Williams-Sonoma, Inc. (WSM): A Bull Case Theory

We came across a bullish thesis on Williams-Sonoma, Inc. on M Squared Capital’s Substack by Matthew McClintock. In this article, we will summarize the bulls’ thesis on WSM. Williams-Sonoma, Inc.'s share was trading at $196.06 as of September 16th. WSM’s trailing and forward P/E were 21.83 and 23.92 respectively according to Yahoo Finance.

Comp was above expectations with accelerating trends, as all brands posted positive comps for the second consecutive quarter, reflecting strength across both furniture and non-furniture categories. Management raised guidance, assuming no changes in the macro environment, signaling continued momentum.

EBIT margin guidance was reiterated despite a doubling of the incremental tariff rate since 1Q, supported by ongoing supply chain efficiencies that contributed 30 bps during the quarter. Leadership highlighted the potential for sourcing flexibility if additional tariffs are imposed, although moving significant volumes into the U.S. quickly would remain challenging, especially for lower-end products reliant on Asia sourcing.

AI is emerging as a meaningful growth lever, delivering higher conversion rates, with the rollout of an AI assistant across all brands this week. Management is also developing next-generation digital design tools and plans to launch a culinary companion for cookware discovery and holiday entertaining, signaling potential long-term upside. Rejuvenation posted strong double-digit comps, driven by core renovation categories, with expectations to sustain growth into 2H and beyond, prompting closer attention to this brand. Pricing and elasticity remain less predictable, with differentiated products showing limited elasticity, and no evidence of tariff-driven demand pull-forward into 1Q. Innovation continues to be the key driver, supported by vendor partnerships.

Management emphasized the strength of the “fortress balance sheet” while signaling the effectiveness of pricing strategies and restrained promotion, particularly at Pottery Barn. Overall, the call reinforced confidence in the company’s multi-brand execution, supply chain and tariff management, and AI-driven initiatives, while highlighting ongoing opportunities for innovation and operational leverage across its portfolio.

Previously we covered a bullish thesis on Williams-Sonoma, Inc. (WSM) by Charly AI in April 2025, which highlighted margin expansion, operational efficiency, and strategic adaptability in non-furniture categories. The company's stock price has appreciated approximately by 23.9% since our coverage. The thesis still stands as WSM continues to deliver accelerating comps. Matthew McClintock shares a similar perspective but emphasizes AI initiatives and supply chain flexibility.

Williams-Sonoma, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 50 hedge fund portfolios held WSM at the end of the second quarter which was 48 in the previous quarter. While we acknowledge the potential of WSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.