Q3 2025 Williams Sonoma Inc Earnings Call

We'll follow the conclusion of the prepared remarks, I would now like to turn the call over to Jeremy Brooks, Chief Accounting Officer, and head of Investor Relations. Please go ahead.

Speaker #3: And we continue to deliver on the bottom line despite the substantial tariff headwinds . Our operating margin came in at 17% , expanding ten basis points with earnings per share of $1.96 , growing 5% year over year .

Good morning, and thank you for joining our third quarter earnings call.

I am here today with Laura <unk>, our Chief Executive Officer, Jeff, How we our Chief Financial Officer and.

Speaker #3: We are encouraged by our continued strong year to date performance through Q3 and are confident in our outlook for Q4 . And therefore , we are reiterating our outlook for the full year brand , comparable revenue growth to be in the range of 2% to 5% .

Samir Who's our chief Technology and digital officer.

Before we get started I would like to remind you that during this call. We will make forward looking statements with respect to future events and financial performance.

Including our updated guidance for fiscal 'twenty, five and our long term outlook.

Speaker #3: And we are raising line our bottom guidance 40 basis points to an operating margin of 78 to 18 , one versus 17 4 to 17 eight .

We believe these statements reflect our best estimates now.

However, we cannot make any assurances these statements will materialize.

And actual results may differ significantly from our expectations.

Speaker #3: We drove this improvement in performance despite continued geopolitical uncertainty and no substantive improvement in the housing market. And we continue to gain market share and outperform the industry, which declined again in Q3.

The company undertakes no obligation to publicly update or revise any of these statements to reflect events or circumstances that may arise after todays call.

Laura Alber: Since we last spoke, there have been notable changes in tariffs, such as a new tariff on some furniture, including imported upholstery, kitchen cabinets, and bath vanities. The 28% additional charter tariffs are down from 30%. Net-net, these changes are a push to our current estimated impact. As we look forward to the future, predictability in the tariff environment and a reduction in the India tariff would certainly be a positive for us. In the meantime, we continue to be actively and aggressively mitigating what we can with our previously discussed six-point plan. To remind you, first, we are obtaining cost concessions from our vendors. Second, we are resourcing goods to get the best cost for our customers. Third, we're identifying further supply chain efficiencies. Fourth, we are controlling costs. Fifth, we are expanding our Made in the USA assortment, production, and partnerships.

Additionally, we will refer to certain non-GAAP financial measures.

Speaker #3: Our continued strong results reflect the power of our operating model , industry leading channel experiences , and strong portfolio of brands . We continue to see exceptional performance in our retail channel , which ran a positive 8.5 comp in Q3 .

<unk> measures should not be considered replacements for and should be read together with our GAAP results.

This call should also be considered in conjunction with our filings with the SEC.

Finally, a replay of this call will be available on our Investor Relations website.

Speaker #3: Retail continues to benefit from an improved in-store experience with more inventory availability , enhanced design services and and events , the opening of 14 beautiful newly remodeled or repositioned stores .

Now I'd like to turn the call over to Laura.

Thank you Jamie good morning, everyone and thank you for joining the call I'm excited about.

Speaker #3: So far this year , with seven more to come in Q4 . This investment is paying off with almost all of them beating the performance of the prior location .

About our third quarter first I'd like to take a moment to thank our team for their continued hard work.

Williams Sonoma, Inc has been focused on our key three priority this year, which are returning to growth elevating customer service and driving earnings.

Speaker #3: Our stores serve as brand billboards , and we believe a refreshed store improves customer perception of our brands . As we move into the final quarter of 2025 , I want to highlight the specific progress we've made on our three key priorities , starting with growth .

And that focus continues to drive our results.

We are proud to deliver strong results in the third quarter of 2025 with an accelerating positive topline comp and continued outperformance in our profitability.

Laura Alber: Last, we are taking select price increases with a focus on maintaining competitive pricing. Now, let's review our brands. Pottery Barn ran a positive 1.3% comp in Q3. We are pleased with the improvement we saw in large ticket, including furniture, upholstery, and lighting. Our Pottery Barn stores continue to outperform, led by our standout design crew services, and our increased take-it-home-today assortment. Our strategy of focusing on improving retail inventory availability, refreshing product assortments, and enhancing design services is working. We have opened six beautiful, new, remodeled, or repositioned Pottery Barn stores so far this year, with three more to come in Q4. Finally, across the brand, we continue a major change that we have made all year, which is to substantially reduce promotions in Pottery Barn. Now, I'd like to talk to you about our Pottery Barn children's business, which ran a 4.4% comp in Q3.

Speaker #3: Our core brands continue to deliver strong results from positive momentum in furniture . Our focus on innovation has driven strong and improving furniture comps .

In Q3 came in above expectations at 4% driven by another quarter of positive comps across all of our brands.

And we continue to deliver on the bottom line, despite the substantial tariff headwinds.

Speaker #3: Additionally, we are focused on incremental growth categories like Pottery Barn, Dorm, and West Elm Kids. We're also broadening our reach through strategic collaborations.

Our operating margin came in at 17%.

Standing 10 basis points with earnings per share of $1 96, growing 5% year over year.

Speaker #3: These initiatives attract new customers while keeping our brands fresh and relevant . Our B2B business also remains an important growth engine , up 9% this quarter with strength in both trade and contract and our emerging brands rejuvenation .

We are encouraged by our continued strong year to date performance since Q3 and are confident in our outlook for Q4, and therefore, we are reiterating our outlook for the full year comparable brand revenue growth to be in the range of 2% to 5%.

Speaker #3: Mark and Graham and Green Roe continue to perform exceptionally well . Together , they delivered a double digit comp and we're excited to have recently opened our 13th rejuvenation store in Salt Lake City .

And we are raising our bottom line guidance 40 basis points in operating margin of 17 818, one versus 17, 4% to 17 eight.

Speaker #3: This year , we're also very proud of our improvements in customer service . We are committed to flawless execution , delivering orders on time , damage free every time , and we're proud that this year we have record metrics .

We drove this improvement in performance despite continued geopolitical uncertainty and no substantive improvement in the housing market.

Laura Alber: We saw acceleration in furniture fueled by successful new product launches. Continued growth in collaborations, and back-to-school and dorm was a particular highlight in the quarter. In fact, back-to-school delivered double-digit growth, an acceleration from Q2. Our brands have become a destination for high-quality study solutions, durable backpacks, and on-trend dorm decor. Additionally, our enhanced dorm design tools and pick-up near campus options have been important for gaining share in a very fragmented market. Now, let's review West Elm. West Elm ran a positive 3.3% comp in Q3. We continue to make progress against the brand's four key pillars: product, brand heat, channel excellence, and operational efficiencies. Throughout the year, West Elm has brought in new successful collections in both furniture and non-furniture, where the brand was previously underdeveloped. West Elm has significantly shifted the composition of their sales towards new products.

And we continue to gain market share and outperform the industry, which declined again in Q3.

Speaker #3: We're focusing on furthering our improvements through fewer split shipments and faster fulfillment . Finally , our third key priority driving earnings our revenue focus on growth customer , elevating service , and maintaining cost discipline has delivered strong earnings with our year to date earnings per share growing 5% in a very tough tariff environment .

Our continued strong results reflect the power of our operating model industry, leading channel experiences and strong portfolio of brands.

We continue to see exceptional performance in our retail channel, which ran a positive $8 five comp in Q3.

Retail continues to benefit from an improved in store experience with more inventory availability enhanced design services and events.

Speaker #3: Also in Q3 , we used AI as a key business driver to accelerate our strategies across our portfolio . AI powered chat experiences are now live for all brands , providing customer service delivery support and product guidance .

Opening of 14 beautiful newly remodeled or reposition stores. So far this year with seven more to come in Q4.

This investment is paying off with almost all of them exceeding the performance of the prior location.

Speaker #3: These agents are improving speed , consistency and satisfaction , and we are now resolving over 60% of chats without human assistance , reducing handle times from 23 minutes to just five .

Our stores service brand Billboards and we believe our refreshed store improved customer perception of our brands.

As we move into the final quarter of 2025 I want to highlight the specific progress we've made on three key priorities.

Speaker #3: Another notable milestone this quarter was the launch of our new AI , culinary and shopping companion for the Williams-Sonoma brand . Olive helps customers plan , cook and shop with confidence , combining our culinary authority with cutting edge technology to create a differentiated experience .

Starting with growth our core brands continue to deliver strong results from positive momentum and furniture.

Laura Alber: The cumulative effects of new introductions since the fall of last year continue to produce results. Retail in West Elm was also a highlight due to improved in-stocks, more new furniture, and more new fabrics displayed on the retail floor. We've opened two beautiful, new, remodeled, or repositioned West Elm stores so far this year, with one more to come in Q4. To remind everyone, we have 119 stores in West Elm. Based on results, we are looking forward to returning to retail unit growth in this brand. As you can hear, we are quite excited by the momentum at West Elm. Now, let's review the Williams-Sonoma brand, which continues to fire on all fronts and ran a positive 7.3% comp in Q3. Williams-Sonoma remains focused on premium quality products that are expertly crafted, combining style and functionality.

Our focus on innovation has driven a strong and improving furniture comps.

Additionally, we are focused on incremental growth categories like pottery barn, dorm and west Elm kit.

Speaker #3: What makes Williams-Sonoma unique is how AI can amplify our differentiated foundation with our proprietary data, vertical integration from design to delivery, our multi-channel engagement, and our expertise in home design in the culinary space.

We're also broadening our reach through strategic collaborations.

These initiatives attract new customers, while keeping our brands fresh and relevant.

Our <unk> business also remains an important growth engine up 9% this quarter with strength in both trade and contract and our emerging brands rejuvenation, Mark and Graham and seating row continues to perform exceptionally well.

Speaker #3: Our strong balance sheet , coupled with our tech capabilities , allows us to apply AI in ways that can drive real , scalable impact for our business that others cannot .

Together, they delivered a double digit comp and we're excited to have recently opened our 13th rejuvenation store in Salt Lake City.

Speaker #3: Looking ahead , we see opportunity to drive down costs and drive up sales with AI and our early results are reinforcing that confidence .

This year, we're also very proud of our improvements in customer service.

Speaker #3: We're using AI to enhance what we do best: guiding customers through shopping and design decisions. Additionally, AI is driving improvements in productivity and empowering associates with tools to amplify their creativity and expertise.

We are committed to flawless execution delivering on time demonstrate every time.

And we're proud that this year, we have record metrics.

We're focusing on furthering our improvement through fewer split shipments and faster fulfillment.

Laura Alber: In Q3, we celebrated many successful culinary stories, from the food and flavors of Spain to authentic Indian flavors through a collaboration with Palak Patel, founder of The Chutney Life. We also recently launched a wicked collection featuring limited edition Le Creuset Dutch ovens inspired by Elphaba and Glinda. As we continue to connect our customers to the world's best chefs and products, we are seeing great traction with in-store events. Across the country, we hosted 42 in-store book signing events in Q3. We welcome the fans of celebrities and celebrity chefs like Neil Patrick Harris, David Birka, and Melissa King into our stores for amazing cooking demos and cookbook signings. Finally, we've opened six beautiful, new, remodeled, or repositioned Williams-Sonoma stores so far this year, with two more to come in Q4.

Speaker #3: Now , I'd like to update you on tariffs . Since we last spoke , there have been notable changes in tariffs , such as a new tariff on some furniture , including imported upholstery , kitchen cabinets and bath vanities .

Finally, our third key priority driving earnings are.

Our focus on revenue growth elevating customer service and maintaining cost discipline has delivered strong earnings with our year to date earnings per share growing 5% and a very tough tariff environment.

Speaker #3: And now the 20% additional China tariffs are down from 30% . Net net . These changes are a push to our current estimated impact as we look forward to the future .

Also in Q3, we use AI as a key business driver to accelerate our strategy.

Cross our portfolio AI powered chat experiences are now life for all brands, providing customer service delivery support and product guidance.

Speaker #3: Predictability in the tariff environment and a reduction in the India tariff would certainly be a positive us for . In the meantime , we continue to be actively and aggressively mitigating what we can with our previously discussed six point plan .

These agents are improving speed consistency and satisfaction.

We are now resolved over 60% of chats without.

Without human assistance, reducing handle times from 23 minutes to just five.

Speaker #3: To remind you . First , we are obtaining cost concessions from our vendors . Second , we are resourcing goods to get the best cost for our customers .

Another notable milestone this quarter was the launch of all of our new AI culinary and shopping companion for the Williams Sonoma brand.

Speaker #3: Third , we're identifying further supply chain efficiencies . Fourth , we are controlling costs . Fifth , we are expanding our made in the USA assortment production and partnerships .

Olive helps customers plan Cook and shop with confidence combining our culinary authority with cutting edge technology to create a differentiated experience.

Laura Alber: Now, I'd like to update you on B2B, which grew 9% in Q3, with both trade and contract delivering strong comps. Leveraging our design expertise and commercial-grade product assortment, we've built a strong and growing client base across multiple industries. Our B2B offering remains a powerful differentiator, and we are seeing continued momentum. Our biggest success story in Q3 was an increase in commercial workspace wins, including projects with Google, WeWork, TurboTax, and PayPal. Q4 brings a ramp-up of our growing corporate gifting program, including our leading assortment of quality giftables that can be customized with logos and company branding. We're also a destination for seasonal favorites that make the perfect client and employee holiday gift if any of you need help. Now, I'd like to update you on our emerging brands.

Speaker #3: And last, we are taking select price increases with a focus on maintaining competitive pricing. Now let's review our brands. Pottery Barn ran a positive 1.3% comp in Q3.

What makes Williams Sonoma, Inc. Unique is how AI can amplify our differentiated foundation without proprietary carried data our vertical integration from design to delivery, our multichannel engagement and our expertise in home design in the culinary space.

Speaker #3: We are pleased with improvement the we saw in large ticket , including furniture , upholstery and lighting . Our Pottery Barn stores continue to outperform , led by our standout design crew services and our increased take at home today assortment .

Our strong balance sheet, coupled with our tech capabilities allows us to apply AI in ways that can drive real scalable impact for our business that others cannot.

Speaker #3: Our strategy focusing on of improving retail inventory availability , refreshing product and assortments , enhancing design services is working . We have opened six beautiful new remodeled or repositioned Pottery Barn stores so far this year , with three more to come in Q4 .

Looking ahead, we see opportunity to drive down costs and drive up sales with AI and our early results are reinforcing that confidence.

We are using apps to enhance what we do best guiding customers through shopping and design decisions.

Speaker #3: Finally , across the brand , we a major continue change that we have made all year , which is to substantially reduce promotions in Pottery Barn .

Additionally, AI is driving improvements in productivity and empowering our associates with tools to amplify their creativity and expertise.

Laura Alber: With our proven ability to incubate and scale brands in-house, we are confident in the continued growth of our concepts and their ability to deliver profitability to our results. Rejuvenation delivered strong double-digit comps in the quarter, continuing an upward trajectory fueled by product innovation and category expansion. Our high-quality product offer and proprietary designs are resonating with customers. Both channels are performing well, and we continue to open new retail locations to drive brand awareness. This quarter, we expanded our Rejuvenation store count to 13, with the opening of two new storefronts, one in Nashville and one in Salt Lake City. The brand also saw strong performance from its first-ever lighting collaboration. Mark & Graham delivered its best Q3 in brand history, driven by successful new categories, M&G Kids and Bark & Graham, as well as continued growth in personalized corporate gifting.

Now I'd like to update you on tariffs.

Since we last spoke there have been notable changes in tariffs such as a new tariff on some furniture, including imported whole street kitchen cabinets and Bath Vanity.

And now the 28% additional China tariffs are down from 30%.

Net net these changes our push to our current estimated impact.

As we look forward to the future predictability in the tariff environment and a reduction in the India tariff would certainly be a positive for us.

And anytime we continue to be actively and aggressively mitigating what we can with our previously discussed six point plan.

To remind you first we are obtaining cost concessions from our vendors.

We are resourcing goods to get the best cost for our customers third we're identifying further supply chain efficiencies.

Laura Alber: As we head into the peak gifting season, the brand is well-positioned with thoughtful, personalized gifts for all occasions. I'm also excited to talk about our newest brand, Green Row, which delivered strong growth this quarter. In Q3, we launched the largest holiday collection to date, with handcrafted decor and gifts made from upcycled and natural materials. The brand's colorful and unique products have had a great response, and the product line is incredibly beautiful in person. Therefore, we believe retail stores are the next leg of growth at Green Row, and are looking to test a few store locations as soon as possible. Finally, I'd like to share one highlight in our global business. In the UK, we've broadened our brand presence with the launch of Pottery Barn online and the opening of a pop-up store in our West Elm Tottenham Court Road in London.

We are controlling costs.

Fifth we are expanding our made in the USA assortment production and partnerships and last we are taking select price increases with a focus on maintaining competitive pricing.

Now, let's review our brands.

Pottery barn, and a positive one 3% comp in Q3, we are pleased with the improvement we saw in March ticket, including furniture upholstery in lighting are pottery barn stores continue to outperform led by our standout design crew services and our increased take it home today Assortments.

Our strategy of focusing on improving retail inventory availability refreshing product assortments and enhancing design services is working we have opened six beautiful new remodeled or reposition pottery barn stores. So far this year with three more to come in Q4.

Laura Alber: So far, we're quite pleased with the performance of Pottery Barn in this new market. In summary, we're pleased with our execution and continued outperformance in Q3, marked by accelerating positive comps and strong profitability. Across the company, we remain dedicated to enhancing our channel experiences and strengthening our brand. Each and every day, we prioritize innovation, product design, and exceptional customer service. These are the qualities that set us apart in a fragmented industry and position us to capture additional market share. We see tremendous opportunity to continue to lead our industry as we execute on our vision to own the home and the places where our customers work, stay, and play. As we enter the final quarter of the year, we're filled with optimism for a strong finish. This holiday season, we're ready to showcase our best across our stores and online.

Finally across the brand we continue our major changes that we have made all year, which is to substantially reduce promotions in pottery barn.

Now I'd like to talk to you about our pottery barn children's business, which ran a four 4% comp in Q3.

We saw acceleration in furniture fueled by successful new product launches continued growth in collaborations and back to school and dorm was a particular highlight in the quarter.

In fact back to school delivered double digit growth and acceleration from Q2, our brands have become a destination for high quality study solution durable backpacks and on trend dorm decor.

Additionally, our enhanced store design tools and pick up near campus options have been important for gaining share in a very fragmented market.

Now, let's review our film.

Laura Alber: From all of us, we wish you and your family a joyful Thanksgiving next week and a happy holiday season. Before I hand things over to Jeff, I want to take another minute to express our thanks to our team, our vendors, and all of our partners for their ongoing dedication and contributions to our company's success. We appreciate everything they do. With that, I will turn it over to Jeff to walk you through the numbers and our outlook in more detail. Thank you, Laura. Good morning, everyone.

West Elm ran a positive three 3% comp in Q3.

We continue to make progress against the brands four key pillars product brand he channel excellence and operational efficiency.

Now, I'd like to talk to you about our Potter Barn children's business, which ran a 4.4% comp in Q3.

Throughout the year West Elm has brought in new successful collections in both furniture and non furniture, where the brand was previously underdeveloped.

we thought acceleration and Furniture fueled by successful. New product, launches continued growth in collaborations and back to schools, and dorm, was a particular highlight in the quarter.

Some has significantly shifted the composition of their sales towards new products and the cumulative effect of new introductions since the fall of last year continues to produce results.

In fact, back to school delivered double-digit growth and acceleration from Q2. Our brands have become a destination for high-quality study solutions, durable backpacks, and on-trend dorm decor.

Laura Alber: Our results this quarter reflect Williams-Sonoma's competitive advantages in the home furnishings industry, including the following: the strength of our multi-brand portfolio across different categories, aesthetics, and price points, our size and scale, providing the ability to drive market share gains as we maximize white space opportunities, the competitive advantage of our multi-channel platform, serving customers where they choose to shop: online, in-store, or business-to-business, our focus on customer service and full-price selling, creating efficiency and cost savings across our supply chain, and finally, the power of our operating model to deliver highly profitable earnings. Our headlines for this quarter demonstrate these competitive advantages. We delivered positive comps for the fourth straight quarter. Furniture and non-furniture categories both ran positive comps, reflecting strength across all categories of our offering. White space opportunities, such as dorm, West Elm Kids, and Rejuvenation, grew double digits.

Retail and less down was also a highlight did improved in stocks and more new furniture and more new fabrics displayed on the retail floor.

Additionally, our enhanced dorm design tools and pick up near campus options. Have been important for gaining share in a very fragmented Market.

now, let's review West, um,

Weststone ran a positive 3.3% comp in Q3.

And we have opened two beautiful new remodeled or reposition west Elm stores. So far this year with one more to come in Q4.

We continue to make progress against the brands 4T pillars.

Products branded, heat channel excellence, and operational efficiencies.

To remind everyone. We have 119 stores in west Elm and based on results. We are looking forward to returning to retail unit growth in this brand.

Throughout the year, West Elm has brought in new, successful collections in both furniture and non-furniture categories.

As you can hear we are quite excited by the momentum at West Elm.

Wounded significantly shifted the composition of their sails towards new products.

Now, let's review the Williams Sonoma brand, which continues to fire on all fronts, and we had a positive seven 3% comp in Q3.

And the cumulative effect of new introductions, since the fall of last year continues to produce results.

<unk> remains focused on premium quality products that are expertly crafted combining style and functionality.

Retail in West Ham was also a highlight, with improvements in stock, more new furniture, and more new fabrics displayed on the retail floor.

In Q3, we celebrated many successful culinary sorry from the food and flavors of Spain to authentic Indian flavors through a collaboration with select hotel founder of that shut in your life.

And we've opened two beautiful, newly remodeled or repositioned West Elm stores so far this year, with one more to come in Q4.

We also recently launched a Wicked collection, featuring limited edition look Jose Dutch oven.

To remind everyone. We have 119 stores in West Elm and based on results. We are looking forward to returning to retail unit growth in this brand.

Laura Alber: Retail, e-commerce, and business-to-business all drove positive comps. Our supply chain team achieved best-ever results across nearly all customer service metrics, while simultaneously improving efficiency and reducing costs. Despite the headwinds from tariffs, we drove operating margin expansion of 10 basis points to 17% and EPS growth of 5% to $1.96 per share. Our results this quarter would not be possible without the team we have at Williams-Sonoma. I'd like to thank our talented, dedicated team for delivering these outstanding results. Now, let's dive into the numbers. I'll start with our Q3 results and then update guidance for fiscal year 2025. Q3 net revenue finished at $1.88 billion for a positive 4% comp. All brands delivered positive comps, driven by positive comps in both our furniture and non-furniture categories. We gained market share in the quarter, even as we increased our penetration of full-price selling.

Inspired by alphabet, Inc. Linda.

As you can hear, we are quite excited by the momentum at West Dome.

And as we continue to connect our customers to the world's best chefs and products, we are seeing great traction with in store events.

Now, let's review the William. Sonoma brand, which continues to fire on all fronts and ran a positive 7.3% comp in Q3.

Ross the country, we hosted 42 in store book signing events in Q3, we.

We welcome the fans of celebrities and celebrity chef like Neil Patrick Harris, Dave Burkha, and Melissa King into our stores for amazing cooking demos and cookbook signing.

Williamson remains focused on premium quality products that are expertly crafted combining style and functionality.

Finally, we've opened six beautiful new remodeled the reposition Williams Sonoma stores. So far this year with two more to come in Q4.

In Q3, we celebrated many successful culinary stories, from the food and flavors of Spain to authentic Indian flavors, through a collaboration with PCT Patel, founder of The Chutney Life.

Now I'd like to update you on <unk>, which.

Which grew 9% in Q3 with both trading contract delivering strong comps.

Leveraging our design expertise and commercial grade product assortment, we've built a strong and growing client base across multiple industry.

We also recently launched a wicked collection. Featuring limited edition. Look Crusade dutch ovens, inspired by alphaba and Glenda.

And as we continue to connect our customers to the world's best chefs and products, we are seeing great traction within store events.

<unk> offering remains a powerful differentiator and we are seeing continued momentum.

Our biggest success story in Q3 was an increase in commercial workspace wins, including projects with Google, We work Turbotax and Paypal.

Across the country, we hosted 42 in-store book signing events in Q3. We welcomed the fans of celebrities and celebrity chefs.

Like Neil Patrick Harris, David burqa, and Melissa, King into our stores for amazing. Cooking demos and cookbooks signings.

Q4 during the ramp up of our growing corporate gifting program, including our leading assortment of quality giftable that can be customized with logos and company branding.

Laura Alber: From a channel perspective, both channels delivered positive comps, with retail up 8.5% comp and e-commerce up 1.9% comp. Moving down the income statement, gross margin exceeded our expectations, coming in at 46.1%, 70 basis points higher than last year. Higher merchandise margins and supply chain efficiencies drove this gross margin improvement, offset by slightly higher occupancy costs. Merchandise margins delivered 60 basis points of our gross margin improvement, exceeding our expectations. Three factors contributed to this improvement in merchandise margins. First, the impact from tariffs is taking longer than anticipated to flow through to our gross margin. This is due to the delayed effective dates of the tariffs and our aggressive front-loading of inventory before tariff effective dates. Second, we are seeing margin upside from our six-point tariff mitigation plan, including price increases, as well as strong consumer response to our full-price product offering.

Dinosaurs so far this year, with two more to come in Q4.

Now, I'd like to update you on B2B.

We're also a destination for seasonal favorites that make the perfect client and employee holiday gift if any of you who need help.

Which grew 9% in Q3 with both trade and contract, delivering strong comps.

Now I'd like to update you on our emerging brands.

Leveraging, our design expertise and commercial grade product. Assortment we built a strong and growing client space across multiple Industries.

But our proven ability to incubate and scale brands. We are confident in the continued growth of our concepts and their ability to deliver profitability to our results.

Our B2B offering remains a powerful differentiator and we are seeing continued momentum.

Would you have an Asian delivered strong double digit comps in the quarter, continuing an upward trajectory fueled by product innovation and category expansion.

Our biggest success story in Q3 was an increase in commercial workspace. Wins including projects with Google. We work Turbo Tax and PayPal.

Our high quality product offer and proprietary designs are resonating with customers.

Both channels are performing well and we continue to open new retail locations to drive brand awareness.

Q4 brings the ramp-up of our growing corporate gifting program, including our leading assortment of quality giftables that can be customized with logos and company branding.

This quarter, we expanded our rejuvenation store counts of 13 with the opening of two new storefronts, one in Nashville, and one in Salt Lake City.

We're also a destination for seasonal favorites that make the perfect client and employee holiday gifts, if any of you need help.

Now, I'd like to update you on our emerging brands.

The brand also saw strong performance from its first ever lighting collaborations.

Mark and Graham delivered its best Q3 in brand history, driven by successful new categories LNG Kid embarking Graham.

Laura Alber: Lower inbound transportation costs are helping offset tariff costs. Supply chain efficiencies added 30 basis points to our gross margin. Our focus on customer service and in-stock ready-to-sell inventory is delivering tangible margin improvements from lower accommodations, damages, replacements, and out-of-market shipping expense. Occupancy costs were up 5.9% and were 20 basis points higher year over year. This was because of our retail outperformance and the higher occupancy costs in that channel. To recap, our gross margin results this quarter exceeded our expectations. Our tariff mitigation efforts more than offset the headwinds from tariffs in the third quarter. Turning now to SG&A. Our Q3 SG&A ran at 29.1% of revenues, 60 basis points higher than last year. Employment expense deleveraged 50 basis points due to higher incentive compensation from our strong results year to date.

With our proven ability to incubate and scale Brands in-house. We are confident in the continued growth of our Concepts, and their ability to deliver profitability to our results.

As well as continued growth in personal and corporate gifting.

As we head into the peak gifting season, the brand is well positioned with thoughtful personalized gifts for all occasions.

Rejuvenation delivered strong double-digit comps in the quarter, continuing an upward trajectory fueled by product innovation and category expansion.

I'm also excited to talk about our newest brand Green row, which delivered strong growth. This quarter in Q3, we launched the largest holiday collection to date with handcrafted decor and guests made from up cycle and natural materials. The.

Our high-quality product offerings and proprietary designs are resonating with customers.

Both channels are performing well, and we continue to open new retail locations to drive brand awareness.

The brand's colorful and unique products have had a great response and the product line is incredibly beautiful in person.

This quarter, we expanded our Rejuvenation store count to 13 with the opening of 2. New storefronts 1 in Nashville and 1 in Salt Lake City.

The brand also saw a strong performance from its first ever lighting collaboration.

Therefore, we believe retail stores.

The next leg of growth at Green row, and are looking to test a few store locations as soon as possible.

Mark and Graham delivered its best Q3 in brand history, driven by successful new categories: M, G, kids, and barking. Graham.

Finally, I'd like to share one highlight in our global business in the U K, we've broadened our brand presence to launch a pottery barn online and the opening of a pop up store in our West Elm Tottenham Court Road in London, and so far we're quite pleased with the performance of pottery barn in this new market.

As well as continued growth and personalized corporate gifting.

As we head into the peak gifting season, the brand is, well, positioned with thoughtful, personalized gifts for all occasions.

In summary.

We're pleased with our execution and continued outperformance in Q3 marked by accelerating positive comps and strong profitability.

I'm also excited to talk about our newest brand green row, which delivered strong growth. This quarter in Q3, we launched the largest holiday collection to date with handcrafted decor and Gifts made from upcycled and natural materials.

Laura Alber: We continued to manage variable employment costs across our stores, distribution centers, and customer care centers in line with top-line trends. Advertising expenses were 20 basis points higher year over year. Our in-house marketing team continues to test and optimize into different levels of spend. During the quarter, we increased our investment in digital advertising after testing and proprietary in-house analytics models indicated we could scale efficiently. The higher spend drove an acceleration in year-over-year site traffic and improved revenue per visit. Our in-house marketing team's ability to test, scale, and optimize across our portfolio of brands is a competitive advantage in the home furnishings industry. Finally, general expenses leveraged 10 basis points. On the bottom line, our earnings exceeded our expectations. Despite the tariff headwinds, our operating margin of 17% was 10 basis points above last year, and diluted earnings per share grew 5% year over year to $1.96.

Across the company, we remain dedicated to enhancing our channel experiences and strengthening our brands each.

Each and every day, we prioritize innovation product design and exceptional customer service.

The Brand's colorful and unique products have had a great response and the product line is incredibly beautiful in person. Therefore, we believe retail stores are the next leg of growth at Green row and are looking to test a few store locations at soon as possible.

These are the qualities that set us apart in a fragmented industry and position us to capture additional market share, we see tremendous opportunity to continue to lead our industry as we execute on our vision to own the home and the places where our customers work stay and play.

As we enter the final quarter of the year for filled with optimism for a strong finish.

Finally, I'd like to share 1 highlight in our Global business in the UK we've broadened, our brand presence to launch a Potter Barn online, and the opening of a pop-up store in our West Elm, Tottenham Court Road in London. And so far, we're quite pleased with the performance of Potter Barn in this new market.

In summary.

This holiday season, we're ready to showcase our best across our stores and online from all of US We wish you and your family a joyful Thanksgiving next week and a happy holiday season.

We're pleased with our execution and continue to outperformance in Q3 marked by accelerating positive comps in strong profitability.

Before I hand things over to Jeff I want to take another minute to express our thanks to our team our vendors and all of our partners for their ongoing dedication and contributions to our company's success. We appreciate everything they do.

Across the company. We remain dedicated to enhancing our Channel experiences and strengthening Our Brands,

Each and every day we prioritize Innovation product design and exceptional customer service.

And with that I will turn it over to Jeff to walk you through the numbers and our outlook in more detail.

Thank you Laura and good morning, everyone.

These are the qualities that set us apart in a fragmented industry and position us to capture additional market share. We see tremendous opportunity to continue to lead our industry as we execute on our vision to own the home and the places where our customers work Stay and Play.

Our results this quarter reflect Williams Sonoma, Inc competitive advantages.

Laura Alber: On the balance sheet, we entered the quarter with a cash balance of $885 million with no outstanding debt. We generated $316 million in operating cash flow during the quarter and invested $68 million in capital expenditures, supporting our long-term growth. During the quarter, we returned $347 million to our shareholders. We did this through $267 million in stock repurchases, and $80 million in dividends. Merchandise inventories stood at $1.5 billion, up 9.6% to last year. Our inventory includes $48 million of incremental tariff costs recorded in inventory, as well as $30 million of a strategic pull forward of receipts at lower tariff rates than in effect today. Without this incremental $78 million, our inventory level would be in line with our sales trends. Overall, our inventory level and composition are well-positioned to support our upcoming holiday season.

As we enter the final quarter of the Year, we're filled with optimism for a strong finish.

Furnishings industry <unk>.

Including the phone.

The strength of our multi brand portfolio across different categories.

Fedex and price points.

This holiday season, we're ready to showcase our best. Across our stores and online. From all of us, we wish you and your family, a joyful Thanksgiving next week and a happy holiday season.

Our size and scale, providing the ability to drive market share gains as we maximize white space opportunities.

The competitive advantage of our multi channel platform.

Serving customers, where they choose to shop online.

Before I hand things over to Jeff, I want to take another minute to express our thanks to our team, our vendors, and all of our partners for their ongoing dedication and contributions to our company’s success. We appreciate everything they do.

Online in store for a business to business.

Our focus on customer service.

And with that, I will turn it over to Jeff to walk you through the numbers and our Outlook in more detail.

Full price selling.

Thank you, Laura and good morning everyone.

Creating efficiencies and cost savings across our supply chain.

And finally the <unk>.

Power of our operating model.

To deliver highly profitable earnings.

Our results. This quarter, reflect William snowman, inc's competitive advantages in the home furnishings industry, including the following

Our headline for this quarter demonstrate these competitive advantages.

the strength of our multi-brand portfolio.

Across different categories.

We delivered positive comps for the fourth straight quarter.

Aesthetics and price points.

Furniture and non furniture categories.

Ran positive comps.

Reflecting strength across all categories of our offering.

Based opportunities.

White space opportunities.

The competitive advantage of our multi-channel platform.

Laura Alber: Summing up our Q3, we're proud to have delivered strong results, even as we navigated a challenging tariff environment and historically low housing turnover. Now, let's turn to our guidance for fiscal year 2025. First, some housekeeping. In the first quarter of fiscal year 2024, we recorded a $49 million out-of-period adjustment related to prior year's rate accrual. This benefited fiscal year 2024 operating margin results by approximately 70 basis points. Our guidance for fiscal year 2025 uses our fiscal year 2024 results without the out-of-period adjustment as a comparable basis. Additionally, fiscal year 2024 was a 53-week year for Williams-Sonoma. In fiscal year 2025, we will report comps on a 52-week versus 52-week comparable basis. All other year-over-year compares will be 52 weeks versus 53 weeks. On full year 2024 results, the additional week contributed 150 basis points to revenue growth and 20 basis points to operating margin.

Such as John restaurant.

And rejuvenation doubled.

Double digits.

Serving customers where they choose to shop online in store or business to business.

Retail e-commerce and business to business drove positive comps.

Our focus on customer service.

Our supply chain team achieved best ever results across nearly all customer service metrics.

And full price selling is creating efficiency and cost savings across our supply chain.

And finally,

Simultaneously, improving efficiency and reducing costs.

The power of our operating model to deliver highly profitable earnings.

And despite the headwinds from tariffs.

Our headlines, for this quarter, demonstrate these competitive advantages.

Drove operating margin expansion of 10 basis points.

17%.

We delivered positive comps for the fourth straight quarter.

And EPS growth of 5% to $1 96 per share.

Our results this quarter would not be possible without the team we have at Williams.

Furniture and non-fallers.

White space opportunities.

I'd like to thank our talented and.

Dedicated team for delivering these outstanding results.

Such as dorm West, some kids and Rejuvenation grew double digits.

No.

Retail e-commerce and business to business, all drove positive comps.

Let's dive into the numbers.

I'll start with our Q3 results and then update guidance for fiscal year 'twenty five.

Q3, net revenue of $1 8 billion.

Great positive 4% comp.

Our supply chain team achieved best-ever results across nearly all customer service metrics while simultaneously improving efficiency and reducing costs.

All brands delivered positive comps driven by positive comps in both our furniture non furniture categories.

and despite the headwinds from tariffs,

Laura Alber: The discrete impact of the additional week on just Q4 2024 was 510 basis points to revenue growth and 60 basis points to operating margin. Now, our guidance. Given our strong Q3 results and our outlook for Q4, we are updating our fiscal year 2025 guidance. On the top line, we are reiterating our fiscal year 2025 net revenue guidance. We expect full year 2025 comps to be in the range of positive 2% to positive 5%, with total net revenues in the range of positive 0.5% to positive 3.5% due to the 53rd-week impact from last year. Our guidance continues to assume no meaningful changes in the macroeconomic environment, or interest rates, or housing turnover. Our guide reflects the continued strength in our business, strong customer response to our product lineup, and continued traction across our growth initiatives.

We drove operating margin expansion of 10 basis points to 17%.

We gained market share in the quarter.

Even as we increased our penetration of full price selling.

And EPS growth of 5% to 1.96 cents per share.

From a channel perspective.

<unk> channels delivered positive comps.

With retail up eight 5% comp and e-commerce up one 9% comp.

Our results this quarter would not be possible without the team. We have at Williams-Sonoma, Inc.

Moving down the income statement gross margin exceeded our expectations.

I would like to thank our talented, dedicated team for delivering these outstanding results.

Now, let's dive into the numbers.

And at 46, 1% 70 basis points higher than last year.

I'll start with our QC results and then update guidance for fiscal year 25.

Higher merchandize margins and supply chain efficiencies drove this gross margin improvement.

Q3 net revenue finished at 1.88 billion for a positive 4% comp.

Offset by slightly higher occupancy costs.

Merchandize margins delivered 60 basis points of our gross margin improvement.

All brands delivered positive comps driven by positive comps in both our furniture and non-furniture categories.

<unk> our expectations.

We gain market share in the quarter.

Three factors contributed to this improvement in merchandise margins.

Even as we increase, our penetration of full price selling.

First the impact from tariffs is taking longer than anticipated to flow through to gross margin.

From a channel perspective, both channels deliver positive comps.

This is due to the delayed effective dates of the tariffs.

With retail up 8.5% comp and e-commerce up 1.9% comp.

Our aggressive frontloading of inventory before tariff effective dates.

Laura Alber: On the bottom line, we are raising our full year operating margin guidance 40 basis points to a range of 17.8% to 18.1%. This means that despite the tariff headwinds, we are now guiding the midpoint of our fiscal year 2025 operating margin to be approximately 20 basis points above last year when excluding the 53rd-week impact. Our higher operating margin guide reflects both the strong results we have delivered year to date, and the expectation that tariffs will have a greater impact on our margins in Q4. Our updated guidance reflects all the tariffs in place as of this call. This includes the new Section 232 tariffs on furniture, the revised 20% additional China tariffs, the 50% India tariff, the 20% Vietnam tariff, and an average 18% tariff on the rest of the world, as well as the 50% steel and aluminum tariffs, and the 50% copper tariff.

Second we.

We're seeing margin upside from our six point tariff mitigation plan.

Moving down the income statement, gross margin. Exceeded, our expectations coming in at 46.1% 70 basis points higher than last year,

<unk> price increases.

As well as strong consumer response to our full price product offering.

Higher merchandise margins and supply chain efficiencies drove this gross margin improvement.

Offset by slightly higher occupancy costs.

And finally, lower inbound transportation costs are helping offset tariff costs.

Merchandise, margins delivered 60 basis points of our gross margin Improvement. Exceeding our expectations.

Supply chain efficiencies added 30 basis points to our gross margin.

3 factors contributed to this Improvement in merchandise margins.

Our focus on customer service.

And stock ready to sell inventory is delivering tangible margin improvements.

First, the impact from tariffs is taking longer than anticipated to flow through to our gross margin.

From lower accommodations.

Damages.

And out of market shipping expense.

This is due to the delayed effective dates of the tariffs and our aggressive front-loading of inventory before tariff effective dates.

Occupancy costs were five 9% and.

Second.

There were 20 basis points higher year over year.

We are seeing margin upside from our 6-point tariff, mitigation plan.

Including price increases.

This was because of our retail outperformance and the higher occupancy costs in that channel.

As well as strong consumer response to our full price product offering.

To recap our gross margin results this quarter exceeded our expectations.

Our tariff mitigation efforts more than offset the headwinds from tariffs in the third quarter.

And finally lower inbound. Transportation costs are helping offset, tariff costs.

Laura Alber: In fact, our incremental tariff rate has more than doubled from 14% earlier this year to 29% today, inclusive of all the tariffs I just mentioned. We believe the strength of our operating model, combined with the six-point mitigation plan Laura outlined, enables us to mitigate a large portion of these tariffs, which is embedded in our guidance. It's important to note the tariff policy has been volatile and subject to multiple revisions. It's hard to say where tariffs will ultimately land and what impact they will have on our business. Our guidance reflects our best estimates of the impact based upon the tariffs in place as of this call. Also today, we are providing some further inputs for modeling purposes. We now expect our full year interest income to be approximately $35 million, and our full year effective tax rate to be approximately 26%.

supply chain, efficiencies added 30 basis points to our gross margin

Turning now to SG&A.

Our focus on customer service.

Our Q3 SG&A ran at 29, 1% of revenues.

60 basis points higher than last year.

An in-stock ready to sell inventory is delivering tangible, margin improvements.

Employment expense Deleveraged 50 basis points.

From lower accommodations.

Due to higher incentive compensation from our strong results year to date.

Damages Replacements and out-of-market shipping expense.

We continued to manage variable employment costs across our stores.

Occupancy costs were 5.9% and were 20 basis points higher year-over-year.

Distribution centers and customer care centers in line with top line trends.

Performance and the higher occupancy costs in that channel.

Advertising expenses were 20 basis points higher year over year.

Our in house marketing team continues.

To recap our gross margin results is quarter, exceeded our expectations.

And optimize the different levels of spend.

During the quarter, we increased our investment in digital advertising after testing and proprietary in house analytics models indicated we could scale efficiently.

Our tariff, mitigation efforts, more than offset, the headwinds from tariffs, in the third quarter.

Turning now to sgna.

Our Q3 sgna ran at 29.1% of revenues.

60 basis points higher than last year.

The higher spend drove an acceleration in year over year site traffic and improve revenue per visit.

Employment. Expense de-lever 50 basis points.

Laura Alber: Turning now to capital allocation, our plans for fiscal year 2025 continue to prioritize funding our business operations and investing in long-term growth. We expect to spend between $250 million and $275 million on capital expenditures in fiscal year 2025. We are investing 85% of this capital spend on our e-commerce channel, retail optimization, and supply chain efficiency. We remain committed to returning excess cash to our shareholders in the form of increased quarterly dividend payouts and ongoing share repurchases. For dividends, we will continue to pay our quarterly dividend of $0.66 per share, which is a 16% increase year over year. We are proud to say that fiscal year 2025 is the 16th consecutive year of increased dividend payouts. For share repurchases, we announced today that our board of directors approved an additional $1 billion share repurchase authorization, bringing our total authorization to approximately $1.6 billion.

Our in house marketing teams ability to test.

Due to higher incentive compensation from our strong results here today.

Scale and optimize across our portfolio of brands is a competitive advantage in the home furnishings industry.

We continue to manage variable employment costs across our stores.

Finally general expenses leveraged 10 basis points.

With Topline trends.

On the bottom line our earnings exceeded our expectations.

Advertising expenses were 20 basis points higher year-over-year.

Are in-house marketing. Team continues to test.

Spike to tariff headwinds, our operating margin of 17% was 10 basis points above last year.

And optimize into different levels of spend.

And diluted earnings per share grew 5% year over year to $1 96.

On the balance sheet.

during the quarter, we increased our investment in digital advertising after testing and proprietary in-house, analytics models indicated we could scale efficiently

We ended the quarter with a cash balance of $885 million with no outstanding debt.

The higher spend drove an acceleration in year-over-year site traffic and improved Revenue per visit.

We generated $316 million in operating cash flow during the quarter and invested $68 million and capital expenditures supporting our long term growth.

our in-house marketing, team's ability to test,

During the quarter, we returned $347 million to our shareholders.

Scale and optimize across our portfolio of Brands is a competitive advantage in the home furnishings industry.

Finally, general expenses leverage 10 basis points.

We did this through $267 million in stock repurchases.

Laura Alber: We remain committed to opportunistically repurchasing our stock to provide returns to our shareholders. As we look forward to 2026, we will balance our long-term growth potential with the tariff and macroeconomic landscape, and we will provide guidance in March. As we look further into the future beyond 2026, we are reiterating our long-term guidance of mid to high single-digit revenue growth, with operating margins in the mid to high teens. Wrapping up Laura's and my comments, we delivered another quarter of strong results despite the headwinds from tariff policy and historically low housing turnover. Our focus remained on our three key priorities: returning to growth, elevating our world-class customer service, and driving earnings.

on the bottom line, our earnings, exceeded our expectations,

$80 million in dividend.

Merchandise inventory stood at $1 5 billion up nine 6% from last year.

Despite the tough headwinds, our operating margin of 17% was 10 basis points above last year.

Our inventory includes $48 million of incremental tariff costs recorded in inventory.

Diluted earnings per share grew 5% year-over-year to $1.96.

On the balance sheet.

As well as $30 million of a strategic pull forward of receipts and.

We entered the quarter with a cash balance of $885 million and no outstanding debt.

And lower tariff rates and in effect today.

Without this incremental $78 million or.

Tori level would be in line with our sales trends.

We generated $316 million in operating cash flow during the quarter and invested $68 million in capital expenditures, supporting our long-term growth.

Overall.

Our inventory levels and composition are well positioned to support.

During the quarter, we returned $347 million to our shareholders.

Coming holiday season.

Summing up our Q3.

We did this through $267 million in stock repurchases and $80 million in dividends.

We're proud to have delivered strong results.

Even as we navigated a challenging tariff environment and historically low housing turnover.

Merchandise inventories, so that 1.5 billion up 9.6% to last year.

Laura Alber: We are confident we will continue to outperform our peers and deliver shareholder growth for these five reasons: our ability to gain market share in the fragmented home furnishings industry, the strength of our in-house proprietary design, the competitive advantage of our digital-first, but not digital-only, channel strategy, the ongoing strength of our growth initiatives, and the resilience of our fortress balance sheet. With that, I'll open the call for questions.

Now, let's turn to our guidance for fiscal year 'twenty five.

Our inventory includes 48 million of incremental tariff costs recorded in inventory.

First some housekeeping.

As well as 30 million of a strategic pull forward of receipts.

In the first quarter of fiscal year 'twenty, four we recorded a $49 million out of period adjustment.

At lower tariff rates than in effect today.

Related to prior years greater cool.

This benefited fiscal year 'twenty for operating margin results by approximately 70 basis points.

Without this incremental, 78 million our inventory levels would be in line with our sales trends.

Overall.

Our guidance for fiscal year 'twenty five.

As our fiscal year 2004 results without the out of period adjustment as a comparable basis.

Our inventory levels and compositions are well, positioned to support our upcoming holiday season.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. Your first question comes from the line of Max Reklenko from TD Cowen. Your line is open.

Summing up our Q3.

Additionally.

We're proud to have delivered strong results.

Fiscal year 'twenty four it was a 53 week year for wings Tommy.

In fiscal year 'twenty five we will report comps on a 52 week versus 52 week comparable basis.

even as we navigated a challenging tariff environment and historically low housing turnover

All other year over year compares will be 52 weeks versus 53 weeks.

Laura Alber: Great. Thanks a lot, and congrats on the nice quarter. First, can you just discuss the elasticity that you're seeing in the business as you selectively increase prices? How would you think about the impact to comps from transactions versus ticket in Q3?

Now, let's turn to our guidance for fiscal year 25.

On full year 'twenty four results. The additional week contributed 150 basis points to revenue growth and 20 basis points to operating margin.

First some housekeeping.

In the first quarter of fiscal year 24 we recorded a 49 million out of period adjustment related to Prior years Freight approval.

The discrete impact of the additional week on just Q4 dollars 24 was 510 basis points to revenue growth.

this benefited, fiscal year, 24, operating margin results by approximately 70 basis points,

Laura Alber: Thanks, Max. Good morning. We look at prices constantly across our brands, across categories, and with our competition. We sell a wide range of products, so there's not one quick answer to elasticity because in some cases, there's room to take up prices. In other cases, you need to take down prices based on what the market's doing. This is why we're so focused on innovation and bringing new, innovative, and exclusive products to market, because that gives us better pricing power. Also, I would say that pricing is not just about the product itself, but also the service and the experience. We have been really, really focused, as you know, on improving our service, which has been a huge driver of our out margin, which I'm sure we'll talk a lot about today.

And 60 basis points to operating margin.

Now our guidance.

Our guidance for fiscal year. 25 uses our fiscal year 24 results without the out of period adjustment as a comparable basis.

Given our strong Q3 results and our outlook for Q4, we are updating our fiscal year 'twenty guidance.

Additionally.

Fiscal year 24 was a 53 week year for William snowman Inc.

On the top line.

We are reiterating our fiscal year 'twenty five net revenue guidance.

In fiscal year 25, we will report comps on a 52 week versus 52 week, comparable basis.

We expect full year 'twenty five comps to be in the range of positive 2% deposit 5% with total net revenues in the range of positive <unk>, 5% deposit of three 5% due to the 50 <unk> week impact from last year.

All other year-over-year Compares will be 52 weeks versus 53 weeks.

on full year 24 results, the additional week, contributed 150 basis points to revenue growth and 20 basis points to operating margin

Our guidance continues to assume no meaningful changes in the macroeconomic environment.

Our interest rates for housing turnover.

The discrete impact of the additional week on just Q4 2424 was 510. Basis points to revenue growth and 60 basis points to operating margin

Our guidance reflects the continued strength in our business.

Laura Alber: That's a big, especially as we come up against the holiday season, it's a big deal for customers deciding where to buy their gifts, especially large tickets. If they want to buy gifts from people they trust, they can return things to, and they're going to stand behind their product quality, and they can get instructions about how to use that expensive espresso machine. It's not just one metric, and it's not just one category. The answer is going to be different depending on the product you asked me about.

Now, our guidance.

Strong customer response to our product lineup.

Continued traction across our growth initiatives.

Given our strong Q3 results and our outlook for Q4, we are updating our fiscal year 2025 guidelines.

On the top line.

On the bottom line.

We are raising our full year operating margin guidance.

We are reiterating our fiscal year 2025 net revenue guidance.

This points to a range of 17, 8% to 18, 1%.

We expect full-year, 25 comps to be in the range of positive 2% to 5%.

This means that despite the tariff headwinds we are now guiding the midpoint of our fiscal year 'twenty five operating margin to be approximately 20 basis points above last year, when excluding the 50 <unk> week impact.

With total net revenues in the range of positive 0.5% deposit 3.5% due to the 53rd week impact from last year.

Laura Alber: Got it. Thanks a lot, Laura. Jeff, you noted that it's taken longer for tariffs to flow through. Just how should we consider the impacts of tariffs over the next several quarters as it does sound like Q4 will see a pickup? Just any guideposts on modeling for the next several quarters?

Our higher operating margin guidance reflects both the strong results, we have delivered year to date and the expectation that tariffs will have a greater impact on our margins in Q4.

Our guidance continues to assume no meaningful changes in the macroeconomic environment.

Or interest rates or housing turnover.

Our guide reflects the continued strength in our business.

Our updated guidance reflects all of the tariffs in place as of this call.

Jeff Howie: Yeah. Good morning, Max. Thanks. Let me explain why the tariffs are taking longer to flow through. I think it's important to unpack that. First, it's really due to the delayed effective dates. For example, the 7 August reciprocal tariff, which applies to most countries like China and Vietnam, etc., had an exception for goods that were on the water that had to be received before 5 October. Another example is with the India tariffs that were effective on 27 August, there was an exception for goods on the water to be received before 17 September. This means that these tariffs did not start being applied to new receipts until mid to late third quarter. On top of that, we aggressively front-loaded receipts to bring in inventory at lower tariff rates than are in effect today. The combination of these two really advantaged us in Q3.

Strong customer response to our product lineup, and continued traction across our growth initiatives.

This includes the new section 232 tariffs on furniture.

The revised 20% additional China tariffs.

On the bottom line, we are raising our foyer operating margin guidance by 40 basis points.

The 50% India tariff.

The 20% Vietnam tariffs.

And an average 18% tariff on the rest of the world.

As well as the 50% steel and aluminum tariffs and a 50% comp return.

In fact, our incremental tariff rate has more than doubled from 13% earlier this year to 29% debt.

This means that, despite the tariff headwinds, we are now guiding the midpoint of our fiscal year operating margin for Q3 2025 to be approximately 20 basis points above last year, when excluding the 53rd week impact.

Inclusive of all the tariffs I just mentioned.

We believe the strength of our operating model combined with the six point mitigation plan more outlined.

Our higher operating margin guide reflects, both the strong results we have delivered year to date and the expectation that tariffs will have a greater impact on our margins in Q4.

Our updated guidance, reflects all the tariffs in place as of this call.

Enables us to mitigate a large portion of these tariffs which is embedded in our guidance.

This includes the new section 232 tariffs on furniture.

Jeff Howie: As we look to Q4, we've certainly said that the tariffs will have a larger impact upon our margin, and that is embedded in our guidance. As we look beyond Q4, it's a little early to talk about 2026. There's a lot that could change between now and then, especially with the tariff landscape. We'll save that conversation for March.

It is important to note the tariff policy has been volatile and subject to multiple revisions.

The revised 20% additional China, tariffs.

The 50% India tariff.

It's hard to say where tariffs will ultimately land.

The 20% Vietnam tariff?

And what impact it will have on our business.

And an average 18% tariff on the rest of the world.

Our guidance reflects our best estimates of the impact based upon the tariffs in place as of this call.

As well as the 50% steel and aluminum tariffs and the 50% copper tariff.

Also today, we are providing some further inputs for modeling purposes.

We now expect our full year interest income to be approximately $35 million.

Operator: Your next question comes from a line of Zach Fatham from Wells Fargo. Your line is open.

In fact, our incremental tariff rate has more than doubled from 14% earlier this year to 29% today, inclusive of all the tariffs I just mentioned.

Our full year effective tax rate to be approximately 26%.

we believe that our operating model,

[Analyst]: Good morning. Could we start with your take on broader category performance from Q2 to Q3, and whether you saw underlying improvement there? Just curious, stepping back, how you would frame the improvement we've seen in furnishings in your category relative to some of the broader macro pressures that we've seen in home improvement and other bigger ticket categories?

Combined with the 6-point mitigation plan. Laura outlined.

Turning now to capital allocation.

Our plans for fiscal year 'twenty five continue to prioritize funding our business operations and investing in long term growth.

Enables us to mitigate a large portion of these tariffs, which is embedded in our guidance.

We expect to spend between $250 million and 275 million on capital expenditures in fiscal year 'twenty five.

It's important to note that tariff policy has been volatile and subject to multiple revisions.

It's hard to say where tariffs will ultimately land.

And what impact they will have on our business?

We are investing 85% of this capital spend on our E Commerce channel.

Laura Alber: Thanks, Zach. We're really pleased with our continuing improvement across quarters and brands. In particular, the West Elm increase in comps is really exciting for us to see because we expected it to happen. There's nothing more fulfilling when you see a strategy come to fruition. I still think there's a lot of room left to go in West Elm as they build out certain categories and the seasonal assortments. We've been continuing to improve our in-store experiences, and that's been really helping. In terms of the broader merchandise categories across brands, we have been aware, as everyone is, that the housing market has not recovered. That is really most correlated with furniture. To be able to improve our furniture comps without a significant improvement in housing is a really, really strong sign.

<unk> optimization and supply chain efficiency.

our guidance, reflects our best estimates of the impact based upon the tariffs in place as of this call,

We remain committed to returning excess cash to our shareholders.

Also, today, we are providing some further inputs for modeling purposes.

In the form of increased quarterly dividend payouts and ongoing share repurchases.

For dividends, we will continue to pay a quarterly dividend of 66 per share, which is a 16% increase year over year.

We now expect our full-year interest income to be approximately $35 million.

And our full-year effective tax rate is expected to be approximately 26%.

We're proud to say that fiscal year 'twenty five is the 16th consecutive year of increased dividend payouts.

Turning now to capital allocation, our plans for fiscal year 2025 are to prioritize funding our business operations.

And investing in long-term growth.

For share repurchases, we announced today that our board of directors approved an additional $1 billion share repurchase authorization.

We expect to spend between 250 million and 275 million on Capital expenditures in fiscal year 25.

Bringing our total authorization to approximately $1 6 billion.

We are investing 85% of this Capital spend on our e-commerce Channel.

We remain committed to Opportunistically repurchasing our stock provide returns to our shareholders.

Retail optimization and supply chain efficiency.

We remain committed to returning, excess cash to our shareholders.

Laura Alber: We love that because a furniture collection that we introduced in the season this year, we can build upon for next year with new piece types, and also with better inventory stocking positions. The continuation of our furniture strength is very important to the short term and the longer term. In the holiday seasons, the categories that are exciting, we saw dorm pickup from Q2 to Q3. Back to school is the broader category for that, and it was a strong season and really, really a good season for us. The Halloween product categories were strong, autumnal, and Thanksgiving. Also, we're not done with Thanksgiving yet, obviously, but we're close, and we've been pleased with our results there. It's too early to comment about holiday. We're actually on the call a week earlier than we were last year.

As we look forward to 2026, we will balance our long term growth potential with the tariff and macroeconomic landscape.

In the form of increased quarterly dividend payouts and ongoing share repurchases.

And we will provide guidance in March.

As we look further into the future beyond 2006, we are reiterating our long term guidance, okay mid to high single digit revenue growth with operating margins in the mid to high teens.

For dividends, we will continue to pay our quarterly dividend of $0.66 per share, which is a 16% increase year-over-year.

We are proud to say that fiscal year 25 is the 16th consecutive year of increase dividend payoffs.

Wrapping up lower than my comments, we delivered another quarter of strong results. Despite.

For share repurchases. We announced today that our board of directors approved an additional 1 billion, share repurchase, authorization,

The headwinds from tariff policy and historically low housing turnover.

Bringing our total authorization to approximately $1.6 billion.

Our focus remains on our three key priorities.

Returning to growth.

We remain committed to opportunistically repurchasing, our stock to provide returns to our shareholders.

Elevating our world class customer service and driving earnings.

We are confident we will continue to outperform our peers and deliver shareholder growth for these five reasons.

As we look forward to 2026, we will balance our long-term growth potential with the Tariff and macroeconomic Landscape.

Our ability to gain market share in the fragmented home furnishings industry.

And we will provide guidance in March.

The strength of our in house proprietary design.

Laura Alber: For those of you who are wondering about the lack of comments there, it's just a little bit too early to comment. Based on what we've seen with the other seasonal holidays, we can see that that's a competitive advantage for us. There's not many other people out there that have the assortment that allows customers to really decorate and entertain for the holidays. Especially at this time of year, it's a real strength. It's a traffic driver for us.

The competitive advantage of our digital first but not digital omnichannel strategy.

As we look forward into the future Beyond 26. We are reiterating a long-term guidance of mid to high single-digit Revenue growth with operating margins in the mid to high team.

The ongoing strength of our growth initiatives.

Wrapping up Lords in my comments.

And the resilience of our fortress balance sheet.

We delivered another quarter of strong results.

With that I'll open the call for questions.

Despite the headwinds from tariff policy and historically low housing, turnover.

Okay.

Thank you we will now begin the question and answer session if you'd like to ask a question. Please press star one on your telephone keypad.

Our Focus remains on our 3, key priorities.

Returning to growth.

Could you please limit yourself to one question and one follow up.

Elevating our world-class customer service and driving earnings.

Operator: Your next question comes from a line of Christina Fernandez from Telsey Advisory Group. Your line is open.

Our first question comes from the line of Max <unk> from Gd Cowen Your line is open.

We are confident, we will continue to outperform our peers and deliver shareholder growth for these 5 reasons.

Samir Hassan: Hi, good morning. I want to follow up a little bit on that last comment on holiday. If you look at the implied Q4 revenue guidance, it's pretty wide. Could you comment on the low end versus high end and your ability to continue this comp trend as you face a more difficult year-over-year comparison?

Great. Thanks, a lot and congrats on the nice quarter. So first can you just discuss the elasticity that youre seeing in the business as you selectively increased prices and how we should think about the impact to comps from transactions versus ticket in Q.

Our ability to gain market share in the fragmented Home. Furnishings industry.

The strength of our in-house proprietary design.

The competitive advantage of our digital-first, but not digital-only channel strategy.

The ongoing strength of our growth initiatives.

Thanks, Matt good morning.

Laura Alber: Thank you, Christina. Holiday is a long season, and it includes January. We are really focused on great price selling. This has been an important part of our margin profile all year, and the improvements that you've seen. I mean, amazingly, we've had great success in our margin improvements even with the tariffs on top of everything. As we go into the holiday season, we continue to have opportunity from a year-over-year perspective in pulling back on promotions. We're focused on great price selling and hope to have fewer promotions than last year, hence the wide range of comp performance. That's one piece of it. The second is when you look at the multi-year numbers, we're mindful of our strong holiday last year.

And the resilience of our Fortress balance sheet.

We looked at prices constantly.

With that, I'll open the call for questions.

Across our brands across categories and.

With our competition and you know we sell a wide range of products and so theres not one quick answer to elasticity.

Thanks, Amit.

As your own takeout exits in other cases, you need to take down prices based on what the market's doing.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. Your first question comes from the line of Max Wrecklino from TD Cowen. Your line is open.

This is why we're so focused on innovation and bringing new innovative and exclusive products market.

Does that give us better pricing power, although I would say that pricing is not just about the product itself, but also the service and the experience.

We have been really really focused as you know.

Great. Uh, thanks a lot and uh, congrats on the nice quarter. Uh, so first, can you just discuss the elasticity that you're seeing in the business, as you selectively? Uh, increase prices and how we should think about the impact to comps from transactions versus ticket in 3Q?

Currently access.

We look at prices.

It's just been a huge driver of our op margin with some several up a lot of us today, but that's a big especially to come up against the holiday season is a big deal.

So our customers deciding where to buy their gas, especially large ticket yesterday I guess from people. They trust. They can return things too and that theyre going to stand behind their product quality and they can get instructions about how to use <unk>.

Operator: Your next question comes from a line of Peter Benedict from Baird. Your line is open.

[Analyst]: Oh, hey, guys. Thanks for taking the question. I guess two, one would be the market seems to be really concerned about how you're going to be able to digest these tariffs as they ultimately come through despite your ability to do so to date. I think expectations next year are for operating margins to be lower in the first half of the year. Maybe, Jeff, I'm not asking for specific guidance, but just how should we think about the ability of the business to just even maintain operating margins in the face of what you know about tariffs as they sit today? That's my first question. My second question would be around unit growth. Laura, it sounded like maybe a little bit more of an offensive posture there, particularly around West Elm. We know that in aggregate, your units have been kind of coming down.

Expensive espresso machine so.

It's not just one metric and it's not just one category.

Kansas and Etfs is heading out.

The product you asked me about.

Got it thanks, a lot Laura and thanks, Jeff you noted that it's taken longer for tariffs to flow through just how should we consider the impact of tariffs over the next several quarters as it does sound like <unk>, we will see a pick up and then just any guidepost on modeling for the next several quarters.

Yes, good morning, Max Thanks, Yes, let me explain why the tariffs are taking longer to flow through I think it's important to unpack that and first is really due to the delayed effective dates for example, the August seven for cyclicals hair, which applies in most countries like China, and Vietnam et cetera, and exception for goods that were on the wall.

Across Our Brands, uh, across categories and with our competition and you know, we sell wide range of products. And so there's not 1 quick answer to Alaska City because in some bedrooms take up prices in other cases you need to take down prices based on what the Market's doing. Um this is why we're so focused on Innovation and bringing new Innovative and exclusive products to markets because that gets us better pricing. Power also, I would say that, you know, pricing is not just about the product itself but also the service and the experience. And um we have been really, really focused as you know, on improving our service. Um which has been a huge driver of our op March in which I'm sure we'll talk a lot about today but that's a big you know especially to come up against the holiday season. It's a big deal um for customers deciding where to buy their gifts, especially with our tickets because they want to buy gifts from people, they trust they can return things to and that they're going to stay in behind their product

[Analyst]: Are you signaling a change there? Should we be thinking about, I'm just thinking about the magnitude of unit growth we might expect as we look out on the horizon? Thank you.

<unk>.

That had to be received before 10 five. Another example, as with India appears to have effective August 27, there was an exception for goods in the water to be received before 917. So this means that these tariffs are not start being applied the new receipts until mid to late third quarter.

Quality and they can get instructions about how to use um, you know, that expensive espresso machine. So you know it's it's um it's it's not just 1 metric and it's not just 1 category and it's you know it's going to be it's going to be different depending on the product you asked me about

Jeff Howie: Yeah. Good morning, Peter. Where is the operating margin going? That's a great question. If we look beyond our current guidance, that's not really a question we're going to answer today. It's too early to start discussing 2026 guidance. Our focus is on the holiday season, delivering Q4. The real reason here is the tariff landscape has been incredibly volatile. Just look at what's happened over the past several quarters. Every quarter, there's been new tariffs, repeal tariffs, everything's changing, and there's a lot of uncertainty on this front. I would point out that India is one of our largest sources of goods, and where that tariff is going, which is currently at 50%, is an open question. We also have the Supreme Court decision on IEEPA tariffs pending. We'll see where that goes.

And then on top of that we aggressively frontloaded receipts to bring in inventory at lower tariff rates than are in effect today. So the combination of these two really advantages us in Q3.

Got it, thanks a lot. Laura and then Jeff you noted that it's taking longer for tariffs to flow through. Just how should we consider the impacts of tariffs over the next several quarters? As it does sound like 4 q, will see a pickup and then just any guidepost on modeling for the next several quarters.

As we look to.

Q4, we certainly said that.

The tariffs will have a larger impact.

Upon our margin and that is embedded in our guidance as we look beyond Q4, it's a little early to talk about 2006. There is a lot that could change between now and then especially with the tariff landscape. So we will save that conversation for March.

Jeff Howie: It's a little hard to understand beyond our current guidance and beyond this year and Q4 where the tariff landscape is going to impact us. We believe that our six-point mitigation plan that Laura and I have been articulating all year, combined with the power of our operating model, will allow us to offset a large portion of the tariffs. The ultimate amount depends upon where the tariffs ultimately land. What we're really focused on is delivering the current quarter, and everything we know about our ability to offset the current tariffs is embedded within our guidance. In terms of your second question, Peter, where is unit growth going? Look, we've been saying all along that we have done an incredible job, and I want to compliment our entire organization regarding our retail repositioning strategy. There's been multiple legs of the strategy.

Your next question comes from the line of Zack <unk> from Wells Fargo. Your line is open.

Good morning can we start with your take on broader category performance from from Q2 to Q3, and whether you saw underlying improvement there and then just curious stepping back how you would frame the improvement we've seen in furnishings in your category relative to some of the broader.

Yeah, good morning, Max. Thanks. Um, yeah, let me explain why the tariffs are taking longer to flow through. I think it's uh, important to unpack that. And first, it's really due to the delayed effective dates, for example, the August 7th reciprocal tariff, which applies the most countries like China and Vietnam. Etc, had an exception for goods that were on the water, uh, that had to be received before 105. Another example, is with the India tariffs that were effective on August 27th, there was an exception for goods in the water to be received before 9:17. So this means that these tariffs are not start being applied to new receipts from toe, mid to late, third quarter. Um and then on top of that we aggressively front-loaded receipts to bring in uh inventory at lower tariff rates than are in fact today. So the combination of these 2 really advantaged Us in Q3 as we

Macro pressures that we've seen in home improvement and other bigger ticket categories.

Thanks Zack.

We're very pleased with our continuing improvement across quarter end brand in particular.

Look to um Q4 you know we've certainly said that um um the tariffs will have a larger impact um Upon Our margin and that is embedded in our guidance as we look Beyond Q4, it's a little early to talk about 26. There's a lot that could change between now and then especially with the Tariff landscape. So we'll save that conversation for March.

The lesser increase in comms is really exciting for us to say because we expected it to happen and there is nothing more facility when you see a strategy from the installation.

Jeff Howie: There's been closing underperforming stores, which I think everyone knows we've closed about 17% of our stores since 2019. It's about repositioning stores from some of the tired indoor malls to more vibrant lifestyle centers. It's also been about opening new stores. We see opportunity for new store growth, particularly in the West Elm brand, with Rejuvenation, with Green Row potentially. There's a lot of opportunity for us to continue to grow stores. In terms of where overall store count growth is going, as we've been saying all year, it'll be mid-single-digit closures this year. I think we're not necessarily guiding 2026, but I don't think we'll see a substantial change in the overall store count as we look towards 2026. There's still more room to go on our repositioning strategy, but there's also white space opportunity to infill.

You. Our next question comes from a line of Zach Fedom from Wells Fargo. Your line is open.

I still think there's a lot of room left to go and less LSA Bill al certain categories in our seasonal assortment.

And we've been continuing to improve our in store experiences and that's been really healthy.

But in terms of the broader merchandize categories across brands.

We have been aware as everyone is that the housing market has not recovered and that is really more correlated with furniture NPL to improve our furniture comps without a significant improvement in housing is really really strong sign.

Good morning. Um could we start with your take on broader category? Performance from from Q2 to Q3 and whether you saw underlying Improvement there and then just curious stepping back how you would frame the, the Improvement we've seen in, in Furnishings in your category relative to some of the broader macro and pressures that that we've seen in in Home Improvement and other bigger ticket categories,

Hey, Seth.

And we love that because.

Our furniture collection that we introduced in this and the season. This year, we can build upon for next year with new types as also with better inventory stocking.

Docking positions and so the continuation of our furniture strength is very important to the short term and the longer term and then.

Jeff Howie: There are some great new locations that we're working on that will come online in 2026 and in 2027.

We're um really pleased with our continuing improvements across quarters and and Brands. And in particular, you know, the web sales increase in costs is really exciting for us to see because we expected it to happen and there's nothing more fulfilling when you see a strategy come to fruition. Um, and I still think there's a lot of room left to go and less so that they build out certain categories and their seasonal absorbance and um, you know, we can continuing to improve our

Okay.

And the holiday season.

<unk>.

Operator: Your next question comes from a line of Chris Horbers from JPMorgan. Your line is open.

Exciting we thought storm pickup from Q2 to Q3.

[Analyst]: Thanks. Good morning. Two quick ones. I guess playing devil's advocate on the compare in the fourth quarter, Laura, furniture pull forwards behind you, there's a lot of momentum around self-help initiatives, and obviously, there's a tick of pricing coming through here. If you think about where we are in the cycle, particularly with housing not helpful, why couldn't the growth rate just stay at the growth rate considering where we are? A quick one on gross margin. Understanding there was some shift on timing, but asking the question another way, did the drivers in terms of in the fourth quarter in terms of the expected tariff headwind versus the expected benefit from the mitigation strategies, did you change those at all in your outlook? Thank you very much.

Back to school.

As the product category for that as well.

<unk> season and.

Really really good for us.

Halloween.

Product categories were strong all time low and Thanksgiving also.

Into our experiences, and that's been really helping. Um, but in terms of the broader merchandise categories across brands, you know, we have been aware, as everyone is, that the housing market has not recovered, and that is really most correlated with furniture. To be able to improve our furniture comps without a significant improvement in housing is a really, really strong sign. Um, and we love that because.

On Thanksgiving, obviously more clubs.

And so we've been pleased with our results there it's too early to comment about holiday rush. It on the call a week earlier than we were last year.

Most of you are wondering.

The lack of comments there is just a little bit too early to comment.

Based on what we've seen with the other seasonal holidays.

We can see this as a competitive advantage for us.

There's not many other people out there.

For next year with new piece sites, and also with, um, better inventory stocking positions and so, so continuation of our furniture strength is very important to the short-term and the longer term. And then, um, you know, in, in, uh, the holiday seasons the categories that are, um, exciting. We saw storm pickup from Q2 to Q3, uh,

That half the assortment that allows customers severity decorate and entertain for the holidays.

Laura Alber: Yeah, thanks. I don't pull forward at first. I don't really see that. I don't see any reason to believe we've seen pull forward of anything for that matter. We absolutely could be at the same comps, if not higher. We have a wide range. I was just explaining the differences of why you might look at it and say it's a little bit lower than where you've been. It's very important that we don't play the promotional game. It's a key aspect of our strategy. At the same time, we're going to have great deals for Black Friday. We have great deals right now for early Black Friday. We've bought into them. We have vendor partnerships on them. We're not going to have as much, we hope we're not going to have as many needs to promote as we did last year.

Such as the timing as a real strength of the traffic driver for us.

Back to school, you know, it's a broader category for that and uh, it was a strong season and uh, really, really a good season for us the Halloween.

Your next question comes from the line of Cristina Fernandez from Telsey Advisory Group. Your line is open.

Product categories, or strong autonomy, and Thanksgiving also, um, you know, we're not done with Thanksgiving yet, obviously, but we're close.

Hi, good morning, So wanted to follow up a little bit on that last comment on holiday. If you look at the implied Q4 revenue guidance.

Pretty wide. So could you comment on the low end versus and then your ability to continue this trend as you face a more difficult year over year comparison.

Thank you Christina.

And so, we've been pleased with our results there, it's too early to come out about holiday. We're actually on the call a week earlier than we were last year. So, if those are 1, that those of you are wondering, um, about the lack of comments there, it's just a little bit too early to comment, but based on what we've seen with the other seasonal holidays, um, we can see that. That's the competitive Advantage for us.

And the last season, and then includes January [laughter].

you know, there's not many other people out there

We are really focused on Reg price.

And this has been an apartment part of our margin profile all year and the improvements that you're seeing and when we have <unk>.

That have the assortments that allow customers to really decorate and entertain for the holidays. And especially at this time of year, it's a real strength of the traffic driver for us.

Raising rate increase we've had great success in our margin improvements.

Laura Alber: That's the only hesitation on the comp side. In terms of the tariff impact in Q4, it's sizably more than Q4 because of the way that the cost flows through every single quarter. We did a fantastic job, great success with our mitigation plan in Q3 and throughout the year. We will continue to do that. In fact, it's amazing to see the new opportunities that we're finding in supply chain. Supply chain has been just a tremendous positive this year in delivering up margin. What's great about it, as you know, is it means the customer is getting their product delivered more smoothly, on time, and without damage. That's all good for the brand. It's fantastic for the P&L, and there's still room.

Your next question comes from the line of Cristina Fernandez from Telsey Advisory Group. Your line is open.

Even with the tariffs on top of everything.

And as you go into the holiday season, we continue to have opportunity.

From a year over year perspective.

And pulling back on promotions.

And so we're focused on right price salary and hope to have less promotions in the last year, hence the wide range of comp performance.

Hi, good morning. So so I want to follow up a little bit on that last comment on holiday. If you look at the implied Q4 Revenue guidance, it it's pretty wide. So could you comment on the low end versus high end and your ability to continue this calm Trend if you face a more difficult year-over-year comparison

Thank you, Christina.

One piece of it is that it is and when you look at the multiyear.

Holiday the last season.

Numbers were mindful of.

And then it closed January. Um,

Elevated last year.

Your next question comes from the line of Peter Benedict from Baird. Your line is open.

We are really focused on red price solids and this has been an important part of our margins profile all year and the improvements that you've seen. And when we have

Oh, Hey, guys. Thanks for taking the question I guess one would be.

Amazingly we we've had great success in our margin improvements. Um,

The market seems to be really concerned about how youre going to be able to digest. These tariffs as they ultimately come through.

Laura Alber: If you look at Q4 on the up margin side and the supply chain savings, there's more to go there. We're really optimistic about our APDC, which is our new DC that came up last year. Honestly, we're doing better than we had been with that. That could really help us, especially because the calendar this year for Christmas, similar to last year, is pretty tight. We want to be able to ship it late and ship it perfectly and not disappoint anyone. That's why people come to us and shop online later with us like they do Amazon and others, because they trust us to deliver before Christmas. There's a lot of really good things happening.

Despite your your ability to do so to date.

even with the tariffs on top of everything um and as we go into the holiday season, we continue to have opportunity um from a year-over-year perspective in pulling back um promotions

I think expectations next year for operating margins to be lower in the first half of the year, but maybe Jeff I'm not asking for specific guidance, but just how should we think about.

And so we're focused on right price selling and hopes to have less promotions than last year hence the wide range of comp performance.

The ability of the business.

Even maintain operating margins in the face of what you know about tariffs as they sit today. That's my first question and then my second question would be around unit growth for it sounded like maybe a little bit more of an offensive posture, there particular out west.

That's 1 piece of it. The second is, when you look at the multi-year, um, numbers or mindful of our strong holiday last year,

Your next question comes from the line of Peter Benedict from Beard. Your line is open.

Laura Alber: In terms of the impact of tariffs, please don't get ahead of us on Q4 in terms of the margin because the tariffs are going to have a greater impact, as you can see in our guidance and the implied Q4 guidance, than they did in Q3. If you look at our up margin X tariff, it's expanding. For all those that are worried about this, just realize that this goes into the base and we're done with it and we move forward. It's about outperforming our competition, continuing to deliver for our shareholders, and most importantly for our customers, and giving them incredibly beautiful, well-designed, high-quality products at the best price in the market.

We know that in aggregate your units have been kind of coming down are you signaling a change there should we be thinking about I'm just thinking about the magnitude of growth we might expect as we look out on the horizon. Thank you.

Yes, good morning, Peter so, whereas the operating margin going that's a great question, but if we look beyond our current guidance that's not really a question we're going to answer today.

Oh, hey guys. Uh, thanks for taking the question. Um, I guess 2 1 would be. Um, the market seems to be really concerned about how you're going to be able to digest these tariffs as they ultimately come through. Uh, despite your, your, your ability to do so to to date. Um, I think expectations next year are property. Margins to be lower in the first half of the year but maybe Jeff I'm not asking for.

Specific guidance. But just how should we think about?

It's too early to start discussing 26 guidance. Our focus is on the holiday season in Q4 and the real reason here is the tariff landscape has been incredibly volatile just look at what's happened over the past several quarters every quarter theres been new tariffs repeal tariffs everything is changing.

Operator: Your next question comes from a line of Jonathan Matzewski from Jefferies. Your line is open.

And Theres a lot of uncertainty in this front I would point out that India is one of our largest.

[Analyst]: Great. Good morning. I had one question, one follow-up. The first question was just on the consumer. You mentioned a better response to full price selling than it seems like what you planned for. Just from a strategy perspective here, how does that minimal elasticity kind of inform your customer targeting efforts going forward? Is what you're seeing giving you more confidence to target a higher-end consumer, a higher-income consumer more in the future than in the past? Are there strategies in place to do that? That's my first question.

Sources of goods in where that tariff is going which is currently at 50% is an open question.

The ability of the business to just even maintain operating margins in the face of what you know about tariffs. Um as they sit today, that's my first question and then my second question would be around uni growth or it sounded like maybe a little bit more of an offensive posture there, particularly around West Elm. Um, we know that in aggregate, your units have been kind of coming down. Are are are you signaling a change there? Should we be thinking about, you know, I'm just thinking about the magnitude of of unit growth we we might expect as we look out on the horizon

Horizon. Thank you.

We also have the <unk>.

Cream court decision on our E. P tariffs pending we'll see where that goes so it's a little hard to understand.

Beyond our current guidance beyond Q. This year in Q4, where the tariff landscape is going to impact us. We believe that our six point mitigation plan that Lauren I have been articulating all year combined with the power of our operating model will allow us to offset a large portion of the tariffs, but the ultimate amount depends upon.

Yeah, good morning, Peter. So you know, where is the operating margin going? That's a great question, but, you know, if we look Beyond um, our current guidance, that's not really a question. We're going to answer today.

Laura Alber: That's a great question. We're lucky where we sit. We love all our customers. We want to give them the best price if it's their first apartment, first baby, or if it's their fifth house. We do see when we look at our tic-tac-toe and owning the home that we haven't covered the real super high end at scale yet. It's not surprising to me that Rejuvenation is doing so well. Why do we have such great growth? It's expensive. It's absolutely gorgeous, high-quality products. I hope that you've all visited a store, bought some products, or seen it in someone's house because when you see it, you understand why we're really growing that business and why we believe so strongly it will be our next billion-dollar brand. That sits at the high end. Green Row sits at the high end.

One where the tariffs ultimately land what we're very focused on is delivering in the current quarter and everything we know about our ability to offset the current tariffs is embedded within our guidance.

In terms of your second question, Peter whereas unit growth going look we've been saying all along that we have done an incredible job and I want to complement our entire organization.

Regarding our retail repositioning strategy and Theres been multiple megabit strategy, there's been closing underperforming stores, which I think everyone knows we've closed about 17% of our stores since 2019, it's about repositioning stores.

From some of the <unk>.

Hired indoor malls more vibrant lifestyle centers and it's also been about opening new stores and we see opportunity for new store growth, particularly in the western brand.

With rejuvenation with.

Sure.

Laura Alber: We haven't talked about it a lot because it's tiny. We are seeing that it's a new aesthetic. It's very, very original. It's not in the marketplace, and it is entirely green products. People care about that. At least that customer cares about that. That's at the high end. We see that we can have retail stores in that brand, which tells me it's bigger than you might think. There's Lanson on the home, which we continue to see as an opportunity for us into the future. Don't mistake the importance of us also covering the upper-middle customer, the Pottery Barn, the West Elm, and making sure that also those brands are so appealing that people trade into them. If I can decorate your house more beautifully and more affordably than the high end, why wouldn't you come to us?

With Green Arrow potentially.

This year in Q4, the tariff landscape is going to impact us. We believe that our 6-point mitigation plan, which Laura and I have been articulating all year, combined with the power of our opening model, will allow us to offset a large portion of the tariffs. However, the ultimate amount depends upon where the tariffs ultimately land. What we are really focused on is delivering in the current quarter, and everything we know about our ability to offset the current tariffs is embedded within our guidance.

There's a lot of opportunity for us to continue to grow in terms of where overall store count growth is growing as we've been saying all year it'll be mid single digit closures. This year and I think we're not necessarily guiding 'twenty six but I don't think we'll see a substantial change.

And the overall store count as we look towards 2006.

So more room to go on our repositioning strategy, but there's also a white space opportunity to infill and Theres. Some great new locations that were working on that will come online in 'twenty six and then 27%.

Your next question comes from the line of Chris <unk> from Jpmorgan. Your line is open.

Yeah.

Thanks, Good morning, So two quick ones, so I guess.

Playing Devil's advocate on the compare in the fourth quarter Laura.

Furniture pull forward is behind you there is a lot of momentum around self help initiatives and obviously theres a ticket pricing coming through here. So do you think about where we are in the cycle, particularly with housing.

Laura Alber: By the way, we'll do the whole thing for you. We'll set it up. I think you'll see that we can do it for a fraction of the price of what other people do and have it be super interesting and gorgeous. We're going after all those pieces, and there's opportunity right across that tic-tac-toe bar from what we define as our value customer, which is different than the market, all the way to the high-end consumer.

Um, in terms of, you know, second question, Peter, where is unit um, growth going? Look, we we've been saying all along that we have done an incredible job and I want to compliment our entire organization, um, regarding our retail, repositioning strategy, and there's been multiple legs of the strategy. There's been closing, underperforming stores, which I think everyone knows we've closed about 17% of our stores since 2019, it's about repositioning stores, uh, from, uh, some of the, um, tired indoor malls, to more vibrant lifestyle centers, and it's also been about opening new stores and we see opportunity for new store growth, particularly in the West, on brand, uh, with Rejuvenation with uh, uh, um, with Green Road potentially. Um, and you know, there's a lot of opportunity for us to continue to grow stores. In terms of, oh, we're overall store, count growth is growing. As we've been saying all year, um, it'll be, you know, mid single digit closures this year and I think, you know, we're not necessarily guiding 20.

Housing not helpful.

Why couldnt the growth rate just stay at the growth rate, considering where we are and then a quick one on gross margin understanding there were some shift on timing but.

6. But I don't think we'll see a substantial change in the overall store count as we look towards 2026. There's still more room to go on our repositioning strategy, but there's also white space opportunity to infill, and there are some great new locations that we're working on that will come online in 2026 and in 2027.

Asking the question in another way did the drivers in terms of in the fourth quarter and turned on terms of the expected tariff headwind versus the.

Operator: Your next question comes from a line of Simeon Gutman from Morgan Stanley. Your line is open.

You. Our next question comes from a line of Chris herbers from JP Morgan. Your line is open.

The expected.

Jeff Howie: Hey, Laura. Hey, Jeff. Can I ask on tariffs again? The six-point plan seems to be beneficial, and it sounds like the elasticities aren't awful. What's the chance that we get to the fourth quarter, even the first quarter, as this inventory turns, that the impacts are going to be a lot more minimal than we think? I'm just trying to size up the conviction that we haven't seen anything yet. If some of this IEEPA stuff gets, I don't know, invalidated, do you suspect that industry prices go back down, or do you think retail prices, especially ones that have already changed, they're just going to hold?

Benefit from any mitigation strategies did you changed those at all in your outlook. Thanks very much.

Okay.

Well, Florida first alethia, I'll say any reasonably painful part of anything for that matter.

<unk>.

We absolutely can be ascertained constant in Ohio, we have a wide range I was just explaining the differences of why you might look at it and say, it's all of it lies and where you've been.

Very important.

Thanks, good morning. So 2, quick ones. So I guess, you know, Playing devil's. Advocate on on the comparison, the fourth quarter, Laura e, Furniture pull, forwards behind you. There's a lot of momentum around, you know, self-help initiatives. And obviously there's a type of pricing coming through here. So, do you think about where we are on the cycle? Particularly with, you know, housing not helpful, you know, why couldn't the growth rate? Just stay at the growth rate, considering, you know where we are. And then a quick 1 on gross margin understanding. There was some shift on timing, but, you know, asking the question another way did

We now.

Playing the promotional game.

Key asset of our strategy.

Same time, we are in a great deal for our Black Friday, we have raised deal early Black Friday, we bought into EMEA, and then new partnerships on them, but we're not.

Laura Alber: First of all, I just want to say that the last thing I want you to think is that we're immune to tariffs. We've done a really great job of offsetting them so far. The amount that they hit us in Q4 is sizably different than it was in Q3. That's why look at our guidance, please, and understand the impacts. IEEPA, there's always tariffs. I'm not focused on that. We're focused on how we give, in the current tariff environment, the greatest value to our consumers. Where should we be pricing things? Where should we be moving things? I wouldn't spend a lot of time worrying about that. I think it's just one more thing that could change and be kind of distracting in the short term.

Did the drivers in terms of in the fourth quarter and turn them in terms of the expected tariff headwind versus, uh, the expected, um, benefit from the mitigation strategies. Did you change those at all in your outlook? Thanks very much.

I'm going to have as much we hope not.

Many knee system all as we did last year and that's the only hesitation on the comp side.

Yeah, thanks. Um, well for the first, I don't really see that. I don't see any reason to believe we've seen a full Board of anything for that matter. Um,

And then in terms of the tariff impact in Q4 is slightly more in Q4, because the way that the hospitalist drew.

We?

Every single quarter, and so we did a fantastic job great success with our mitigation plan in Q3 and throughout the year and we will continue to do that and in fact, it's amazing to see.

Absolutely could be at the same concept not higher. We have a wide range, um I was just explaining the differences um of why, you know, you might look at it and say it's a little bit lower than what you said. Um, it's very important that you know, we don't

The new opportunities in refining and supply chain.

Yes supply chain has been just a tremendous.

Positive this year and delivering op margin and what's great about it as you noticed that means the customers hitting their product delivered more smoothly and on time and without damage and thats all of those brands.

Laura Alber: There's also really good things that if the India tariff is repealed or reduced by half, that would be great for us. All that is backdrop that affects the entire industry. Once it's in and it's rolled through on a yearly basis, we're done with it. I just said just to recap, please don't think that we are immune in Q4 and beyond. We will offset as much as we possibly can. We've done a better job than I think we even thought we could do in offsetting all of it this quarter. We have a few things going on in Q4 that I want to make sure Jeff reminded you in his prepared remarks. I'll let him remind you again about the 53rd week.

Play the promotional game. It's a key aspect of our strategy. At the same time, we're going to have great deals for Black Friday. We have great deals right now, for early Black Friday, we bought into them, we have vendor Partnerships on them.

Capex for the P&L.

And it's all around as we look at Q4.

On the op margin side and the supply chain savings.

They reported down there, we're very optimistic about our ADC, which is on MCC that came out last year end.

Honestly, we're doing better than we had that with that and that could be second really help us, especially because the calendar this year compared with last year.

But we're not going to have as much. We hope we, we hope we're not going to have as many needs to promote as we did last year. And so that's the only hesitation on the comp side. Um, and then in terms of the Tariff impact in Q4, it's possibly more. Thank you for us because of the way that the cost flows through um every single quarter. And so you know we did a fantastic job. Great success with our mitigation plan in Q3 and throughout the year and we will continue to do that. And in fact, you know, it's amazing to see um the new opportunities that we're finding in supply chain.

We wanted to show that range, principally in mountain decline anymore, and that's why people come to us in Shanghai later with us like they do Amazon and others. He has.

Jeff Howie: Yeah. I mean, a couple of other things that I want to highlight too, Simeon, is, and as Laura said, don't get ahead of us there. We did have an improvement in our merchandise margins, particularly against what we expected in Q3. It goes back to the timing factor that I talked about, I think, on the first question. The effective dates were delayed for all the tariffs. As we get to Q4, there will be a substantially larger impact to our operating margin than there was in Q3. Our guidance embeds in there our best estimates of what that impact is, inclusive of all of our tariff mitigation efforts. I can't say it any other way other than we do not expect a repeat of Q3 in Q4, which is what our guidance is.

They trust us for delivery for our customers.

So there's a lot of really good things happening, but in terms of <unk>.

The impact of tariffs.

Please don't get ahead of us.

Yes, supply chain has been just a tremendous um um positive this year in delivering op margin and what's great about it. As you know is it means the customer is getting um their product delivered more smoothly and on time and without damage and that's all good for the brand. It's it's fantastic for the piano. Um and there's still room, you know, if you look at Q4

Q4 in terms of the margin.

On the ATM margin side and the supply chain savings.

It Hasnt tariffs are going to have a greater impact as you can see in our guidance and the implied Q4 guidance that mentioned in Q3 as you look at our op margin ex tariffs.

Thanks Sanjay.

And so for all those that are worried about this.

Realize that this goes into the based on whatever that we move forward, it's about outperforming our competition in continuing to deliver for our shareholders.

Most importantly for our customers and giving them incredibly beautiful well designed high quality products at the best price in the market.

So, uh, we wanted to ship it late and ship it perfectly and not disappoint anyone. That's why people come to us and shop online later with us, like they do with Amazon and others, because.

Jeff Howie: In terms of the 53rd week, I do want to remind everyone that this is a 53rd week for Williams-Sonoma. We are coming up against the 53rd week for Williams-Sonoma. On the year, it was worth 150 basis points to revenue growth and 20 basis points to operating margin. In Q4, where the 53rd week comes into play, it had a pretty big impact. It's 510 basis points of revenue growth and 60 basis points of operating margin growth. Just on that, the 53rd week and those 60 basis points, we would be down normally on a year-over-year 13-week—I'm sorry, yeah, 13-week to 13-week comparison.

They trust us to deliver before Christmas. Um, so there's a lot of really good things happening but in terms of

Your next question comes from the line, Jonathan Matt <unk> from Jefferies. Your line is open.

The impact of tariffs, you know, please don't get ahead of us on Q4, in terms of the margin.

Great. Good morning, I had one question one follow up.

The first question was just on the consumer you mentioned, a better response to full price selling than it seems like what you planned for so just from like a strategy perspective here, how does that minimal elasticity kind of inform your customer targeting efforts going forward and is what you're seeing giving you more.

Just expanding.

We're confident that target a higher end consumer a higher income consumer more in the future than in the past and are there strategies in place to do that that's my first question.

Operator: Your next question comes from a line of Steven Zaccone from Citigroup. Your line is open.

And so, for all those that are, you know, worried about this, you know, just realize that this goes into the base and we're done with it and we move forward and it's about outperforming our competition and continuing to deliver for our shareholders. And, um, most importantly, for our customers and giving them incredibly beautiful well-designed high quality products is the best price in the market.

[Analyst]: Great. Good morning. Thanks very much for taking my question. I wanted to ask on Pottery Barn because the business is accelerating a little bit there on the two-year stack, and it's actually lagging the rest of the segments of the business. You referenced some pullback in promotions. Can you just talk about what's new this year? I think that's been the strategy for the past couple of years. When you think about the performance of that business, what are you seeing from a competitive perspective? Any sort of kind of trade-down from the consumer? To go with some of these earlier questions around pricing, is there anything to call out from a pricing perspective, competitive-wise?

That's a great question.

Our Lucky you already said.

Your next question comes from the line of Jonathan Mutsuki from Jeffrey’s. Your line is open.

Toby will walk us so I'm going to give them the best price.

Jonathan first apartment.

Firstly.

Sure.

And we.

We do see when we look at our Tic Tac toe in owning the home setting.

We have a real super high.

At scale yet.

It's not surprising to me to rejuvenate and is doing so well why we have this great growth in expensive, it's absolutely gorgeous high quality products.

<unk>.

Laura Alber: We haven't seen that yet. Pottery Barn's furniture has improved this year, especially on the multi-year stack, and that's been good to see. They did have more promotions to reduce out of their base than you might have expected. We continue to work on that, and there's still opportunity.

I hope that involve visited <unk> products I've seen it in someone's house. He is let me see it you'll understand why we are really growing that business and why we believe the science Fair next billion dollar brands that sits at the high end.

Great. Good morning. I had a 1 question and 1 follow-up. Uh, the first question was just on the consumer. You mentioned a better response to full price selling than it. Seems like what you planned for. So just from like a strategy perspective here. How does that minimal? Elasticity kind of inform. Your your, your customer targeting efforts going forward and and is what you're seeing, giving you more confidence to Target a higher end consumer. A higher income consumer more in the future than in the past and are there strategies in place to do that. Uh, that's my first question.

That's a great question. Um,

Greenhouse sits at the high end.

We haven't talked biomarker study.

Operator: Your next question comes from a line of Chuck Brown from Gordon Haskett. Your line is open.

We're seeing that as a new aesthetic.

you know, we're lucky we're with the um, focus of all our customers. So we want to give them the best price, you know, if it's the first Department, um, first lady or if it's their fifth house,

This is very very operation.

and,

[Analyst]: Hey, thanks very much. Laura, just bigger picture, a lot of people have asked about the tariffs. I want to ask a little bit about category growth and how you see sustainability moving into 2026. Broadly speaking, a lot of your peers are doing better. Do you think that continues? One more near-term, just cadence throughout the quarter. Some of your peers have had a lot of volatility. Anything you want to highlight for us, and anything you want to speak to so far in November? Thank you.

Not in the marketplace.

That is entirely green products and people care about that at least our customers care about that and so that was the highest.

We do see when we look at our tic tac toe and owning the home that we have a coverage, a real super high end.

At scale yet.

We see that each and every customer and that brand, which tells me it's bigger than you might think.

And then the Atlantis in Oklahoma, which we continue to see as an opportunity for us into the future.

Um it's not surprising to me that Rejuvenation is doing so well. You know why do we have such great growth visits expensive? It's absolutely gorgeous. High quality products

um,

So, let's say the importance of US also covering the upper middle customer the pottery barn, the lifestyle and making sure that also those brands are so appealing that people trade into that.

Laura Alber: Yeah. Hi. We don't talk about the months and the cadence. I do want to talk about the excitement we have as we look forward. We have not seen a housing recovery. It's like the worst housing market in the last 40 years, as you know. That is a big deal. Now, there's really not a lot of great signs that it's getting better quickly, but there are some green shoots. I personally am very optimistic about housing next year. That'd be a big change for us if that happens because we know that when you move, you buy a lot when you refurnish your house. We've been very good at getting the remodeler and the redecorator to come to us, but we're excited to be ready with a much more powerful furniture supply chain than we ever had before when those sales come to us.

I can decorate your house.

Or beautifully and more affordably than the high as widely as you come to us and by the way we will do the whole thing to be able to set it up and.

I hope that you've all visited the store, bought some products. I've seen it in someone's house, because when you see it, you understand why we are really growing that business and why we believe so strong. Expand, next billion dollar brand that sits at the high end. Um, green growth sits at the high end. Um we haven't talked about access tiny but we're seeing that it's a new aesthetic.

It's very, very original.

I think youll see that we can do it for a fraction of the price of what other people do and have a super interesting in Georgia. So we're going after all those pieces.

It is not in the marketplace, and it is entirely green, um, products. And people care about that; at least that customer cares about that. And so that's the thinking behind it. We see that we can have retail stores in that brand, which tells me it's bigger than you might think.

And this opportunity right across that.

<unk>.

What we define as our value customer, which is different to the market.

Taylor.

Your next question comes from the line of Simeon Gutman from Morgan Stanley. Your line is open.

Hey, Laura Hey, Jeff.

And then there's Landon on the home which we continue to see as an opportunity for us into the future but don't, you know, mistake, the importance of us also covering, you know, the upper middle customer, the Pottery Barn, the West though, and making sure that also those brands are so appealing that people trade into that.

Laura Alber: We know that when that turns and you see upside again, it's a really big deal. Some people, I don't think you're going to be ready for it. The things we've done to really improve our supply chain are so strategic. I believe, and I've always believed, that the person that owns the furniture network is the one who wins the whole thing. That is where we've been focused and continue to build, and have all sorts of tech projects in play to make that happen. You can see it in our numbers this year, how much improvement year on year. I read through last year's script, and it's funny when you read it because we were talking about all the supply chain improvements then. I think if you'd asked me, I wouldn't have expected that we would have this much more.

Can I ask on tariffs again.

You know, if I can decorate your house.

Six point plan seems to be beneficial and it sounds like the elasticities.

Harmful.

The chance that we get to the fourth quarter or even the first quarter.

Inventory turns.

The impacts are going to be a lot more minimal than we've seen kind of I'm just trying to size up.

The conviction that we havent seen anything yet.

More beautifully, and more affordably than the high-end. Why wouldn't you come to us? And by the way, we'll do the whole thing for you and we'll set it up. And uh I think you'll see that we can do it for a faction of the price of what other people do and have it be super interesting and gorgeous. So we're going after all those pieces. Um, and there's opportunity right across that

And then if some of this stuff gets validated do you.

Suspect that industry prices go back down or do you think retail prices, especially ones that are already changed theyre just going to hold.

The Tic Tac Toe bar from from what we've defined, as our value customer, which is different from the market, all the way to the high-end consumer.

You. Our next question comes from a line of Simeon, Gutman from Morgan Stanley. Your line is open

First of all I, just wanted to say Theknot com.

Hey, Laura. Hey, Jeff.

Hi.

Laura Alber: Yet we still have more. That's what's exciting when you think about the power of our operating model in this multi-brand, multi-channel company, and where this could go in the future as furniture recovers.

The last thing I'd like to think is that we're immune to tariffs we've done a really great job of offsetting it so far but the amount that they hit us in Q4 and five different than it was in Q3 FY.

Can I ask about tariffs again? You know, the 6-point plan seems to be beneficial, and it sounds like the elasticities aren't awful.

What's the chance that we get to the fourth quarter or even the first quarter as this inventory turns?

That's why look at our guidance please.

Operator: Your next question comes from a line of Michael Laster from UBS. Your line is open.

And understand the impact.

That the impacts are going to be a lot more minimal than we think. And I'm just trying to size up.

This on the tariffs.

I'm not focused on we're focused on.

Samir Hassan: Good morning. Thank you so much for taking my question. Laura, one of the interpretations of some of your comments over the last hour is that Williams-Sonoma has gone through this significant change where it's reduced promotions, improved its profitability, while it's been able to drive consistent sales growth. Now it may be at the point at which it can no longer lower promotional activity without it having some impact on the sales. Is that the right interpretation of what has been said on this call? Second, was the magnitude of the benefit to your margin in the third quarter from selling older, lower-cost inventory at new higher prices equal to or greater than it might have been in the second quarter, such that we should think about these not repeating in 2026? Understanding you're not providing any guidance on 2026 at this point. Thank you very much.

You know, the conviction that we we haven't seen anything yet.

<unk> and the current tax environment, the greatest value to our consumers and where should we be alright, thank things aggressively moving things.

and then if some of these iipa stuff gets, I don't know in invalidated

So.

I would spend a lot of time worrying about that I think it's just one more thing a change in D C.

That have already changed. They're just going to hold.

Kind of distracting in the short term.

Some really good things that Blake.

<unk> is to repeal that or reduced by half that would be great for us.

So.

All of that is is.

That's enough to affect the entire industry.

And once it's in.

Roll through on a yearly basis, we're done with it.

First of all, I just want to say that um the last thing I want you to think is that for me to tariff we've done a really great job of offsetting them so far but the amount that they hit us thank you for invisibly different than it was in Q3 so just that's why look at our guidance please. Um and understand the impact um IA. You know there's other tariffs

So I just.

Just to recap. Please so thanks MBR in Q4 and beyond we will offset as much as we possibly can and we've got a better job than the I think we even thought we could do and offsetting all of it this quarter.

But we have two things going on in Q4 that I want to make sure Jefferies. I've reminded you in his prepared remarks I'll, Let me remind you again about the tissue directly yes, a couple of other things that I want to I want to highlight two Simeon as and as Laura said don't get ahead of us there.

Laura Alber: In terms of your first question, I mean, you took some liberty saying Michael. I think what I'm saying is that key strategies for our company continue to work. It has been a focus on innovative product design, high quality, high service, and a regular-priced business, investing in our brands, investing in our tech staff, our supply chain to deliver great operating margins. I will remind you, our first initiative this year was return to growth. I kept joking. It's one, two, and three, return to growth. We are obsessed with where we can grow, what brands it is, which categories it is, and how we outperform. Do not mistake that that is where our head is and what we're driving towards. On the second question, I'll hand it to Jeff.

Um, I'm not focused on that. We're focused on how we give in the current tariff environment, the greatest value to our consumers, and where should we be pricing things. And where should we be moving things? Um, so I wouldn't spend a lot of time learning about that. I think it's just one more thing that could change and be.

kind of distracting in the short term, you know, that's also really good things that like, is it in the air tariff, just repealed that or reduced by half that would be great for us. Um, so, you know, all that is is,

We did have improved.

Improvement in our merchandise margins and particularly against what we expected in Q3, but it goes back to the timing factor that I talked about I think on the first question.

Backed up the effects, the entire industry.

And once it's in, and it's, it's rolled through on a yearly basis. We're done with it. Um, so I just

The effective dates were delayed for all the tariffs so as we get to Q4, there will be a substantially larger impact to our operating margin than there was in Q3.

Our guidance Embeds in there our best estimates of what that impact is inclusive of all of our tariff mitigation efforts.

So.

I can't say it any other way other than we do not expect a repeat of Q3 and Q4, which is what our guidance is.

That's like the cost to recap. Please don't think that we are in the moving Q4 Beyond. We will offset as much as we possibly can. We've got a better job than you. I think we even thought we could do and offsetting all of it this quarter. Um, but we have a few things going on. In Q4 that I want to make sure Jeffrey might be reminded you in his prepared remarks. I'll let him remind you again about the 53rd week.

Jeff Howie: Yeah, Michael, honestly, I'm not tracking with you on the question because actually our margin expansion year over year in Q2 was 200 basis points. Gross margin was 220 basis points. There's only 70 basis points in Q3, with the difference, of course, being the impact of the tariffs. I'm not sure I understood your question, but there was a greater impact of the tariffs in Q3. While certainly we have our mitigation efforts, the tariff impact will increase sequentially quarter over quarter every year this year. As we said on the call, it will have an impact on us in Q4 in a much more substantial way than it did in prior quarters this year.

In terms of the 50 <unk> week I do want to remind everyone that this is a 50 <unk> week for when you're coming up against the 50 <unk> week for Williams Sonoma, Inc.

On the year. It was worth 150 basis points to revenue growth and 20 basis points of operating margin, but in Q4, where the 50 <unk> week comes into play and at a pretty big of an impact at 510 basis points of revenue growth and 60 basis points of operating margin growth. So just on that.

The 50 <unk> week in those 60 basis points.

We would be down normally on a year over year 13 week I'm, sorry, 13 week to 13 week comparison.

Your next question comes from the line of Stephens <unk>, calling from Citigroup. Your line is open.

Operator: Your next question, and this will be the final question, comes from a line of Oliver Wintermantle from Evercore ISI. Your line is open.

Yeah, I mean, a couple other things that I want to, I want to highlight too. So I mean is and and as Laura said, don't get ahead of us there, you know, we did have a, um, improvement in our merchandise margins and particularly against what we expected in Q3. But it goes back to the timing factor that I talked about. Um, I think on the first question, uh, the effective dates were delayed for all the tariffs. So as we get to Q4, uh, there will be a substantially larger impact to our operating margin than there was in Q3 and our, uh, guidance embeds in there. Are best estimates of what that impact is. Inclusive of all of our tariff, mitigation efforts. Uh, so I, you know, I can't say it any other way other than we, do not expect a repeat of Q3 in Q4, which is what our guidance is.

Hey, good morning, Thanks, very much for taking my question.

[Analyst]: Thanks very much, guys. Yes, I think the message on gross margin in Q4 came across. I just want to focus on SG&A. You guys have lowered general expenses for the last several quarters. Especially in Q4, I think there was an 80 basis points in incentive comp headwind, and advertising was also up a headwind of 30 basis points in the fourth quarter. Maybe could you talk a little bit about SG&A moving parts into the fourth quarter, how you expect that to shake out? Thank you.

Wanted to ask on Tottery barn.

Um, in terms of the 53rd week, I do want to remind everyone that this is a 53rd week for Williams. We are coming up against the 53rd week for Williamson Inc,

But this is decelerating a little bit there on the two year stack.

Again, the rest of the.

Segments of the business.

You referenced some pullback in promotions can you just talk about what's new this year. So I think that's been the strategy for the for the past couple of years.

When you think about the performance of that business. What are you seeing from a competitive perspective.

Any sort of trying to trade down to the consumer and industrial some of these earlier questions around pricing is there anything to call out from a pricing perspective competitive flush.

On the year, it was worth 150 basis points to revenue growth and 20 basis points to operating margin. But in Q4, where the 53rd week comes into play, it had a pretty big impact at 510 basis points of Revenue growth and 60 basis points of operating margin growth. So just on that, um, the 53rd week and those 60 basis points will we would be down normally, uh, on a year-over-year 13 week, I'm sorry. Yeah. 13 week to 13 week comparison,

Jeff Howie: Yeah. I mean, as you know, we don't guide the specific lines. We guide the top line and the bottom line because it gives us the flexibility to pull different levers as we see results come in. In Q3, our higher employment expense was really almost entirely attributable to higher incentive compensation due to our strong performance year to date. As I explained in our prepared remarks, advertising did leverage about 20 basis points because we saw some opportunities during Q3 to spend some additional advertising in the digital space. One of our competitive advantages is our in-house marketing team that has ability across our portfolio brand to test, scale, and optimize our spend. They saw some opportunity to spend in Q3 that gave us great returns, drove incremental traffic to the web, and higher revenue per visit. We leaned into that.

We haven't seen that yet pottery barn furniture has been growth this year, especially on a multi year stack and that then let's see they did have more promotions to reduce out of their base than you might have expected and so we continue to work on that and there's still opportunity.

Your next question comes from a line of Steven Zakon from Citigroup. Your line is open,

Your next question comes from the line of Chuck Grom from Gordon Haskett. Your line is open.

Hey, Thanks, very much just largest bigger picture a lot of people have asked about tariffs I wanted to ask a little bit about category growth and how you see sustainability moving into two.

2020 switch probably speaking a lot of your peers are doing better or do you think that continues minimum one more near term just cadence throughout the quarter.

Hey, good morning. Thanks very much for taking my question. Um, I wanted to ask on toddy Barn because um, but this is accelerated a little bit there on the 2-year stack and it's actually lagging the rest of the, the segments of the business. Um, you know, the reference some pullback and promotions. Can you just talk about what's new this year? Because I think that's been the strategy for the for the past couple of years. And, um, when you think about the performance of that business, you know, what are you seeing from a competitive perspective? You know, any sort of trying to trade down some of the consumer? And, you know, deal with some of these earlier questions around pricing. Is there anything to call out from a pricing perspective? What that is was

Some of your peers have had a lot of volatility and anything you want a highway for us and I think you want to speak to him. So far in November. Thank you.

Jeff Howie: As we think about Q4, we don't guide the specific lines, but our approach is always the same as we're looking to control our SG&A. Where we see opportunities that are going to give us good return on investment, we will, of course, lean into those. It all depends upon the overall macro.

Yes, hi.

Okay.

Hello.

On the units.

Hi.

Talk about the excitement we have as we look forward.

Um, we haven't seen that yet Potter Barnes Furniture um has improved this year, especially on the multi-year stack. And that's been good to see. They did have, uh, more promotions to reduce out of their base, then you might have expected. And so we continue to work on that and there's still opportunity.

We are not seeing the House America.

Laura Alber: I thought that it might be worth spending a minute, even though we're a couple of minutes past the hour, talking about our SG&A reductions due to our AI initiative. You were joking earlier that we have a six-point mitigation plan for tariffs, but I think maybe we should launch our seventh as AI because we're seeing some really exciting results both on the sales side and also on the margin side. Let me make a few comments about that before we close the call.

Like the worst housing market in the last 40 years.

Your next question comes from the line of Chuck Grow from Gordon Haskett. Your line is open.

And that is a big deal now.

Really not a lot of great science that is getting there quickly.

There are some wages and firstly I'm very optimistic about how the next year.

That would be a big change for us if that happens because they know that they can move.

Biopsy when your refinish in house and we.

Samir Hassan: Sure. Thank you, Laura. Yeah, like Laura mentioned earlier, in Q3, we are seeing really, really impactful results. She shared a couple of the data points around our customer service automation. She shared our launch of Olive, our AI agent that's customer-facing. If you haven't used that, I really encourage you to go on the Williams-Sonoma site today. Super helpful for planning for the holidays, and is driving sales, driving engagement, driving loyalty. It's really exciting. We're already, just on the topic of SG&A, seeing reduced payroll costs where automation, AI automation, absorbs repeatable work, reduced vendor costs when we streamline external spend. We're also seeing the same tech grow the top line. In supply chain, we're cutting market shipments, improving routes, lowering damages, replacements, trimming shipping costs, inventory. We're using AI to raise in-stock rates on key items. All the stuff supports conversion.

We've been very good at getting the remodel or in redecorate here to come to us, but we're excited to be ready with a much more powerful furniture supply chain than we ever had before when those sales come to us and we know that when that turns in E&P upside again.

Hey thanks very much. Just you know, the largest bigger picture, a lot of people asked about the tariffs. Um, I want to ask a little bit about category growth and and how you see sustainability moving into 2026. Broadly speaking a lot of your peers are doing better or do you think that continues and then 1 1 more near term just Cadence um throughout the quarter. Uh some of your peers have had a lot of volatility and anything you want to highlight for us and anything you want to speak to um so far in November thank you.

Educator, I do want to talk about the excitement we have as we look forward.

A really big deal from the model that you're going to be ready for it.

The things we've done to really improve our supply chain.

We have not seen the housing recovery. It's like the worst housing market in the last 40 years, as you know, and that is a big deal. Now,

So strategic.

I believe and I've always believed that the person that owns the furniture network is.

Is the one who runs our wholesale.

And that is where we can focus and we've seen that build and have also asked us.

There's really not a lot of great clients, but it's getting better quickly. There are some green shoots, and I personally am very optimistic about the next year. That would be a big change for us if that happens. Because we know that when you move,

You buy a lot.

Tech projects in play to make that happen and you can see it in our numbers. This year, how much improvement year on year I read through last year's scripts.

Samir Hassan: It's driving down costs, but it's also driving the top line, digital guided journeys, better content coverage. All of this is driving SG&A leverage. All of it's driving reduced costs, but it's also driving demand leverage, which is really exciting to see it impact both on the cost side as well as the top line side. We really see this compounding benefit as we head into 2026. I'm really excited about the continued impact we're seeing from our AI roadmap.

And it's funny when you read it is.

We're talking about.

By chain improvements, then, but I think if you'd asked me I would have expected that we would have this much more.

And yet we still have more and Thats whats exciting when you think about the power of our operating model and its multichannel multi brand multi channel company.

We're the <unk> in the future as furniture company.

When you refurnish your house and um, we've been very good at getting the remodeler and the redecor to come to us. But we're excited to be ready with a much more powerful, Furniture Supply Chain than we ever had before when those sales come to us. And we know that when when that turns and you see upside again it's it's a really big deal, some people I don't think are going to be ready for it um but the things we've done to really improve our supply chain are so strategic.

Operator: We have reached the end of our question and answer session. I will now turn the call back over to Laura Alber for closing remarks.

Your next question comes from the line of Michael Lasser from UBS. Your line is open.

I believe, and it's always been believed, that the person who owns the furniture owns the network.

Is the one who wins the whole thing.

Laura Alber: Thank you all for joining us today. As I said earlier, I wish you all a very happy Thanksgiving with your families. Hopefully, you get a chance to stop by our stores and do some shopping. Look forward to talking to you in the new year. Thank you.

Good morning. Thank you so much for taking my question lower one of the interpretations of your some of your comments over the last hour is that we.

<unk> gone through this.

Significant change, where it's reduced promotion improved its profitability, while it's been able to drive consistent sales growth and now it may be at the point at which.

And that is where we've been focused and continue to build and have all sorts of tech projects in play to make that happen. And you can see it in our numbers. This year, how much improvement year on year? I read through last year's script.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

And it's funny when you read it because we were talking about all the supply chain improvements then. But I think if you had asked me, I wouldn't have expected that we would have this much more.

It can no longer lower promotional activity without it having some impact on sales is that the right interpretation of what has been said on this call and second with the magnitude of the Tennessee.

And yet we still have more, and that's what's exciting. When you think about the power of our operating model and its multi-brand, multi-channel company, and where this could go in the future as for insurance companies.

To your margin in the third quarter from selling older lower cost inventory at new higher prices.

So our next question comes from Michael Lasser from UBS. Your line is open.

Equal to or greater than it might have been in the second quarter, Chris that we should think about these not repeating in 2026 understanding you're not providing any guidance on 2026 at this point. Thank you very much.

Good morning. Thank you so much for taking my question, Laura. One of the interpretations of some of your comments over the last hour is that

In terms of your first question.

You took some liberties cyclical.

Thank you I wanted to say is that.

For our company.

We continue to work as it has been our focus.

Innovative product design and high quality high service and the regular price business.

Williams Sonoma has gone through a significant change where it's reduced promotions, improved its profitability, while it has been able to drive consistent sales growth. And now, it may be at the point at which it can no longer lower promotional activity without having some impact on sales. Is that the right interpretation of what has been said on this call? And second, what was the magnitude of the benefit?

And our brands investing in our tech SaaS, our supply chain to deliver great operating margin, but I will provide you our key <unk>.

To your margin in the third quarter from selling older, lower-cost inventory at new, higher prices.

Our first initiatives this year with retard the growth catch up payments of <unk> strategic growth, we are obsessed with.

Where we can grow what brands in this category as it is and how we outperform.

Equal to or greater than it might have been in the second quarter. Such that we should think about these not repeating in 2026 understanding. You're not providing any guidance on 2026 at this point. Thank you very much.

So do not mistake that that is where we're headed and what we're driving towards on the second question I'll hand, it to Jack Yes, Mike honestly I'm not I'm not tracking with you on the question because actually our margin expansion year over year. In Q2 was 200 gross margin was 220 basis points Theres only 70 basis points in Q3 with a.

Um, I think, you know what I'm saying? Is that key strategies um, for our company, um, continue to work and and it's been a focus on

Difference of course being the impact of tariffs so.

I'm not sure I understood your question.

But there was a greater impact of the tariffs in Q3, and while certainly we have our mitigation efforts.

Tariff impact will increase sequentially quarter over quarter every year this year.

Innovative product design, high quality, High service, and a regular price business. Um, investing in Our Brands investing in our Tech staff, our supply chains to deliver great operating margins all, but I will remind you our key. Our key, our first initiative, this year was Return to growth. I kept joking. It's 1 2 and 3. So to grow, we are obsessed with

And as we said on the call. It will have an impact on us in Q4, and a much more substantial way than it did in prior quarters. This year.

Your next question and this will be the final question comes from the line of Oliver Winter mantle from Evercore ISI. Your line is open.

Thanks, very much guys.

Yes, I think the message one on gross margin and <unk>.

Where we can grow, what brands it is, which categories it is and how we have performed. So so do not mistake that, that is where where our head is, and what we're driving towards on the second question. I'll hand it to Jeff. Yeah, Mike, um, honestly, I'm not, I'm not tracking with you on on the question because actually our margin expansion year-over-year and Q2 is 200 and gross margin was 220 basis points. There's only 70 basis points in Q3 with the difference. Of course being the impact that

It's across I, just wanted to focus on SG&A.

You guys have lower general expenses for the last several quarters.

And especially in <unk> I think there was a 80 basis points.

And incentive comp headwind.

And advertising was also a headwind of 30 basis points in the fourth quarter. So maybe could you talk a little bit about the SG&A moving parts into the fourth quarter. How you expect that the chico's. Thank you.

Tariffs. So um, uh, not sure understood the, your question. Um, but there was a greater impact of the tariffs in Q3 and while certainly, you know, we have our mitigation efforts, uh, the Tariff impact will increase sequentially quarter of a quarter every year this year. Uh, and as we've said on the call it will have an impact on us in Q4 uh in a much more substantial way than it did in Prior quarters this year?

Yes, I mean as you know, we don't guide to specific lines regarding the topline and Bottomline.

It gives us the flexibility to pull different levers as we see results come in.

Your next question and this will be the final question comes from the line of Oliver winter mantel from evercore isi. Your line is open.

In Q3 are higher employment expense was really almost entirely attributable to higher incentive compensation due to our strong performance year to date and then as I explained in our prepared remarks.

Advertising deleverage about 20 basis points, because we saw some opportunities.

During Q3 to spend some additional advertising in the digital space.

One of our competitive advantages is our in house marketing team that as ability across our portfolio of brands to test scale and optimize our spend and based off some opportunity to expand in Q3 that gave US great returns drove incremental traffic to the web.

Stitch on, on gross margin. In 4 q came came came uh, across. I I just want to focus on sgna. Um, you guys have lowered a general uh expenses for for the last several quarters and especially in 4q. I think there was a 80 basis points in incentive comp headwind. Um, and advertising was also up a headwind of 30 basis points uh in the fourth quarter. So maybe could you talk a little bit about uh sgna moving Parts into the fourth quarter? How you expect that to shake out? Thank you.

Higher revenue per visit and we so we leaned into that so as we think about Q4, we don't guide to specific one but our approach is always the same as we were looking to control our SG&A, but where we see opportunities we're going to give us a good return on investment we will of course lean into those but it all depends upon the overall macro and.

That's it might be worth studying other minute, even though a couple of minutes past the hour.

Talking about our SG&A reductions.

Due to our AI initiatives.

You are talking earlier that we have six clients litigation plan for cancer I think enabled with the launch of <unk>.

Yeah, I mean, as you know, we don't guide to specific lines. We guide the top line and the bottom line. Um, it gives us the flexibility to pull different levers as we see results come in. Um, and in Q3, our higher employment expense was really almost entirely attributable to higher incentive compensation due to our strong performance here today. And then, as I explained in our prepared remarks, advertising, the leverage about 20 basis points because we saw some opportunities during Q3 to spend some additional advertising in the digital space. One of our competitive advantages is our in-house marketing team that has the ability across our portfolio brands to test.

As AI, because we're seeing some really exciting results both on the sales side and also environment unless my next few comments thoughts ethically protocol sure. Thank you Laura Laura mentioned earlier in Q3, and we're seeing really really impactful results. She shared a couple of data points around our customer service automation.

Shared our launch of <unk>, our AI engine is customer facing if you haven't used that I really encourage you to go in the Williams Sonoma sites today Super helpful for planning for for the holidays, and Thats driving driving sales driving engagement driving loyalty is really exciting and we're already but just on the topic of SG&A, we're already seeing reduced payroll costs, where automation absorbed.

Scale and Optimizer spend. And they saw some opportunity to spend in Q3 that gave us great. Returns drove incremental traffic to the web and um, higher Revenue per visit, and we. So we leaned into that. So as we think about Q4, we don't guide the specific lines. But in our approach is always the same. As we're looking to, um, control our sgna. But where we see opportunities are going to give us good return. On investment. We will, of course, lean into those but it all depends upon the overall macro.

Absorbed repeatable work reduce vendor costs, when we streamline external spend.

And we're also seeing the same tech growth the topline in supply chain, we're cutting market shipments improving route lowering damages replacements trimming shipping costs inventory, we're using AI to rate in stock rates on key items. All the stuff supports conversion, it's driving down cost, but it's also driving the top line digital guided journey better content coverage all of.

This is driving SG&A leverage at all of its driving reduced cost, but it's also driving <unk>.

<unk> leverage which is really exciting to see it impact both on the cost side as well as the top line side. So we really see this compounding benefit as we head into 2026 I'm really excited about the continued impact we're seeing from our AI roadmap.

And we have reached the end of our question and answer session. I will now turn the call back over to Albert <unk> for closing remarks.

And I, I thought that it might be worth setting on a minute even though we're a couple minutes past the hour, um, talking about our FTA reductions, um, due to our AI initiative because, you know, we were joking earlier that we have a 6-point mitigation plan for tariffs but I think maybe we should launch at 7:00 as AI because we're seeing some really exciting results. Both on the sales side and also on Mars and let's me take a few comments about that before we close the call. Sure, thank you. Laura, you like Laura mentioned earlier in, in Q3, we are seeing really, really impactful results. She shared a couple of the data points around our customer service automation. Uh she shared our, our launch of olive, our AI agent that's customer facing if you haven't used that, I really encourage you to go on the Williamson. Noah site today. Super helpful for for planning for uh for the holidays and is driving driving sales, driving engagement driving loyalty. It's really exciting and we're already just on the topic of sgna, we're already seeing reduced. Payroll costs where automation absorbs a automation, absorbs repeatable work.

Yeah. Thank you all for joining us today as I said earlier I wish you all a very happy Thanksgiving.

With your families.

You get a chance to stop by our stores in different shopping and look forward to talking you in the media. Thank you.

This concludes today's conference call. Thank you for your participation you may now disconnect.

Reduce Bender costs when we streamline external spend, and we're also seeing the same Tech, uh, grow the Top Line. Um, in supply chain, we're cutting out of Market shipments improving routes lowering damages Replacements trimming shipping costs inventory. We're using AI to raise in stock rates on key items. All the stuff that supports conversion, it's driving down costs but it's also driving the Top Line. Digital guided Journeys, better, content coverage. All of this is driving sgna leverage. Its all of its driving reduced cost but it's also driving, uh, demand leverage, which is really exciting to see it. Impact both on the cost side as well as the Top Line side. So, we really see this compounding benefit as we head into 2026. I'm really excited about the continued impact. We're seeing from our AI road map.

And we have reached the end of our question-and-answer session. I will now turn the call back over to Laura Alber for closing remarks.

Yeah, thank you all for joining us today. And, as I said earlier, I wish you all a very Happy Thanksgiving, uh, with your families. Uh, hopefully you get a chance to stop by our stores and do some shopping. Look forward to talking to you uh, in the new year. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.