Dive Brief:
- Williams-Sonoma is not incorporating potential tariff refunds into its plans for 2026 even as U.S. Customs and Border Protection continues developing its system to deliver returns for now-defunct Trump administration levies.
- The home goods retailer also set its fiscal guidance for 2026 based on the assumption that all tariff rates currently in effect will remain or be replaced by similar levies, CFO Jeff Howie said on a March 20 earnings call.
- “It's important to recognize that tariff policy has been volatile and subject to multiple revisions,” Howie said. “Given the ongoing uncertainty, it's impossible to say where tariffs will ultimately land and difficult to determine what impact they will have on our business.”
Dive Insight:
Williams-Sonoma isn’t betting on any type of tariff reprieve as it molds its strategy for the rest of the year, including the possibility of refunds for tariffs the Supreme Court invalidated earlier this year.
In the wake of the high court order, U.S. Customs and Border Protection has been developing a dedicated process to return funds to importers who paid the duties. In its most recent court-ordered development update, the agency said the components of the system were between 60% and 85% finished.
As CBP builds its new refund capabilities, a long list of companies has filed lawsuits demanding refunds from the Trump administration in recent weeks, including Costco, Abercrombie and Fitch Trading Co., and Lululemon. Costco said it planned to lower prices and provide “better values” if and when it recovers the charges.
For Williams-Sonoma, while it is not holding its breath for potential tariff refunds, it is planning for tariff pressures to continue at roughly the same levels as they currently stand. This includes the impact of Section 301 tariffs and sectoral levies on goods such as steel and aluminum as well as a temporary global tariff.
In February, after the Supreme Court wiped out tariffs installed under the International Emergency Economic Powers Act, President Donald Trump installed the temporary 10% global tariff using Section 122 of the Trade Act of 1974. He later said he would increase the rate to 15%, but that hike has yet to come to fruition. Despite this, Williams-Sonoma used the 15% level when constructing its guidance.
“While the Section 122 tariffs are currently set to expire in July, our guidance assumes they will be replaced with tariffs at a similar rate,” Howie said.
Regardless of the future shape of the Trump administration’s tariff regime, President and CEO Laura Alber said Williams-Sonoma will continue employing mitigation tactics that it says helped it dampen the impact of tariffs in 2025. These include negotiating with vendors, re-sourcing, implementing supply chain efficiencies and cost improvements, and adjusting prices.
“Taking a step back, I think what we would observe is, in '25 we demonstrated we could navigate the tariff uncertainty and deliver consistently strong earnings, and we're guiding that we believe we can do so again in fiscal year '26,” Howie said.
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