sales. The company is also using AI to further grow that part of the business. On an earnings call in November, the company said it launched an AI sales assistant nicknamed "Olive." In August, it said customers who engage with it make purchases at three times the rate of customers who don't. Williams-Sonoma has also used AI to reduce costs in its supply chain and deliveries, Chief Technology and Digital Officer Sameer Hassan said on the company's first-quarter earnings call in May. Business-to-business, or B2B, sales have also been a bright spot for the company. Its most recent quarter ended in August saw nearly 15% growth in the category as it expands selling in areas such as cruise ships, senior living and student housing. Williams-Sonoma has said it believes its B2B business, which currently accounts for around $1 billion in annual sales, could double over the next several years. Pottery Barn turnaround Keith said the company's success with products such as candles, pillows and kitchen items has helped make the company less dependent on the underlying housing fundamentals. Still, furniture is the bread and butter of many of its brands, and it has