Williams-Sonoma, Inc. (WSM)

With a retail and direct-to-consumer presence, Williams-Sonoma is a player in the nearly $300 billion domestic home category and $450 billion international home market, focused on expanding its exposure in the B2B ($80 billion total addressable market), marketplace, and franchise areas. Namesake Williams-Sonoma (153 stores) offers high-end cooking essentials, while Pottery Barn (181) provides casual home accessories. West Elm (117) is an emerging concept for young professionals, and Rejuvenation (13) offers lighting and house parts. Brand extensions include Pottery Barn Kids and Pottery Barn Teen (43) as well as Mark & Graham and GreenRow. Williams-Sonoma also has a business-to-business team that supports projects that range from residential to large-scale commercial.

Despite bursts of outperformance, small- and mid-cap stocks (SMID) have underperformed large-caps year to date -- as they have over the past five years. But they are edging closer to their large-cap rivals with a year-to-date return of 10%, just two percentage points below the S&P 500. As well, SMIDs may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by trade and tariff issues, fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps, with the P/E ratio on the Russell 2000 SmallCap Index at 17, compared to a trailing P/E of 25 for the S&P 500. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. SMID risks do carry risk, but diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.

The back-to-school season has come and gone -- but in a blink, the end-of-year holidays will begin. We expect very happy holidays this year for retailers and forecast that holiday retail sales will rise about 4.1% in 2026. That would top $1 trillion for a second straight year, as employed consumers are likely to spend in 2026. As background, the average holiday-sales gain since 2002 has been 4% including inflation, with a 4.1% increase in 2025 and a high 12.5% increase in the pandemic-recovery year of 2021. The only decline, of 4.5%, was during the Great Recession in 2008. The following list is of Argus BUY-rated companies that are leaders in retail (with their designation in Argus model portfolios if applicable).

Williams-Sonoma Inc. is a leading specialty retailer of products for the home. The San Francisco-based company operates 506 retail stores under the Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, Rejuvenation, and Green Row nameplates, with approximately 20 stores in Canada, 19 stores in Australia, and two in the U.K. WSM has franchises in the Middle East, the Philippines, Mexico, South Korea, and India. The company operates e-commerce websites and direct-mail catalogs that allow shoppers to purchase products from these brands, plus Mark & Graham and Dormify. The company's outlet stores are included in the store count. In fiscal 2026, e-commerce revenues accounted for approximately 65% of the company's $7.8 billion in sales. The total selling area was about 3.8 million square feet. The average store was 11,400 square feet, with the flagship brand averaging 6900. The company's fiscal year ends on the Sunday closest to January 31. The current fiscal year ends on January 31, 2027. As such, we call it FY27. This is a 52-week fiscal year for WSM, with a normal comparison against FY26.