Williams-Sonoma, Inc. "This Dinner Party Is Still On" (Neutral) Lasser

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Williams-Sonoma, Inc. "This Dinner Party Is Still On" (Neutral) Lasser

the 1Q beat against our prior estimate is being largely offset by slightly lower

expected interest income and higher fuel/transportation costs.

What are the key considerations for WSM's reiterated FY'26 guidance?

The co. reiterated its top-line and margin outlook for this year. We think this was in-line

with buyside expectations, per our conversations heading into the print. Specifically, the

co. maintained its outlook for 2.7% to 6.7% sales growth, including 70bps of non-

comp store growth due to its retail growth activities, and a 2.0% to 6.0% same store

sales range. It still expects EBIT margin to shake out in the range of 17.5% to 18.1%,

with more tariff pressure in 1H, which should moderate thereafter. It also provided

expectations for $25m of interest income and a tax rate of 25.5%. We break down the

key considerations below:

Guidance for 2-4Q comps still embraces a wide range of potential

outcomes; but we think momentum has been solid QTD. With this in mind,

we forecast 2Q SSS of 4.0%. Our sense is the company has had a strong start to

2Q, coming off the broad-based strength it witnessed in 1Q across the various

segments and channels of its business. Notably, we don't think the co. benefitted

significantly from higher tax refunds, but, nor was it extremely hindered by higher

gas prices. As a reminder, WSM's core customer has a household income of $150k

+/year on average. So, our forecast reflects a pretty stable ~8% comp on a 2-yr

stacked basis, and modest deceleration of 80bps on a 1-yr basis.

The co. reiterated its retail store plans. The co. expects its store count to

remain relatively flattish on a Y/Y basis. But, its new store and repositioning