Williams-Sonoma stock dropped on Wednesday even as the company posted better-than-expected second-quarter earnings and raised its full-year outlook.

Shares slipped 0.8% to $232.87. Coming into Wednesday trading, the stock was up 25.20% this year, though it had fallen 11.19% from its all-time closing high of $251.78, on August 7, according to Dow Jones Market Data.

The retailer reported adjusted earnings of $2.10 a share in its fiscal second quarter, up from $2.00 a year ago and above Wall Street's expectations of $2.08. Revenue increased to $1.96 billion, up from $1.84 billion a year ago and narrowly beating analyst estimates of $1.93 billion.

The company also raised its guidance for the fiscal year ending Jan. 31, 2027, targeting a 4.7% to 7.2% increase in revenue. The new range is up from 2.7% to 6.7% previously.

While earnings and full-year outlook were positive, one figure troubled at least one Wall Street analyst. Williams-Sonoma attributed a tighter operating margin of 17.3% to tariff headwinds this quarter, which hit results harder than analysts had anticipated.

While William-Sonoma's results were "impressive," the stock could face near-term pressure since investors raised a high bar for this quarter, according to TD Cowen analyst Max Rakhlenko. He noted that tariffs were a "greater than expected drag," as margins declined 230 basis points (or 2.3%).

However, management said it expects tariff pressures to ease in the current quarter.

For the second half of the year, Wall Street might need a bit more proof of how profit margins and costs play out before they are willing to bid the stock price up even further, Rakhlenko said. He nonetheless rates Williams-Sonoma at Buy with a $280 price target.