Williams-Sonoma tops estimates with strong margins and revenue growth
Investing.com -- Williams-Sonoma reported stronger-than-expected first-quarter results, driven by broad-based sales growth across all of its brands and continued profitability despite ongoing tariff and macroeconomic pressures.
The company’s revenue for the quarter came in at $1.81 billion versus the consensus estimate of $1.8 billion, while diluted earnings per share rose 4.3% year over year to $1.93, $0.12 better than the analyst estimate of $1.81 per share.
“We continue to outperform on both the top and bottom lines. We are delivering compounding results year-after-year despite the cyclical swings of the housing market and other macroeconomic events. We believe our strong brands, our proven ability to execute our vision, and our relentless focus on customer service will allow us to accomplish our goals in 2026 and beyond,” said Laura Alber, President and Chief Executive Officer at Williams-Somana.
The retailer reaffirmed its fiscal 2026 guidance, projecting annual net revenue growth between 2.7% and 6.7%, with comparable sales expected to rise between 2% and 6%. The company also maintained its forecast for an operating margin between 17.5% and 18.1%.
Management said its outlook assumes elevated oil prices and existing tariff structures will remain in place throughout fiscal 2026, with tariff impacts expected to weigh more heavily in the first half of the year.
Inventory levels climbed 9% year over year to $1.46 billion, including approximately $60 million tied to incremental tariff costs. Despite higher costs, the company maintained a strong liquidity position with $652 million in cash and generated $156 million in operating cash flow during the quarter.
The company’s gross margin declined slightly to 44.0%, pressured by lower merchandise margins and tariff-related costs, though supply chain efficiencies and occupancy leverage partially offset the impact. SG&A expenses increased modestly as employment and general costs rose.
Williams-Sonoma returned $373 million to shareholders through share repurchases and dividends, including $288 million in buybacks and $85 million in dividend payments.