Williams Sonoma: 1Q26 Immediate Call Postmortem
The answer to Sigman’s question probably sums everything up: Seeing broad based comp levers and very excited to see it across channels. Thrilled to see furniture recovering. Good Easter. Better customer experience with in-stocks. Not just price.
Guidance seems largely de-risked. Not raising guidance as early in year and lot of uncertainty. Not building in a housing recovery and assuming all the major headwinds of today continue. Tariffs stay the same for entire year. Current fuel prices are embedded in guidance for freight.
Supply chain improvements (+50 basis points) part of the reason why they have been able to partially offset the impact of tariffs and fuel. Think this has been a surprise to most investors but we outlined how they still had significant opportunities in the supply chain in our October 6 note (There’s A Light At The End Of This Tunnel) to subs.
West Elm is on a roll. Drivers of the business are consistent. Highlight for the quarter was retail as customers who came into store saw more newness and better in-stocks. Brand is executing well and feel good about opportunity to build on this progress through 2026 and beyond. Pierce And Ward continues to do well. Still areas where underdeveloped versus Pottery Barn but brand has a lot of growth in it that they are “going to go get it”.
“If you are going to be in Napa this weekend, please give me a call” – Laura Alber. Laura I will fly out there just to see you, what’s your number?
B2B growth up 13.7% with trade up 9% and contract up 22%. Largest quarter ever for B2B and they are not competing on price, rather leading with product and service. Projects include the Delano Miami, Capital One Arena, Live Nation Philadelphia, and apparently, they are going to do the US Open (can’t wait to see what that is). Rejuvenation had strong double-digit comps and also saw strong engagement from the trade.
Green Row continued to deliver growth. We recently visited the only store and will put that channel check out to our subs relatively soon.
Boom – Laura always loves to make sure we are aware how they run their business different than Gary Friedman from Restoration Hardware: Business is not promotional led and they are “very” well positioned versus the competition.
Samir came on call to talk about AI. They are accelerating AI. 1) culinary assistant is getting smarter and now she is helping to sell. 2) Room planner is another area with a very complex design experience, 3) massive efficiencies in the supply chain (cost of transportation, delivery process, etc), 4) training and workflow tools.
Horvers wins best comment with “feel like I’m at a Pink Floyd concert right now”. Was that Laura laughing in the background when the weird echo for the call started? It was almost impossible to listen to the call afterwards.
*These are our unabridged quick thoughts and notes from the call. We get them out as soon as possible after the call ends. Management has given some topics to dig deeper into and will circle back afterwards with much more in depth work on what was mentioned. You can find that work (and more on Williams Sonoma and other retail/consumer research) at our website here: M Squared Capital
Originally posted on X and Substack.