Williams-Sonoma WSM · USD

Segment Reporting We identify our operating segments according to how our business activities are managed and evaluated. Each of our brands are operating segments. Because they share similar economic and other qualitative characteristics, we have aggregated our operating segments into a single reportable segment.Our single reportable segment derives revenues from sales of merchandise through our e-commerce websites, direct-mail catalogs and retail stores, and includes shipping fees received from customers for delivery of merchandise to their homes. The accounting policies of our single reportable segment are described in the Summary of Significant Accounting Policies within Note A.Our chief operating decision maker (“CODM”) is our Chief Executive Officer. The CODM assesses performance for our single reportable segment and decides how to allocate resources based on operating income, which is reported on the Consolidated Statements of Earnings. Segment balance sheet information is not regularly provided to the CODM. The CODM uses operating income to decide whether to reinvest profits into our operating segments or allocate to other purposes, such as for repurchases of common stock, payment of dividends or acquisitions.Operating income is used to monitor budget versus actual results. The CODM also uses operating income in competitive analysis by benchmarking to our peers. The competitive analysis, along with the monitoring of budget versus actual results, is used in assessing performance of the segment.The following table summarizes reported net revenues, significant segment expenses, operating income and earnings before income taxes for fiscal 2025, fiscal 2024 and fiscal 2023:For the Fiscal Year Ended(In thousands)February 1, 2026February 2, 2025January 28, 2024Net revenues$7,806,816 $7,711,541 $7,750,652 Less:Cost of merchandise and shipping3,383,429 3,336,102 3,632,761 Occupancy, excluding depreciation591,678 567,602 584,469 Employment1,254,658 1,227,305 1,167,024 Advertising552,587 567,723 502,245 Other segment items 1378,891 354,914 389,938 Depreciation and amortization expense229,851 227,712 230,022 Operating income$1,415,722 $1,430,184 $1,244,193 Interest income, net36,838 55,548 29,162 Earnings before income taxes$1,452,560 $1,485,732 $1,273,355 1Other segment items within operating income include general expenses, which consist primarily of credit card fees, data processing expenses and administrative expenses.

Commitments and ContingenciesWe are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes, which are not currently material, have increased and continue to increase in number as our business expands and we grow as a company. We review the need for any loss contingency reserves and establish reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. In view of the inherent difficulty of predicting the outcome of these matters, it may not be possible to determine whether any loss is probable or to reasonably estimate the amount of the loss until the case is close to resolution, in which case no reserve is established until that time. Any claims against us, whether meritorious or not, could result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a material adverse effect on our Consolidated Financial Statements when taken as a whole.

Income Taxes The components of earnings before income taxes, by tax jurisdiction, are as follows:For the Fiscal Year Ended(In thousands)February 1,2026February 2,2025January 28,2024United States$1,253,410 $1,301,017 $1,154,160 Foreign199,150 184,715 119,195 Total$1,452,560 $1,485,732 $1,273,355 The provision for income taxes consists of the following:For the Fiscal Year Ended(In thousands)February 1,2026February 2,2025January 28,2024CurrentFederal$242,980 $276,201 $275,734 State65,877 64,834 54,903 Foreign34,951 29,187 22,041 Total current$343,808 $370,222 $352,678 DeferredFederal$22,799 $(7,608)$(30,632)State(2,024)(1,925)686 Foreign(460)(208)861 Total deferred$20,315 $(9,741)$(29,085)Total provision$364,123 $360,481 $323,593 On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was signed into law in the United States. The OBBB includes a broad range of tax reform provisions, including permanently extending and modifying certain expiring provisions of the 2017 Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions becoming effective in fiscal 2025 and the majority taking effect in future years. The OBBB had a minimal impact on the effective tax rate but resulted in favorable cash tax impacts in fiscal 2025 as a result of certain accelerated tax deductions.Since the Organization for Economic Co-operation and Development (“OECD”) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“Framework”) in 2021, a number of countries have begun to enact legislation to implement the Framework, including the Pillar Two minimum tax. Our subsidiaries were not subject to Pillar Two minimum tax in fiscal 2025. Pillar Two minimum tax will be treated as a period cost in future periods when it is applicable. We are continuing to evaluate the potential impact of the Framework on future periods and monitoring legislative developments by other countries, especially in the regions in which we operate.For fiscal 2025, ASU 2023-09 requires an expanded view of the rate reconciliation as well as a summary of income taxes paid for material jurisdictions. We have elected a prospective presentation. The tables below represent the new standard for fiscal 2025 and revert to prior guidance for comparable years.

Stock-Based Compensation Equity Award Programs Our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, “option awards”), restricted stock awards, restricted stock units (including those that are performance-based), deferred stock awards (collectively, “stock awards”) and dividend equivalents up to an aggregate of approximately 85.4 million shares. As of February 1, 2026, there were approximately 7.6 million shares available for future grant. Awards may be granted under the Plan to officers, employees and non-employee members of the Board of Directors of the Company or any parent or subsidiary. Shares issued as a result of award exercises or releases are primarily funded with the issuance of new shares.Stock Awards Annual grants of stock awards are limited to two million shares on a per person basis. Stock awards granted to associates generally vest evenly over a period of four years for service-based awards. Certain performance-based awards, which have variable payout conditions based on predetermined financial targets, generally vest three years from the date of grant. Certain stock awards and other agreements contain vesting acceleration clauses resulting from events including, but not limited to, retirement, disability, death, merger or a similar corporate event. Stock awards granted to non-employee Board of Directors members generally vest in one year. Non-employee Board of Directors members automatically receive stock awards on the date of their initial election to the Board of Directors and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve as a non-employee Board of Directors member). Non-employee directors may also elect, on terms prescribed by the Company, to receive all of their annual cash compensation to be earned in respect of the applicable fiscal year either in the form of (i) fully vested stock units or (ii) fully vested deferred stock units.Stock-Based Compensation Expense During fiscal 2025, fiscal 2024 and fiscal 2023, we recognized total stock-based compensation expense, as a component of SG&A, of $106.5 million, $99.0 million and $84.8 million, respectively. As of February 1, 2026, there was $157.

LeasesThe components of our lease costs are as follows:For the Fiscal Year Ended(In thousands)February 1,2026February 2,2025January 28,2024Operating lease costs$310,736 $299,105 $296,779 Variable lease costs126,545 127,291 132,304 Total lease costs$437,281 $426,396 $429,083 Sublease income and short-term lease costs were not material to us for fiscal 2025, fiscal 2024 and fiscal 2023.Supplemental cash flow information related to our leases are as follows:For the Fiscal Year Ended(In thousands)February 1,2026February 2,2025January 28,2024Cash paid for amounts included in the measurement of operating lease liabilities$326,616 $325,650 $322,293 Our net additions to right-of-use assets were $340.3 million and $209.4 million in fiscal 2025 and fiscal 2024, respectively.Additional information related to our leases is as follows:For the Fiscal Year EndedFebruary 1, 2026February 2, 2025Weighted-average remaining lease term (years)6.56.5Weighted-average incremental borrowing rate4.3 %4.0 %As of February 1, 2026, the future minimum lease payments under our operating lease liabilities are as follows:(In thousands)Fiscal 2026$325,743 Fiscal 2027300,684 Fiscal 2028257,483 Fiscal 2029216,337 Fiscal 2030178,403 Fiscal 2031 and thereafter465,777 Total lease payments1,744,427 Less: interest(287,522)Total operating lease liabilities1,456,905 Less: current operating lease liabilities(221,356)Total non-current operating lease liabilities$1,235,549 Additionally, we have future payment obligations of $205.9 million relating to executed lease agreements for which the related lease terms had not yet commenced as of February 1, 2026, and, therefore, are not included in the table above.

We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to associates or customers; violation of privacy or security laws; other litigation and legal risk; and reputational risks. These cybersecurity risks and other company risks are monitored and integrated into our enterprise risk management process. As part of this process, appropriate personnel consult with subject matter specialists as necessary to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential mitigations.Our cybersecurity risk management approach includes: (i) an enterprise risk management process, which includes cybersecurity risks and is periodically refreshed; (ii) system vulnerability scanning; (iii) cybersecurity training for employees; (iv) penetration testing, which simulates cyber threats; and (v) third-party risk management for suppliers, vendors, and other partners, which includes risk-based diligence and contractual provisions that allow for periodic auditing. We work to continually improve each of these processes with the goal of ensuring our cybersecurity strategy remains consistent with industry best practices.Our incident response plan coordinates the activities we take to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident. Further, we conduct periodic tabletop exercises to test our cyber incident response plan.As part of our cybersecurity risk management strategy, we periodically engage with assessors, consultants and other third-parties to evaluate and test our systems. We also engage an independent Qualified Security Assessor to review our Payment Card Industry compliance.To date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the company, including our business strategy, results of operations, or financial condition. See “Risks Related to Technology” included as part of our risk factor disclosures in Item 1A of this Annual Report on Form 10-K, which are incorporated herein by reference.

Subsequent Events On February 20, 2026, the U.S. Supreme Court held in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (“IEEPA”) does not authorize a U.S. President to impose tariffs during peacetime national emergencies and that the challenge to the legality of the tariffs imposed under IEEPA was within the exclusive jurisdiction of the U.S. Court of International Trade (“CIT”), thus affirming the prior decision of the CIT in V.O.S. Selections, Inc. v. United States. As a result, on February 20, 2026, the U.S. President issued an executive order stating that the related tariffs were no longer in effect and ending the collection of these tariffs. However, the U.S. President then issued an additional executive order imposing tariffs pursuant to Section 122 of the Trade Act of 1974 for 150 days, effective on February 24, 2026. The Supreme Court's ruling did not address whether importers who paid IEEPA tariffs are entitled to refunds, and that issue remains subject to further litigation before the CIT. We cannot predict whether or when any refunds will be available, or whether the administration will contest refund claims. We are currently assessing the impact of these actions on our operations and Consolidated Financial Statements, including our ability to recover certain tariffs paid.

Earnings Per Share Basic earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding and common stock equivalents outstanding for the period using the treasury stock method. Common stock equivalents consist of shares subject to stock-based awards to the extent their inclusion would be dilutive.The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings per share computations:(In thousands, except per share amounts)Net EarningsWeighted-Average SharesEarnings Per ShareFiscal 2025Basic$1,088,437 121,446 $8.96 Effect of dilutive stock-based awards1,707 Diluted$1,088,437 123,153 $8.84 Fiscal 2024Basic$1,125,251 126,242 $8.91 Effect of dilutive stock-based awards1,799 Diluted$1,125,251 128,041 $8.79 Fiscal 2023Basic$949,762 129,148 $7.35 Effect of dilutive stock-based awards1,395 Diluted$949,762 130,543 $7.28 The effect of anti-dilutive stock-based awards was not material for fiscal 2025, fiscal 2024 and fiscal 2023.