Williams-Sonoma (WSM -0.77%) announced strong first-quarter 2017 results on Wednesday after the market closed. After initially climbing more than 8% on the news, shares of the home-furnishings retailer drifted lower, to fall a modest 1% as the company reaffirmed its full-year guidance.
Let's take a closer look at how Williams-Sonoma kicked off the year, as well as what investors can expect from the company going forward.
Pottery Barn storefront.


Williams-Sonoma results: The raw numbers


Q1 2017

Q1 2016

Year-Over-Year Change


$1.112 billion

$1.098 billion


GAAP net income

$39.6 million

$39.6 million


GAAP earnings per diluted share





What happened with Williams-Sonoma this quarter?

  • On an adjusted (non-GAAP) basis -- which adds perspective by excluding severence-related charges and the tax impact of adopting new accounting rules over the past year -- earnings were $0.51 per share, down from $0.53 per share in the same year-ago period.
  • These results compared favorably to Williams-Sonoma's guidance, which called for revenue of $1.085 billion to $1.120 billion and earnings per share (EPS) of $0.45 to $0.50.
  • E-commerce revenue climbed 0.7% year over year, to $581 million, while retail net revenue rose 1.8%, to $531 million.
  • Comparable-brand revenue increased 0.1% -- versus guidance for comps to be in the range of negative 1% to positive 2% -- including: 
    • a 1.4% decline at Pottery Barn
    • 3.2% growth at Williams Sonoma
    • 6% growth at West Elm
    • a 5.7% decline at Pottery Barn Kids
    • a 14.3% decline at PBTeen
  • Repurchased 764,543 shares for $38 million, or an average cost of $50.16 per share. That left $372 million remaining under Williams-Sonoma's current repurchase authorization.

What management had to say

Williams-Sonoma CEO Laura Alber stated:

In the first quarter, we saw strong sequential improvement in the Pottery Barn brand, demonstrating the effectiveness of the brand initiatives that we are implementing. West Elm, our newer businesses (Rejuvenation and Mark and Graham), and our company-owned global operations delivered another quarter of double-digit growth, and Williams Sonoma started the year off strongly. We also continued to realize positive results from our supply chain initiatives, as we drive continuous improvements across the organization to deliver increased efficiencies and a superior customer experience.

Looking forward

For the fiscal second quarter, Williams-Sonoma anticipates revenue of $1.195 billion to $1.23 billion, assuming comparable-brand revenue growth of 2% to 5%. That should result in EPS in the range of $0.55 to $0.61. By comparison, investors were expecting earnings near the high end of that range on revenue of just $1.19 billion.

For the full fiscal year of 2017, Williams-Sonoma reiterated its previous guidance for revenue of $5.165 billion to $5.265 billion, which still assumes comparable-brand revenue growth of 1% to 3%. Williams-Sonoma also continues to expect adjusted full-year earnings of $3.45 to $3.65. 

In the end, apart from the improvement at Pottery Barn, where comps declined 4.1% last quarter, there were no big surprises from Williams-Sonoma in this report -- and that's fair enough considering the company continues to operate in a relatively difficult retail environment. As long as Williams-Sonoma keeps achieving modest top-line growth, while making progress on its supply chain and operational efficiency initiatives, I think investors should be pleased with where it stands.