AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 2/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Brands and protected designs establish differentiation, but their protection against substitution and replication is insufficiently demonstrated. Operating efficiencies lack a competitor cost comparison.
durability · — · Trademark continuity and patent terms establish legal duration, not durable economic rents. Brand revenue histories do not resolve that distinction.
customer dependency · — · Rewards encourage future purchases, but the passages do not establish material switching friction or customer dependence.
erosion resilience · — · Demand growth and efficiencies coexist with merchandise-margin pressure. These results cannot establish whether a structural advantage resists erosion; generic competitive risks are not realized competitive losses.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 2/4 · Targeted increases and management's historical cost-mitigation account support some pricing capability. First-half fiscal 2026 merchandise-margin compression of 160 basis points shows incomplete cost recovery. Realized pricing is mixed; price and volume effects are not separated.
retention · 2/4 · Fiscal 2025 comparable growth across core brands and first-half fiscal 2026 brand sales growth support continuing demand indirectly. Rewards encourage repeat purchases, but neither those mechanics nor aggregate revenue establishes customer-level retention; Pottery Barn's earlier sales declines temper the evidence.
margin resilience · 2/4 · Supply-chain efficiencies and occupancy leverage offset part of tariff pressure. However, the first-half gross-margin increase of 220 basis points includes 310 basis points from net tariff refunds, implying a 90-basis-point decline without that benefit. Multi-year operating results provide additional evidence of resilience, but do not establish strong pricing protection.
contractual freedom · — · Targeted price increases indicate discretion over some prices. The passages do not adequately disclose customer pricing commitments, repricing rights or contractual constraints to assess this criterion.
Predictability86
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 5.84
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 3.57
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 51.07
- Current ratio (x)
- 1.39
- cashInterestPaid
- 0.69
- cashInterestCoverage
- 1900.13
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -3.71
- 3-year average SBC / revenue (%)
- 1.25
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 3/4 · First-half fiscal 2026 operating cash flow of $695.9 million covered $116.4 million of capital expenditures and $463.2 million of repurchases and dividends, with no revolving credit borrowings. Diluted weighted-average shares also fell year over year. This demonstrates funding discipline, while working-capital movements contributed to cash generation and repurchase valuation remains unproven.
incentive alignment · 2/4 · Actual equity grants, multi-year revenue, EPS, cash-flow and return metrics, and disclosed clawback and trading safeguards support alignment. Director ownership compliance provides additional evidence. Separation benefits including accelerated RSUs and PSUs weaken a strict performance-contingency interpretation; executive ownership levels and realized PSU payouts are not supplied.
execution · 3/4 · Reported comparable growth across core brands, subsequent brand sales growth, supply-chain efficiencies and cash-funded investment demonstrate execution. This is inferred from operating outcomes rather than customer-service measurements. Tariff refunds inflate recent earnings comparisons, and the claimed market-share gain is not independently quantified.
governance · 2/4 · Actual director attendance, current audit-committee independence and compensation safeguards support functioning oversight. The historical $49 million freight-expense error is contrary evidence, although the issuer determined prior periods were not materially misstated. These disclosures support a mixed assessment rather than exceptional governance.
Evidence
Our brand names including “Williams Sonoma,” “Pottery Barn,” “pottery barn kids,” “Pottery Barn Teen,” “west elm,” “Williams Sonoma Home,” “Rejuvenation,” “Mark and Graham” and “GreenRow” are of material importance to us.
Business / Intellectual property / Material brand names · Filed 26/03/2026
Trademarks are generally valid as long as they are in use and/or their registrations are properly maintained, and they have not been found to have become generic.
Business / Intellectual property / Trademark duration · Filed 26/03/2026
As of February 1, 2026, we also own approximately 380 patents in connection with certain product designs, inventions and proprietary technology.
Business / Intellectual property / Patent ownership · Filed 26/03/2026
Patents in the U.S. are generally valid for 15 to 20 years as long as their registrations are properly maintained.
Business / Intellectual property / Patent duration · Filed 26/03/2026
Fiscal 2025 financial achievements included: Continued Strong Earnings Financial Metric Performance Comparable Brand Revenue Growth 3.5% Diluted EPS $8.84 Comparable Consolidated and Brand Revenue Brand 2025 Comparable Brand Revenue Growth(1) Pottery Barn 0.4% West Elm 2.9% Williams Sonoma(2) 6.9% Pottery Barn Kids and Teen 4.4% Total(3) 3.5% (1) Comparable brand revenue growth includes business-to-business net revenues.
Executive compensation / Fiscal 2025 comparable brand revenue · Filed 06/05/2026
For the Thirteen Weeks Ended 1 For the Twenty-six Weeks Ended 1 (In thousands) August 2, 2026 August 3, 2025 August 2, 2026 August 3, 2025 Pottery Barn $ 770,808 $ 724,579 $ 1,479,255 $ 1,419,671 West Elm 496,251 468,550 967,425 905,635 Williams Sonoma 2 268,828 249,053 540,370 506,546 Pottery Barn Kids and Teen 297,438 286,749 537,587 516,465 Other 3 126,432 107,829 240,576 218,556 Total 4 $ 1,959,757 $ 1,836,760 $ 3,765,213 $ 3,566,873 1Includes business-to-business net revenues within each brand.
Note E / Revenue by brand · Filed 28/08/2026
The actions we take to protect our intellectual property rights may not be adequate to prevent imitation of our brands and products by others, particularly in jurisdictions outside the U.S.
Risk factors / Intellectual property imitation · Filed 26/03/2026
Various factors affect comparable brand revenues, including: our e-commerce business; the sales mix among our distribution channels; the number, size and location of stores we open, close, remodel or expand in any period; the overall economic and general retail sales environment; consumer preferences and buying trends; our ability to efficiently source and distribute products; changes in our merchandise mix; competition (including competitive promotional activity and discount retailers); current local and global economic conditions; the timing of our releases of new merchandise and promotional events; the success of our marketing efforts; the cannibalization of existing store sales by our new stores; shifts in catalog circulation; and fluctuations in foreign exchange rates.
Risk factors / Comparable revenue and promotional competition · Filed 26/03/2026
63 Table of Contents The following table summarizes our net revenues by brand for fiscal 2025, fiscal 2024 and fiscal 2023: For the Fiscal Year Ended 1 (In thousands) February 1, 2026 February 2, 2025 January 28, 2024 Pottery Barn $ 2,999,332 $ 3,039,939 $ 3,206,167 West Elm 1,859,501 1,840,582 1,854,811 Williams Sonoma 2 1,362,308 1,302,821 1,260,045 Pottery Barn Kids and Teen 1,138,051 1,107,057 1,060,470 Other 3 447,624 421,142 369,159 Total 4 $ 7,806,816 $ 7,711,541 $ 7,750,652 1Includes business-to-business net revenues within each brand.
Segment disclosures / Fiscal 2023–2025 revenue by brand · Filed 26/03/2026
This increase in gross margin of 220 basis points was driven by (i) IEEPA tariff refunds, net of reimbursements to certain merchandise vendors that previously provided tariff-related concessions, of 310 basis points, (ii) supply chain efficiencies of 40 basis points, including a lower shrink accrual, and (iii) the leverage of occupancy costs of 30 basis points resulting from higher sales, partially offset by (iv) lower merchandise margins of 160 basis points primarily due to the flow-through of tariffs into cost of goods sold.
MD&A / First-half fiscal 2026 gross-margin bridge · Filed 28/08/2026
While we continue to execute against an aggressive tariff mitigation plan which includes cost reductions from vendors, moving production to lower cost markets and cost savings in other areas of the business, as well as targeted price increases, we may not be able to fully or substantially mitigate the impact of the increased tariffs or any future tariffs, pass price increases on to our customers or secure adequate alternative sources of products or materials.
Risk factors / Tariff mitigation and targeted price increases · Filed 26/03/2026
However, our unique operating model and pricing power helped mitigate these increased costs during fiscal 2023.
MD&A / Fiscal 2023 inflation mitigation and pricing-power assertion · Filed 20/03/2024
We offer a customer loyalty program, The Key Rewards, that allows members to earn points on qualifying purchases.
Revenue recognition / The Key Rewards · Filed 26/03/2026
Points earned through either method enable members to receive certificates that may be redeemed on future merchandise purchases.
Revenue recognition / Future-purchase reward certificates · Filed 26/03/2026
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Twenty-six Weeks Ended (In thousands) August 2, 2026 August 3, 2025 Cash flows from operating activities: Net earnings $ 569,471 $ 478,825 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 112,683 113,165 Loss on disposal/impairment of assets 1,108 3,599 Non-cash lease expense 127,380 121,936 Deferred income taxes 12,884 14,658 Tax benefit related to stock-based awards 11,650 11,423 Stock-based compensation expense 61,530 46,974 Other (898) (1,275) Changes in: Accounts receivable (19,495) 2,411 Merchandise inventories 15,000 (98,562) Prepaid expenses and other assets (27,704) (37,959) Accounts payable 49,314 (48,962) Accrued expenses and other liabilities (89,166) (78,142) Gift card and other deferred revenue 16,197 (7,069) Operating lease liabilities (127,247) (125,977) Income taxes payable (16,845) 6,633 Net cash provided by operating activities 695,862 401,678 Cash flows from investing activities: Purchases of property and equipment (116,434) (110,293) Other 62 (1,195) Net cash used in investing activities (116,372) (111,488) Cash flows from financing activities: Repurchases of common stock (287,805) (289,108) Payment of dividends (175,444) (155,994) Tax withholdings related to stock-based awards (99,095) (67,903) Debt issuance costs — (1,187) Other (7,658) (6,941) Net cash used in financing activities (570,002) (521,133) Effect of exchange rates on cash and cash equivalents (353) 3,789 Net increase (decrease) in cash and cash equivalents 9,135 (227,154) Cash and cash equivalents at beginning of period 1,019,801 1,212,977 Cash and cash equivalents at end of period $ 1,028,936 $ 985,823 See Notes to Condensed Consolidated Financial Statements.
Condensed consolidated statements of cash flows / First half fiscal 2026 · Filed 28/08/2026
During the thirteen and twenty-six weeks ended August 2, 2026 and August 3, 2025, we had no borrowings under our Credit Facility.
Liquidity / No revolving credit borrowings · Filed 28/08/2026
Annual RSU and PSU equity grants approved by the Compensation Committee in March 2025, with an effective grant date of April 4, 2025, were as follows: Named Executive Officer Target Equity Value(1) Number of RSUs Number of PSUs (at Target) Laura Alber $19,000,000 50,410 86,417 Jeff Howie $3,500,000 12,602 12,602 Monica Bhargava $3,000,000 10,802 10,802 David King $1,500,000 5,401 5,401 Karalyn Yearout $1,500,000 5,401 5,401 (1) Please see “Grants of Plan-Based Award Table” on page 55 for accounting values.
Executive compensation / Approved fiscal 2025 equity grants · Filed 06/05/2026
The PSU grants made in 2023 were subject to achievement of three-year performance across four relevant financial metrics: Revenue (3-year CAGR, 20% weighting), EPS (3-year CAGR, 20% weighting), Operating Cash Flow (3-year average, 30% weighting), and Adjusted ROIC (3-year average, 30% weighting).
Executive compensation / Fiscal 2023 PSU performance metrics · Filed 06/05/2026
Executive Compensation Practices What We Have What We Do Not Have ✓ Rigorous, objective performance goals and EPS-funded bonus pool ✓ Long-term Incentive Program with 3-year goals ✓ Limited perquisites ✓ Competitive stock ownership guidelines and retention requirement ✓ Clawback policy covering cash incentives and stock awards ✓ Double-trigger change-in-control arrangements ✓ Independent compensation consultant and Board Compensation Committee ✓ Annual risk assessment of compensation policies and programs × No “golden parachute” gross-ups × No hedging/pledging/short sales of Company stock × No dividends paid on unvested shares × No options/stock appreciation rights, or SARs, granted below fair market value × No supplemental retirement benefits × No repricing or cash out of underwater options/SARs without stockholder approval × No excessive severance or excessive perquisites × No single-trigger change-in-control arrangements × No guaranteed salary increases, bonuses or long-term incentive awards Williams-Sonoma, Inc.
Executive compensation / Existing compensation practices and safeguards · Filed 06/05/2026
Bhargava will be eligible for the following payments and benefits, all less applicable withholdings and deductions: (i) payments of $1,571,400 (including legal fees); (ii) the acceleration of vesting of 25,370 restricted stock units; (iii) the acceleration of vesting of 9,580 performance stock units to be issued on March 15, 2027; and (iv) payments of $34,362 to cover the cost of health care coverage for up to 18 months.
Other information / Bhargava separation payments and equity acceleration · Filed 22/05/2026
Each incumbent Director attended at least 75% of the aggregate of (i) the total number of meetings of the Board held during the period of fiscal 2025 and (ii) the total number of meetings held by all committees of the Board on which such Director served during the period of fiscal 2025 that such Director served, and average Board and Committee meeting attendance for all Directors was 97%.
Corporate governance / Fiscal 2025 director attendance · Filed 06/05/2026
Williams-Sonoma, Inc. | 2026 Proxy Statement | Page 15 Table of Contents Audit and Finance Committee Current Members Responsibilities Frits van Paasschen, Chair Esi Eggleston Bracey Andrew Campion William Ready Independence The Board has determined that each member of the Audit and Finance Committee is independent under the currently effective NYSE rules and Rule 10A-3 of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Corporate governance / Current Audit and Finance Committee independence · Filed 06/05/2026
| 2026 Proxy Statement | Page A-1 Appendix A First Quarter 2024 Out-of-Period Freight Adjustment Subsequent to the filing of our fiscal 2023 Form 10-K, in April 2024, we determined that we over-recognized freight expense in fiscal 2021, 2022 and 2023 for a cumulative amount of $49 million.
Appendix A / Historical freight-expense error · Filed 06/05/2026
We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated.
Appendix A / Assessment of prior-period misstatement materiality · Filed 06/05/2026
As of April 21, 2026, all of our Directors have satisfied the ownership requirements or have been on the Board for less than five years.
Director compensation / Ownership-policy compliance as of April 21, 2026 · Filed 06/05/2026
The following table summarizes reported net revenues, significant segment expenses, operating income and earnings before income taxes for fiscal 2025, fiscal 2024 and fiscal 2023: For the Fiscal Year Ended (In thousands) February 1, 2026 February 2, 2025 January 28, 2024 Net revenues $ 7,806,816 $ 7,711,541 $ 7,750,652 Less: Cost of merchandise and shipping 3,383,429 3,336,102 3,632,761 Occupancy, excluding depreciation 591,678 567,602 584,469 Employment 1,254,658 1,227,305 1,167,024 Advertising 552,587 567,723 502,245 Other segment items 1 378,891 354,914 389,938 Depreciation and amortization expense 229,851 227,712 230,022 Operating income $ 1,415,722 $ 1,430,184 $ 1,244,193 Interest income, net 36,838 55,548 29,162 Earnings before income taxes $ 1,452,560 $ 1,485,732 $ 1,273,355 1Other segment items within operating income include general expenses, which consist primarily of credit card fees, data processing expenses and administrative expenses.
Segment disclosures / Fiscal 2023–2025 revenue and operating income · Filed 26/03/2026
Given the challenging macroeconomic backdrop, including the evolving tariff landscape and the continuation of elevated interest rates and a slow housing market, we are pleased by our gain in market share and our strong operating margins and record earnings per share.
Compensation Committee letter / Management market-share claim · Filed 06/05/2026
