Williams-Sonoma(WSM) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2025, the company reported net revenues of $1.73 billion, achieving a positive comp of 3.4$1.85, reflecting an earnings growth of 8.8% [6][42] - Gross margin was 44.3%, which was 360 basis points lower than the previous year when accounting for a $49 million out of period adjustment [39] Business Line Data and Key Metrics Changes - Pottery Barn achieved a positive comp of 2$250 million and $275 million in capital expenditures for fiscal year 2025, prioritizing e-commerce and supply chain efficiency [50] - The quarterly dividend was increased by 16% year-over-year, marking the sixteenth consecutive year of increased payouts [51] Q&A Session Summary Question: Merchandise margins decline - Management clarified that merchandise margins were impacted by higher input costs but offset by supply chain efficiencies and occupancy leverage [58][60] Question: Pricing strategy regarding tariffs - The company emphasized a reduced promotional strategy and a focus on value beyond just price, leveraging direct vendor relationships for better pricing [64][66] Question: Inventory position and its impact on sales - The inventory was strategically increased by 10% to mitigate tariff impacts, with a focus on being in stock to drive sales [86][90] Question: Demand trends throughout the quarter - Management noted strong results across all brands, with furniture achieving positive comps for the first time in nine quarters [77][105] Question: Reducing exposure to China - The company has proactively reduced sourcing from China and is flexible in adjusting sourcing strategies based on the trade environment [81] Question: Tariff mitigation costs - Management explained that tariff mitigation costs were short-term expenses, with expectations of future benefits from proactive inventory management [99][101]