Williams-Sonoma 2026 Q1 Earnings Misses Targets with Net Income Down 11.2%

Williams-Sonoma (WSM) reported its fiscal 2026 Q1 earnings on May 28th, 2025. The company's revenue fell short of expectations, with a modest increase of 4.2% to $1.73 billion, compared to $1.66 billion in 2025 Q1. Despite maintaining its fiscal 2025 guidance, Williams-Sonoma anticipates annual net revenues fluctuating between a decline of 1.5% to an increase of 1.5%. The retailer remains confident in its ability to navigate economic volatility, underscoring its commitment to product innovation and customer service. Analysts maintain a "Hold" status for the stock, reflecting cautious industry sentiment.

Revenue
Williams-Sonoma's total revenue grew by 4.2% to reach $1.73 billion in the first quarter of 2026, up from $1.66 billion in the same period of 2025. Pottery Barn led the segments with revenue of $695.09 million, followed by West Elm, contributing $437.08 million. The Williams Sonoma brand generated $257.49 million, while Pottery Barn Kids and Teen added $229.72 million. Other segments collectively brought in $110.73 million.

Earnings/Net Income
The company's EPS declined by 7.4% to $1.88 in the first quarter of 2026, compared to $2.03 in the previous year. Net income also saw a reduction, falling by 11.2% to $231.26 million from $260.42 million in 2025 Q1. The EPS performance was less favorable compared to last year.

Price Action
Williams-Sonoma's stock price decreased by 1.52% during the latest trading day, fell 4.64% over the most recent full trading week, and increased 8.81% month-to-date.

Post-Earnings Price Action Review
The strategy of acquiring Williams-Sonoma shares when revenue figures fall below expectations and holding them for 30 days has historically yielded a remarkable return of 252.11%. This return significantly surpasses the benchmark return of 86.09%. While the strategy experienced a maximum drawdown of -56.35%, it maintained a positive Sharpe ratio of 0.60, indicating favorable risk-adjusted returns. With a compound annual growth rate of 28.81% and an excess return of 166.02%, the strategy has proven effective. However, it carries a volatility of 48.14%, suggesting a higher risk tolerance that may not be suitable for all investors.

CEO Commentary
Laura Alber, President and Chief Executive Officer of Williams-Sonoma, highlighted the company's strong performance in Q1 2025, noting a 3.4% increase in comparable brand revenue and an operating margin of 16.8%. She emphasized the positive impact of innovation and customer response across all brands despite macroeconomic challenges. Alber expressed optimism about the company's growth trajectory, focusing on enhancing customer service, product innovation, strategic collaborations, and a robust B2B segment to navigate economic volatility.

Guidance
Williams-Sonoma reiterated its fiscal 2025 guidance, projecting annual net revenues to range from a decline of 1.5% to an increase of 1.5%, with comparable brand revenue expected to be flat to up 3.0%. The operating margin is anticipated to be between 17.4% and 17.8%. Capital expenditures are forecasted at $250 million to $275 million, focusing on e-commerce and supply chain efficiency, while maintaining a quarterly dividend of $0.66 per share, reflecting a 16% year-over-year increase.

Additional News
Williams-Sonoma recently expanded its brand portfolio with the acquisition of Dormify's intellectual property, aiming to relaunch the college-focused brand in 2026. This strategic move aligns with the company's growth and diversification goals, capturing market share across key demographic segments. Additionally, Williams-Sonoma maintains a strong liquidity position, with $1 billion in cash and $119 million in operating cash flow. The company returned $165 million to shareholders through stock buybacks and dividends, with $1.1 billion remaining in repurchase authorization. The acquisition reflects Williams-Sonoma's commitment to long-term growth, leveraging its design capabilities, digital expertise, and customer service excellence to enhance Dormify's brand reach.