Last Update 23 Dec 25

Fair value Increased 0.27%

WSM: Future Performance Will Test Premium Multiples And Ongoing Buyback Support

Narrative Update: Williams-Sonoma Analyst Price Target Revision

The analyst-derived fair value estimate for Williams-Sonoma has inched higher to about $199 from roughly $198, even as analysts trim official price targets into the mid-to-high $100s after Q3 results and as they highlight still-elevated valuation versus history.

Analyst Commentary

Bullish analysts acknowledge that the stock has pulled back following the Q3 print, but they still see Williams-Sonoma as executing well against its strategic initiatives, sustaining solid profitability and maintaining a balance sheet that supports ongoing shareholder returns.

Bearish analysts, however, emphasize that even after the decline, the shares trade at a premium to the company’s own historical valuation range, leaving less room for error if growth or margins disappoint from here.

Bullish Takeaways

Recent model updates still support a fair value above some of the newly reduced official targets. This suggests that current pricing already reflects a degree of near term softness.
Steady execution coming out of Q3, including disciplined cost control and inventory management, underpins confidence in margin resilience despite a slower demand backdrop.
Analysts see the company’s brand strength and omni channel capabilities as longer term growth drivers that can support earnings power beyond what is implied by more cautious near term expectations.
Shareholder friendly capital allocation, including buybacks and dividends, is viewed as a support for total return even if top line growth moderates.

Bearish Takeaways

Bearish analysts argue that the stock’s valuation remains elevated versus its own history, even after the recent selloff, limiting upside if execution is merely solid rather than exceptional.
Lowered price targets reflect concern that the post pandemic normalization in home related spending could keep revenue growth subdued, challenging the sustainability of peak earnings.
There is caution that any incremental macro or consumer weakness could pressure discretionary categories, leaving limited buffer for the company to miss expectations given the current multiple.
Some see risk that the market has already priced in much of the company’s operational progress, making it harder for future execution to drive multiple expansion from here.

What's in the News

The Board of Directors authorized a new share repurchase plan in November 2025, signaling continued commitment to returning capital to shareholders (Key Developments).
The company announced a fresh share repurchase program of up to $1 billion with no set expiration date, expanding buyback flexibility (Key Developments).
From August 4, 2025 to November 2, 2025, Williams-Sonoma repurchased about 1.4 million shares, or 1.15 percent of shares outstanding, completing a prior $363 million buyback authorization (Key Developments).
Management reiterated fiscal 2025 guidance, targeting annual net revenue growth of roughly 0.5 percent to 3.5 percent and comparable sales growth of 2.0 percent to 5.0 percent, inclusive of a 53rd week in fiscal 2024 (Key Developments).
Pottery Barn and Williams-Sonoma brands launched high-profile collaborations tied to Norman Rockwell holiday art and the Wicked: For Good film, expanding seasonal and fandom-focused assortments across home and kitchen categories (Key Developments).

Valuation Changes

The fair value estimate has risen slightly to about $199 from roughly $198, reflecting a modest upward adjustment in the model based on updated assumptions.
The discount rate has increased marginally to approximately 8.56 percent from about 8.55 percent, indicating a negligible change in the risk profile applied to future cash flows.
Revenue growth has edged down slightly to roughly 3.77 percent from about 3.77 percent previously, signaling a very small downward revision to the medium-term growth outlook.
The net profit margin has improved modestly to around 13.84 percent from about 13.83 percent, pointing to a slight enhancement in expected profitability.
The future P/E has decreased slightly to about 22.24x from roughly 22.39x, implying a small contraction in the valuation multiple used for forward earnings.

Investments in AI, digital platforms, and supply chain optimization are boosting customer experience, cost efficiency, and operational margins.
Focus on innovation, exclusivity, and sustainability is attracting affluent, younger consumers and expanding market share across new channels and geographies.
Tariff volatility, weak housing demand, and shifting consumer preferences create significant risks to margins, revenue growth, and supply chain stability for Williams-Sonoma.

Catalysts

About Williams-Sonoma

Operates as an omni-channel specialty retailer of various products for home.What are the underlying business or industry changes driving this perspective?

Continued investment and advances in AI-powered tools and digital platforms are driving higher conversion rates, improved customer experience, and measurable productivity gains, supporting both revenue growth and expanded operating leverage at the margin level.
Successful focus on product innovation, exclusive partnerships, and expanding high-quality, differentiated merchandise is resonating across both core and emerging brands, enabling Williams-Sonoma to capture greater share from more affluent, urban, and younger consumers – a demographic that supports premium positioning and long-term revenue expansion.
Strong momentum in B2B and contract channels, as well as international markets, broadens the addressable market and diversifies revenue streams beyond traditional U.S. retail, contributing to steady top-line growth and earnings stability.
Supply chain optimization, including AI-driven forecasting, multi-sourcing strategies, and domestic manufacturing investments, is improving cost efficiency and order fulfillment, mitigating margin pressures from tariffs and global volatility and protecting net margins.
Persistent focus on sustainability, quality, and design authority (including expansion of sustainable product lines and enhanced product transparency) is strengthening brand differentiation and meeting evolving consumer expectations, supporting both customer loyalty and long-term gross margin stability.

Williams-Sonoma Earnings and Revenue Growth

Williams-Sonoma Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Williams-Sonoma's revenue will grow by 3.4% annually over the next 3 years.
Analysts assume that profit margins will shrink from 14.4% today to 13.8% in 3 years time.
Analysts expect earnings to reach $1.2 billion (and earnings per share of $10.65) by about September 2028, up from $1.1 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.6x on those 2028 earnings, up from 21.9x today. This future PE is greater than the current PE for the US Specialty Retail industry at 18.7x.
Analysts expect the number of shares outstanding to decline by 3.6% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.24%, as per the Simply Wall St company report.

Williams-Sonoma Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Doubling and ongoing volatility in global tariffs-particularly on imports from China, India, Vietnam, and metals-create significant cost pressures and unpredictability that could erode gross margins and compress profitability if Williams-Sonoma cannot fully mitigate or pass on these costs to customers. (Gross margin, earnings)
Secular headwinds such as ongoing weakness in the housing market, high interest rates, and stagnant housing turnover limit demand for big-ticket home furnishings, posing a long-term risk to top-line growth as key demographic shifts (e.g., declining homeownership among younger consumers) play out. (Revenue growth)
The company's sustained focus on premium positioning and high-quality, design-led merchandise leaves it exposed to cycles of consumer retrenchment during economic downturns, which could lead to sales declines and margin pressure if discretionary spending contracts. (Revenue, net margins)
Physical store investments and inventory pull-forwards expose Williams-Sonoma to risks of inventory obsolescence and higher fixed costs, especially as consumer preference continues shifting online, and legacy store footprints may weigh on earnings if underperforming. (Net margins, earnings)
Rapid and unpredictable changes in tariff policy and input costs could strain relationships with vendors and manufacturing partners, potentially leading to supply chain disruptions, higher input volatility, and increased reliance on effective sourcing strategies, all of which could impact cost structure and earnings consistency. (Net margins, earnings)

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $204.316 for Williams-Sonoma based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $230.0, and the most bearish reporting a price target of just $138.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.7 billion, earnings will come to $1.2 billion, and it would be trading on a PE ratio of 23.6x, assuming you use a discount rate of 8.2%.
Given the current share price of $202.64, the analyst price target of $204.32 is 0.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Digital Tools And Supply Chain Upgrades Will Advance Future Position