Williams-Sonoma CEO says next quarter will see a bigger tariff impact

Williams-Sonoma CEO Laura Alber gave CNBC’s Jim Cramer an update on how tariffs are affecting business, explaining why her company’s next quarter will see more of an impact.

The home goods and furniture outfit beat the estimates when it reported on Wednesday. But management indicated tariffs are taking longer than anticipated to hit gross margins in part because the new duties’ efficacy dates were delayed. Shares closed down 3.39%.

“In terms of where the tariffs are going, I think we’ll get stability at the end of the year, I hope, and more predictability, and I don’t imagine them going up. That is my best guess,” Alber told Cramer. “But they are going to affect us more in Q4 than they did in Q3 because a bigger percentage of our inventory is now tariffed as the cost rolls through the balance sheet.”

Alber said there is no “immunity” to tariffs, but she described how Williams-Sonoma is working to mitigate losses, including renegotiating deals with vendors and cutting its reliance on certain countries like China. The company — which owns retailing brands including its namesake, West Elm and Pottery Barn — is also trying to boost domestic manufacturing, Alper continued. She added that the majority of Williams-Sonoma’s upholstered furniture is already made in Mississippi and North Carolina.

Williams-Sonoma is also “carefully increasing prices,” Alper said, explaining that the outfit is reviewing areas where it is “underpriced.” She added that her company has substantially reduced promotions and plans to continue to do so in order to “improve the regular price selling and reduce the promotional percent.”

“Once the tariffs are in the base, which is soon, we’re done with this,” she said. “And you move on, and you build from there. So it is a more short term situation than a long term.”