Williams-Sonoma (WSM) Q1 2026 earnings summary

Executive summary

• Q1 net revenues increased 4.2% year-over-year to $1.73 billion, with 3.4% comparable brand growth and all brands posting positive comps, outperforming an industry that declined 3%.

• Operating margin reached 16.8% and diluted EPS was $1.85, up 8.8% year-over-year excluding a prior year freight adjustment.

• Management reiterated full-year and long-term guidance despite macroeconomic and geopolitical uncertainties.

• Operating cash flow was $118.9 million, with $1.0 billion in cash and no debt.

• $165 million was returned to shareholders via dividends and buybacks in Q1.

Financial highlights

• Net revenues: $1.73 billion, up 4.2% year-over-year; retail comps up 6.2%, e-commerce up 2.1%.

• Gross margin: 44.3%, down 360bps year-over-year due to a prior year adjustment; excluding this, gross margin declined 60bps.

• SG&A: $475.1 million (27.5% of revenues), down 130bps year-over-year, with employment and advertising expenses both leveraged.

• Operating income: $291 million, margin 16.8%; net earnings: $231.3 million.

• Merchandise inventories up 10% year-over-year, reflecting a strategic pull forward to mitigate tariff impacts.

Outlook and guidance

• Fiscal 2025 guidance reiterated: comp brand revenue growth flat to +3%, operating margin 17.4%-17.8%.

• Total net revenues expected to range from down 1.5% to up 1.5% due to prior year 53rd week.

• Guidance incorporates incremental costs from existing tariffs but excludes potential future tariff changes.

• Long-term outlook: mid to high single-digit revenue growth, operating margins in mid to high teens.

• Management expects to maintain strong liquidity and compliance with credit covenants for the next 12 months.