Why Williams-Sonoma Stock Gained 11% in October

Share of housewares retailer Williams-Sonoma (NYSE: WSM) jumped 11% in October, according to data provided by S&P Global Market Intelligence. The market has been impressed with its resilience despite inflation, and it's considered a safer alternative to high-flying artificial intelligence (AI) stocks that could be hurt by high interest rates.

Housewares for the affluent

Williams-Sonoma owns several brands of housewares and furniture. It targets the upscale consumer who is less affected by inflation and can afford full-priced products.

Many industry players have been hard hit by the poor real estate environment. The thinking is that more people spend on their home when they move, not if they're staying in place.

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There are a few reasons Williams-Sonoma can withstand the environment. Its eponymous brand is mostly housewares, not the big-ticket items shoppers are waiting to buy for their new home. Its products are geared toward the affluent, who can still afford them, yet they're still lower-priced than large furniture items. That could also be a draw for lower-income consumers looking for small luxuries that can improve their current home without breaking the bank.

Performance has been stellar. In the 2026 fiscal second quarter (ended Aug. 2), sales were up 6.7%, driven almost entirely by comparable sales growth of 6.2%. All of its brands reported year-over-year growth. Adjusted operating margin was 17.3%, down 0.60 percentage points from last year, and adjusted earnings per share were $2.10, up 5%. The company received a tariff refund, but it kept it separate from its operating results; it paid suppliers who had given discounts due to the situation and added $1,000 to employee retirement plans.

Management attributed its success to keeping its full-price strategy, which both builds the brand and keeps margins strong. It also raised full-year guidance after the report.

The market was hesitant about the results, but Williams-Sonoma stock rose after the Federal Reserve raised interest rates in September. That's not the intuitive outcome, and the market is likely thinking that higher interest rates will impact other retailers but not Williams-Sonoma.

The protective dividend

Another reason the market loves the housewares giant at all times, and even more during a challenge, is its dividend. It has raised its dividend for the past 17 years, and it was raised 15% in March. It yields 1.1%, which is historically very low, because the stock has performed so well over the past few years. It's up 47% this year, more than quadruple the S&P 500.

The company still has a large market opportunity in business-to-business activity and global expansion, and it has plenty to offer shareholders.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Williams-Sonoma. The Motley Fool has a disclosure policy.