Williams-Sonoma (WSM) Q1 2027 earnings summary

Executive summary

• Q1 2026 delivered 4.8% comparable brand revenue growth, with all major brands posting positive comps and net revenues rising to $1.81 billion.

• Operating margin reached 16.2%, and diluted EPS increased 4.3% year-over-year to $1.93, reflecting strong performance across retail and DTC channels.

• Growth was broad-based, driven by B2B, emerging brands, and a successful product pipeline.

• Customer experience enhancements included expanded AI, personalization, and supply chain efficiencies.

• Leadership changes included the promotion of Jennifer Kellor to President of Pottery Barn and the departure of Monica Bhargava.

Financial highlights

• Net revenues for Q1 2026 were $1.81 billion, with both furniture and non-furniture categories posting positive comps.

• Gross margin was 44.0%, down 30 bps year-over-year, mainly due to higher tariffs and fuel costs, partially offset by supply chain efficiencies.

• Operating income was $292 million; SG&A was 27.8% of revenues, up 30 bps year-over-year.

• Merchandise inventories stood at $1.46 billion, up 9% year-over-year, including $60 million in embedded tariff costs.

• Cash and equivalents at quarter-end were $652 million, with $156 million in operating cash flow.

Outlook and guidance

• FY2026 guidance reiterated: comparable brand revenue growth of 2%-6%, operating margin of 17.5%-18.1%.

• Guidance assumes continued macro volatility, no material housing recovery, and current tariffs remain in place.

• Full-year interest income expected at $25 million; effective tax rate at 25.5%.

• Capital expenditures for FY2026 expected at $275 million, focused on e-commerce, retail, and supply chain.

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