How Williams-Sonoma Became One Of Retail’s Best-Performing Stocks
Williams-Sonoma has outperformed the S&P 500 and competitors by leveraging its omnichannel model, focusing on full-price selling to affluent customers, and deploying AI to enhance e-commerce and supply chain efficiency. Despite a sluggish housing market, the company has achieved margin expansion and is pursuing growth opportunities through smaller home furnishings, B2B expansion, and renewed store openings.
Summary
Williams-Sonoma, which owns Pottery Barn, West Elm, and other specialty brands, has significantly outperformed the S&P 500, the home furnishings industry, and major retailers like Walmart, Amazon, and Home Depot over the past three years. This success is particularly noteworthy given headwinds including rising energy costs, persistent inflation, and a sluggish housing market in the U.S., which accounts for nearly all of the company's sales.
The company's profitability has soared since 2019, with operating margins expanding substantially. A key differentiator is that Williams-Sonoma customers are willing to pay full price, allowing the company to reduce discounting and spread sales volume more evenly while improving supply chain efficiency. The company benefits from a K-shaped economy where high-income earners continue spending while lower-income households pull back.
Williams-Sonoma has built a massive e-commerce business representing two-thirds of sales, creating a competitive advantage through its omnichannel approach combining online and physical stores. The company has deployed AI technologies, including a sales assistant called Olive that drives purchases at three times the rate of non-users, and personalized digital experiences that generate nine times the revenue of average site visits. AI has also improved supply chain efficiency, transportation, and delivery.
While the company closed 18% of physical stores between 2019 and 2025, new store openings have become a renewed focus, with plans for 1-3% annual store growth. The brand Rejuvenation is experiencing double-digit growth, particularly in B2B sales (nearly 15% growth in the most recent quarter). Williams-Sonoma plans to expand B2B sales to cruise ships, senior living, and student housing, with potential to reach $2 billion in annual B2B revenue. Pottery Barn, the largest brand, has returned to growth after being a portfolio drag during the post-COVID housing slump.
The company faces a tariff headwind, as over 80% of merchandise purchases come from foreign manufacturers. However, Williams-Sonoma received a $200 million tariff refund following a Supreme Court ruling and transparently separated this from reported earnings, maintaining clean financial reporting. The company remains focused on capturing greater market share in the fragmented furniture industry through its multi-brand, omnichannel model.
About this episode
Williams-Sonoma is outperforming the home furnishing industry and broader market. The company is increasingly able to sell products with minimal discounting, grow business-to-business sales and integrate AI to grow its market share. CNBC’s Ryan Baker explains how the home goods company has been able to grow profitability despite a stagnant housing market, economic uncertainty and tariff pressures. Produced and Edited by: Ryan Baker Camera by: Natalie Rice Animation by: Jason Reginato, Emily Park Senior Managing Producer: Tala Hadavi Additional Footage: Williams-Sonoma, Getty Images » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Want to get ahead at work? Then you need to learn how to make effective small talk. In CNBC’s new online course, How To Talk To People At Work, expert instructors teach you how to use everyday conversation to gain visibility, build meaningful relationships and advance your career. Sign up now: https://cnb.cx/4sGlSkh Connect with CNBC News Online Get the latest news: https://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC on Threads: https://cnb.cx/threads Follow CNBC News on X: https://cnb.cx/FollowCNBC Follow CNBC on WhatsApp: https://cnb.cx/WhatsAppCNBC #CNBC How Williams-Sonoma Became One Of Retail’s Best-Performing Stocks
Key Insights
- Williams-Sonoma achieved similar operating income in 2025 as in 2021 despite sales being $450 million lower, demonstrating that the company successfully decoupled profitability from sales volume through margin expansion and reduced discounting.
- AI-powered personalization on Williams-Sonoma's website generates nine times the revenue of an average site visit, and the company's sales assistant Olive drives purchases at three times the rate of customers who don't engage with it.
- Williams-Sonoma transparently separated its $200 million tariff refund from reported earnings, unlike most other retailers, which kept the company's results clean and focused on underlying fundamentals rather than creating noise in operating results.
Topics
Transcript
[0:00] Home retailer Williams-Sonoma, which owns Pottery Barn, West Elm and a number of other specialty brands, has outperformed the S&P 500 and the home furnishing industry, along with competitors like Wayfair, Arhaus, Ethan Allen and RH over the past three years. It's even been a winner compared to retail giants like Walmart, Costco, Home Depot, and Amazon. Working on the product. We've been working on the service and the quality, but also the storytelling, and that is also what's attracting many new customers to our brands and then bringing people back to our brands. The traditional investing thesis around home goods and [0:32] furniture typically revolves around home sales as people buy a new home and move. They also…
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