Q1 2026 Williams Sonoma Inc Earnings Call

May 21, 2026

Speaker #1: All participants are in a listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks. I would now like to turn the call over to Jeremy Brooks, Chief Accounting Officer and Head of Investor Relations.

Speaker #1: ahead.

Speaker #2: Good morning, and thank you for joining our first quarter earnings call. Before we get started, I'd like to remind you that during this call we will make forward-looking statements.

Speaker #2: With respect to future events and financial performance, including our annual guidance for fiscal 26 and our long-term outlook, we believe these statements reflect our best estimates.

Speaker #2: However, we cannot make any assurances these statements will materialize. An actual result may differ significantly from our expectations. The company undertakes no obligation to publicly update or revise any of these statements to reflect events or circumstances that may arise after today's call.

Speaker #2: Additionally, we will refer to certain non-GAAP financial measures. These measures should not be considered replacements for and should be read together with our GAAP results.

Speaker #1: 26 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks.

Speaker #2: This call should also be considered in conjunction with our filings with the SEC. Finally, a replay of the call will be available on our investor relations website.

Speaker #2: Now, I'd like to turn the call over to Laura Alber, our President and Chief Executive Officer.

Speaker #1: I would now like to turn the call over to Jeremy Brooks, Chief Accounting Officer and Head of Investor Relations. Please go ahead.

Speaker #3: Thanks, Jeremy. Good morning, everyone, and thank you for joining the call. We are off to a strong start in fiscal 2026. In Q1, our comp came in at 4.8%, reflecting strong execution across our portfolio of brands, our channels, and our teams.

Speaker #2: Good morning, and thank you for joining our first quarter earnings call. Before we get started, I'd like to remind you that during this call we will make forward-looking statements.

Speaker #2: With respect to future events and financial performance, including our annual guidance for fiscal 26 and our long-term outlook. We believe these statements reflect our best estimates, however we cannot make any assurances these statements will materialize.

Speaker #3: Thank you to everyone at the company for your hard work and dedication. We are pleased that our growth initiatives are working, and every brand delivered a positive comp in Q1.

Speaker #3: We also saw strength in both our retail and DTC channels, with improvements across the customer journey. Furniture and non-furniture trends were strong, and collaborations, newness, and innovation all performed well.

Speaker #2: An actual result may differ significantly from our expectations. Companies undertake no obligation. To publicly update or revise any of these statements to reflect fiscal circumstances that may arise after today's call.

Speaker #3: From a profitability standpoint, we delivered an operating margin of 16.2% ahead of expectations. We delivered this operating margin even while absorbing tariffs and higher fuel costs.

Speaker #2: Additionally, we will reproduce certain non-GAAP financial figures.

Speaker #3: Earnings per share was $1.93, up from $1.85 last year. We continue to outperform on both top and bottom lines in this uncertain environment, which includes but is certainly not limited to war, trade policy, including tariffs, and interest rates.

Speaker #3: We are delivering front-counting results year after year, despite cyclical swings of the housing market and other macroeconomic events. We believe our strong brands, our proven ability to execute our vision, and our relentless focus on customer service will allow us to accomplish our goals in 2026 and beyond.

Speaker #3: First, on growth. In Q1, our 4.8 comp reflected our company-wide focus on growing our top line. Our quarter was driven by strong performance and all of our brands, growth from our B2B division, and continued outperformance of our smaller but quickly growing and profitable emerging brands.

Speaker #3: Also, the product pipeline that we laid out this year is working. We are committed to delivering great customer service, and we continue to put the customer at the center of everything we do.

Speaker #3: We extended AI further into the customer journey. We scaled personalization across our portfolio of brands. And we continue to optimize the shopping and checkout experience.

Speaker #3: We also made progress using automation to improve customer care and strengthen product discovery while continuing to advance our design tools. And across operations, we delivered enhancements that support supply chain efficiency, and enabled important brand initiatives this quarter.

Speaker #3: And we continue to make progress in supply chain performance with our focus on timely delivery and low returns and replacements. These improvements helped us offset higher year-on-year tariffs and higher fuel costs.

Speaker #3: We stayed lean and efficient throughout the organization and managed variable costs. And you can see those results in the P&L we shared with you today.

Speaker #3: Additionally, in the quarter, we returned $373 million to our investors through share buybacks and dividends. Our results demonstrate our discipline and commitment to delivering quality earnings and returning free cash flow to our stockholders.

Speaker #3: Now let's talk about guidance. We are reiterating the annual guidance we provided on our Q4 call. We are confident about our business, both because of our Q1 results and our strategies for the balance of 2026.

Speaker #3: However, despite our gain in the first quarter, we are not raising guidance as it is early in the year and there's a lot of uncertainty in the external environment.

Speaker #3: We are not building in a meaningful housing recovery, and we are assuming continued volatility across geopolitics, war, fuel prices, trade policy, and tariff and interest rates.

Speaker #3: Of course, we can never plan for extreme outlier events, but what we can do is give you our best estimate for 2026, which at this point reflects comp brand revenue growth of 2.6% with a midpoint of 4, and an operating margin in the range of 17.5 to 18.1% with a midpoint of 17.8%.

Laura Alber: With a focus on time and delivery and low returns and replacements. These improvements helped us offset higher year-on-year tariffs and higher fuel costs. We stayed lean and efficient throughout the organization and managed variable costs. You can see those results in the P&L we share with you today. Additionally, in the quarter, we returned $373 million to our investors through share buybacks and dividends. Our results demonstrate our discipline and commitment to delivering quality earnings and returning free cash flow to our stockholders. Now let's talk about guidance. We are reiterating the annual guidance we provided on our Q4 call. We are confident about our business both because of our Q1 results and our strategies for the balance of 2026.

Speaker #1: With a focus on timely delivery and low returns and replacements. These improvements helped us offset higher year-on-year tariffs and higher fuel costs. We stayed lean and efficient throughout the organization and managed variable costs.

Speaker #1: And you can see those results in the P&L we share with you today. Additionally, in the quarter, we returned $373 million to our investors through share buybacks and dividends.

Speaker #3: Now let's review our brands. Product we're delivering a positive one comp in Q1, and we were pleased to see the brands' results improve. We saw progress in key categories for product brands across furniture, lighting, and textiles.

Laura Alber: Additionally, in the quarter, we returned $373 million to our investors through share buybacks and dividends. Our results demonstrate our discipline and commitment to delivering quality earnings and returning free cash flow to our stockholders. Now let's talk about guidance. We are reiterating the annual guidance we provided on our Q4 call. We are confident about our business both because of our Q1 results and our strategies for the balance of 2026.

Speaker #1: Our results demonstrate our discipline and commitment to delivering quality earnings and returning free cash flow to our stockholders. Now let's talk about guidance. We are reiterating the annual guidance we provided on our Q4 call.

Speaker #3: Customers responded to both our spring and summer assortments. The quarter also reflected the actions we have been taking in marketing. We are focused on product brands' hairs aesthetic, both in marketing and product design.

Speaker #1: We are confident about our business, both because of our Q1 results and our strategies for the balance of 2026. However, despite our beat in the first quarter, we are not raising guidance as it is early in the year and there's a lot of uncertainty in the external environment.

Speaker #3: And we are improving value across key categories. At the product brand channel level, DTC improved as we focused on the digital experience. Retail remained strong as customers continued to respond positively to our stores, design services, and the in-person shopping experience, including take it home today.

Laura Alber: Despite our beat in Q1, we are not raising guidance as it is early in the year, and there's a lot of uncertainty in the external environment. We are not building in on the meaningful housing recovery, and we are assuming continued volatility across geopolitics, war, fuel prices, trade policy, and tariffs and interest rates. Of course, we can never plan for extreme outlier events, but what we can do is give you our best estimate for 2026, which at this point reflects comp brand revenue growth of 2% to 6% with a midpoint of 4, and an operating margin in the range of 17.5% to 18.1% with a midpoint of 17.8%. Now let's review our brands. Pottery Barn delivered a +1 comp in Q1, and we were pleased to see the brand's results improve.

Speaker #1: We are not building in a meaningful housing recovery, and we are assuming continued volatility across geopolitics, war, fuel prices, trade policy, and tariff and interest rates.

Speaker #3: We remain focused on executing the product growth strategy quarter by quarter and are confident about the brand's trajectory in 2026 and the average. Before I move on, I also want to share an update on leadership at Product Brand.

Speaker #1: Of course, we can never plan for extreme outlier events, but what we can do is give you our best estimate for 2026, which at this point reflects comprehensive revenue growth of 2% to 6%, with a midpoint of 4%, and an operating margin in the range of 17.5% to 18.1%, with a midpoint of 17.8%.

Laura Alber: Of course, we can never plan for extreme outlier events, but what we can do is give you our best estimate for 2026, which at this point reflects comp brand revenue growth of 2% to 6% with a midpoint of 4, and an operating margin in the range of 17.5% to 18.1% with a midpoint of 17.8%. Now let's review our brands. Pottery Barn delivered a +1 comp in Q1, and we were pleased to see the brand's results improve.

Speaker #3: This morning, we announced a promotion of Jennifer Keller to the role of President of Product Brand. Over the course of her 29-year tenure, Jen has demonstrated an exceptional track record of driving growth and incubating brands.

Speaker #3: She brings deep expertise across merchandising, design, e-commerce, and marketing, and has helped drive significant growth for our company. We also have strong bench of panelists in our Product Brand Children's Businesses, and that team will continue to lead the brands and will report to me.

Speaker #1: Now let's review our brands. Potterburn delivered a positive one comp in Q1, and we were pleased to see the brand's results improve. We saw progress in key categories for Potterburn, across furniture, lighting, and textiles.

Laura Alber: We saw progress in key categories for Pottery Barn across furniture, lighting, and textiles. Customers responded to both our spring and summer assortments. The quarter also reflected the actions we have been taking in marketing. We are focused on Pottery Barn's heritage aesthetic, both in marketing and product design, and we are improving value across key categories. At the Pottery Barn channel level, DTC improved as we focused on the digital experience. Retail remained strong as customers continued to respond positively to our stores, design services, and the in-person shopping experience, including Take It Home Today. We remain focused on executing the Pottery Barn strategy quarter by quarter and are confident about the brand's trajectory in 2026 and beyond. Before I move on, I also want to share an update on leadership at Pottery Barn.

Speaker #1: Customers responded to both our spring and summer assortments. The quarter also reflected the actions we have been taking in marketing. We are focused on Potterburn's heritage aesthetic, both in marketing and product design.

Speaker #3: And finally, today we announced former Product Brand President Monica Bargabas' departure from the company. I want to thank Monica for her significant accomplishment throughout her 26 years with our company.

Speaker #1: And we are improving value across key categories. At the Potterburn channel level, DTC improved as we focused on the digital experience. Retail remained strong as customers continued to respond positively to our stores' design services and the in-person shopping experience, including take-it-home today.

Speaker #3: Monica's visionary leadership and creative talent have made a lasting impact across our brands and we are grateful for her many contributions. Now let's turn to our Product Brand Children's Business, which delivered yet another strong quarter, running a positive 4.5 comp in Q1.

Laura Alber: At the Pottery Barn channel level, DTC improved as we focused on the digital experience. Retail remained strong as customers continued to respond positively to our stores, design services, and the in-person shopping experience, including Take It Home Today. We remain focused on executing the Pottery Barn strategy quarter by quarter and are confident about the brand's trajectory in 2026 and beyond. Before I move on, I also want to share an update on leadership at Pottery Barn.

Speaker #1: We remain focused on executing the Potterburn strategy quarter by quarter and are confident about the brand's trajectory in 2026 and beyond. Before I move on, I also want to share an update on leadership at Potterburn.

Speaker #3: Growth is driven by product innovation with strength in both furniture and non-furniture. Collaborations and licensing remain key drivers led by Love Chef Fancy, Chris Love's Julia, and partners, to keep the assortment fresh and bring in new customers.

Speaker #1: This morning, we announced a promotion of Jennifer Keller to the role of President of Potterburn. Over the course of her 29-year tenure, Jen has demonstrated an exceptional track record of driving growth and incubating brands.

Speaker #3: We also saw strong momentum in Baby, supported by high-quality furniture and expanded gifting assortment, and improvements to the registry experience, both in stores and online.

Laura Alber: This morning, we announced the promotion of Jennifer Keller to the role of President of Pottery Barn. Over the course of her 29-year tenure, Jen has demonstrated an exceptional track record of driving growth and incubating brands. She brings deep expertise across merchandising, design, e-commerce, and marketing, and has helped drive significant growth for our company. We also have a strong bench of talent in our Pottery Barn Children's businesses, and that team will continue to lead the brands and will report to me. Finally, today we announced former Pottery Barn President, Monica Bhargava's departure from the company. I want to thank Monica for her significant accomplishments throughout her 26 years with our company. Monica's visionary leadership and creative talent have made a lasting impact across our brands, and we are grateful for her many contributions.

Speaker #3: And in Dorm, we are entering the season well positioned with complete solutions that meet customers' needs and preferences. In the quarter, we also launched Dormify as our 10th brand, which expands our reach in dorm and small space living with functional, style-driven solutions for the next generation of customers.

Speaker #1: She brings deep expertise across merchandising, design, e-commerce, and marketing, and has helped drive significant growth for our company. We also have a strong bench of talent in our Potterburn children's businesses, and that team will continue to lead the brands and will report to me.

Laura Alber: We also have a strong bench of talent in our Pottery Barn Children's businesses, and that team will continue to lead the brands and will report to me. Finally, today we announced former Pottery Barn President, Monica Bhargava's departure from the company. I want to thank Monica for her significant accomplishments throughout her 26 years with our company. Monica's visionary leadership and creative talent have made a lasting impact across our brands, and we are grateful for her many contributions.

Speaker #3: As we think about the future, we see meaningful growth ahead in our children's business. Our pipeline of new product introductions and continued collaboration growth is strong, and we are excited about the momentum as we move through the year.

Speaker #1: And finally, today we announced former Potterburn President Monica Bargavas' departure from the company. I want to thank Monica for her significant accomplishments throughout her 26 years with our company.

Speaker #3: Now let's review West Dorm. West Dorm ran a positive 8.5 comp in Q1, and I'm proud to say again that West Dorm is on a roll.

Speaker #1: Monica's visionary leadership and creative talent have made a lasting impact across our brands and we are grateful for her many contributions. Now let's turn to our Potterburn children's business, which delivered yet another strong quarter, running a positive 4.5 comp in Q1.

Speaker #3: The drivers at West Dorm are consistent and the results are compounding. West Dorm continued to make improvements across product, brand key, and channel excellence.

Laura Alber: Now let's turn to our Pottery Barn Children's business, which delivered yet another strong quarter, running a +4.5% comp in Q1. Growth was driven by product innovation with strength in both furniture and non-furniture. Collaborations and licensing remained key drivers led by LoveShackFancy, Chris Loves Julia, and partners to keep the assortment fresh and bring in new customers. We also saw strong momentum in baby, supported by high-quality furniture, an expanded gifting assortment, and improvements to the registry experience both in stores and online. In Dorm, we are entering the season well-positioned with complete solutions that meet customers' needs and preferences. In the quarter, we also launched Dormify as our 10th brand, which expands our reach in dorm and small space living with functional, style-driven solutions for the next generation of customers.

Speaker #3: New introductions in both furniture and non-furniture drove growth in both spring and summer newness performed particularly well. Retail in West Dorm was a highlight in Q1.

Speaker #1: Growth is driven by product innovation with strength in both furniture and non-furniture. Collaborations and licensing remain key drivers led by Loveshack Fancy, Chris Loves Julia, and partners that keep the assortment fresh and bring in new customers.

Speaker #3: Customers who came into our stores and saw more newness and better in-stock availability and the strength in the brand gives us confidence to return store count growth with five West Dorm openings planned in 2026.

Speaker #1: We also saw strong momentum in baby supported by high-quality furniture, an expanded gifting assortment, and improvements to the registry experience, both in stores and online.

Laura Alber: We also saw strong momentum in baby, supported by high-quality furniture, an expanded gifting assortment, and improvements to the registry experience both in stores and online. In Dorm, we are entering the season well-positioned with complete solutions that meet customers' needs and preferences. In the quarter, we also launched Dormify as our 10th brand, which expands our reach in dorm and small space living with functional, style-driven solutions for the next generation of customers.

Speaker #3: Collaborations also remain a key pillar of the growth strategy at West Dorm. Me and the Chamberlain selection was a great example. It brought new energy to the brand and connected with a younger customer.

Speaker #1: And in dorm, we are entering the season well positioned with complete solutions that meet customers' needs and preferences. In the quarter, we also launched Dormify as our 10th brand, which expands our reach in dorm and small space living with functional, style-driven solutions for the next generation of customers.

Speaker #3: It is another proof point that West Dorm can create brand heat and drive growth through distinctive products and storytelling. Overall, we are thrilled with momentum at West Dorm.

Speaker #1: As we think about the future, we see meaningful growth ahead in our children's business. Our pipeline of new product introductions and continued collaboration growth is strong, and we are excited about the momentum as we move through the year.

Laura Alber: As we think about the future, we see meaningful growth ahead in our Children's business. Our pipeline of new product introductions and continued collaboration growth is strong, and we are excited about the momentum as we move through the year. Now let's review West Elm. West Elm ran a positive 8.5 comp in Q1, and I'm proud to say again that West Elm is on a roll. The drivers at West Elm are consistent, and the results are compounding. West Elm continued to make improvements across product, brand heat, and channel excellence. New introductions in both furniture and non-furniture drove growth, and both spring and summer newness performed particularly well. Retail in West Elm was a highlight in Q1. Customers came into our stores and saw more newness and better in-stock availability.

Speaker #3: The brand is executing well and we feel good about the opportunity to go on this progress as we move through 2026 and beyond. Now let's review the William-Sonoma continues its streak of strong performance with a positive five comp in Q1 on top of a 7.3 comp last year.

Speaker #1: Now let's review West Elm. West Elm ran a positive 8.5% comp in Q1. And I'm proud to say again that West Elm is on a roll.

Speaker #3: As we spoke about on the last earnings call, 2026 marks William-Sonoma's 70th anniversary. In its 70 years old, this brand is not slowing down.

Speaker #1: The drivers at West Elm are consistent, and the results are compounding. West Elm continues to make improvements across product, brand heat, and channel excellence.

Laura Alber: The drivers at West Elm are consistent, and the results are compounding. West Elm continued to make improvements across product, brand heat, and channel excellence. New introductions in both furniture and non-furniture drove growth, and both spring and summer newness performed particularly well. Retail in West Elm was a highlight in Q1. Customers came into our stores and saw more newness and better in-stock availability.

Speaker #1: New introductions in both furniture and non-furniture drove growth in both spring and summer newness, and performed particularly well. Retail in West Elm was a highlight in Q1.

Speaker #3: In fact, it's gaining momentum. The kitchen business continues to accelerate and our pipeline of proprietary in-house design products and market exclusive separate also from the competition.

Speaker #1: Customers who came into our stores saw more newness and better in-stock availability. And the strength in the brand gives us confidence to return to store count growth, with five West Elm openings planned in 2026.

Speaker #3: We also continue to strengthen the brand through collaborations and marketing partnerships. In Q1, we welcomed world-renowned interior designer Kelly Wurstler as a spokesperson for our exclusive rental offering.

Laura Alber: The strength in the brand gives us confidence to return store count growth with 5 West Elm openings planned in 2026. Collaborations also remain a key pillar of the growth strategy at West Elm. The Emma Chamberlain collection was a great example. It brought new energy to the brand and connected with a younger customer. It is another proof point that West Elm can create brand heat and drive growth through distinctive products and storytelling. Overall, we are thrilled with momentum at West Elm. The brand is executing well, and we feel good about the opportunity to build on this progress as we move through 2026 and beyond. Now let's review the Williams-Sonoma brand. Williams-Sonoma continues its streak of strong performance with a +5 comp in Q1 on top of a 7.3 comp last year.

Speaker #1: Collaborations also remain a key pillar of the growth strategy at West Elm. Me and the Chamberlain Collection was a great example. It brought new energy to the brand and connected with a younger customer.

Speaker #3: We also launched the Stanley Gucci pizza oven to reinvent and a food collaboration with Oakfield Grocery. On Napa Valley Culinary Institution and the oldest continuously operating grocery store in California.

Speaker #1: It is another proof point that West Elm can create brand heat and drive growth through distinctive products and storytelling. Overall, we are thrilled with the momentum at West Elm.

Speaker #3: In our William-Sonoma stores, we continue to bring the brand to life through experiences that deepen engagement. In Q1, skills series classes, we made an important driver and we also built momentum in registry through events and concierge appointments.

Speaker #1: The brand is executing well, and we feel good about the opportunity to build on this progress as we move through 2026 and beyond. Now, let's review the Williams-Sonoma brand.

Laura Alber: The brand is executing well, and we feel good about the opportunity to build on this progress as we move through 2026 and beyond. Now let's review the Williams-Sonoma brand. Williams-Sonoma continues its streak of strong performance with a +5 comp in Q1 on top of a 7.3 comp last year.

Speaker #3: We also saw notable momentum in William-Sonoma Home this quarter. Customers responded to newness and innovation in color prints and pattern. And while the business is small, we see opportunity to expand in the underserved high-end furniture and home furnishings market.

Speaker #1: William-Sonoma continues its streak of strong performance with a positive five comp in Q1 on top of a 7.3 comp last year. As we spoke about on the last earnings call, 2026 marks William-Sonoma's 70th anniversary.

Laura Alber: As we spoke about on the last earnings call, 2026 marks Williams-Sonoma's 70th anniversary. At 70 years old, this brand is not slowing down. In fact, it's gaining momentum. The kitchen business continues to accelerate, and our pipeline of proprietary in-house design products and market exclusives separate us from the competition. We also continue to strengthen the brand through collaborations and marketing partnerships. In Q1, we welcomed world-renowned interior designer Kelly Wearstler as a spokesperson for our exclusive Breville offering. We also launched the Stanley Tucci pizza oven from GreenPan, and a food collaboration with Oakville Grocery, a Napa Valley culinary institution, and the oldest continuously operating grocery store in California. In our Williams-Sonoma stores, we continue to bring the brand to life through experiences that deepen engagement. In Q1, skill series classes remained an important driver, and we also built momentum in registry through events and concierge appointments.

Speaker #1: And at 70 years old, this brand is not slowing down. In fact, it's gaining momentum. The kitchen business continues to accelerate and our pipeline of proprietary in-house design products and market exclusive separate us from the competition.

Speaker #3: Looking ahead, we are excited for the summer entertaining season. We have bottle rock this weekend, which is another great example of how we brighten the brand to life through food, community, and experiences that are uniquely William-Sonoma.

Speaker #3: And if you're going to be in Napa this weekend, please give me a call. Now I'd like to update you on B2B. B2B started two years strong with another record-breaking quarter, delivering growth of 13.7%.

Speaker #1: We also continue to strengthen the brand through collaborations and marketing partnerships. In Q1, we welcomed world-renowned interior designer Kelly Wurstler as a spokesperson for our exclusive Breville offering.

Speaker #1: We also launched the Stanley Sushi Pizza Oven from Green Pan. And a food collaboration with Oakfield Grocery. A Napa Valley culinary institution and the oldest continuously operating grocery store in California.

Laura Alber: We also launched the Stanley Tucci pizza oven from GreenPan, and a food collaboration with Oakville Grocery, a Napa Valley culinary institution, and the oldest continuously operating grocery store in California. In our Williams-Sonoma stores, we continue to bring the brand to life through experiences that deepen engagement. In Q1, skill series classes remained an important driver, and we also built momentum in registry through events and concierge appointments.

Speaker #3: We saw the strength across B2B with continued momentum in both trade, which grew 9%, in contracts, which grew 22%. Our B2B team continues to strengthen our position as a preferred partner.

Speaker #1: In our William-Sonoma stores, we continue to bring the brand to life through experiences that deepen engagement. In Q1, skills series classes remained an important driver and we also built momentum in the registry through events and concierge appointments.

Speaker #3: We're winning because of our deep relationships with designers, developers, procurement groups, and brands, and because of designs delivered capabilities are difficult to replicate. We also delivered several marquee projects in the quarter, including hospitality work for Dolano Miami for an adjusted resort and spa, multiple locations with national developers like Ammar and Great Star, and detained momentum in sports and entertainment with Capital One Arena, Live Nation Philadelphia, and upcoming work with the US Open.

Speaker #1: We also saw notable momentum in William-Sonoma Home in the quarter. Customers responded to newness and innovation in color, prints, and pattern. And while the business is small, we see opportunity to expand in the underserved high-end furniture and home furnishings market.

Laura Alber: We also saw notable momentum in Williams-Sonoma Home in the quarter. Customers responded to newness and innovation in color, prints, and patterns. While the business is small, we see opportunity to expand in the underserved high-end furniture and home furnishings market. Looking ahead, we are excited for the summer entertaining season. We have BottleRock this weekend, which is another great example of how we bring the brand to life through food, community, and experiences that are uniquely Williams-Sonoma. If you're going to be in Napa this weekend, please give me a call. Now I'd like to update you on B2B. B2B started the year strong with another record-breaking quarter, delivering growth of 13.7%. We saw the strength across B2B with continued momentum in both trade, which grew 9%, and contracts, which grew 22%. Our B2B team continues to strengthen our position as a preferred partner.

Speaker #3: And to start Q2, the team was recognized as a hospitality design expo winning the best in show award. Overall, we are pleased with the start to the year in B2B, and we remain excited about the pipeline.

Speaker #1: Looking ahead, we are excited for the summer entertaining season. We have Ballrock this weekend, which is another great example of how we bring the brand to life through food, community, and experiences that are uniquely Williams-Sonoma.

Speaker #3: And the opportunity ahead. Now I'd like to update you on our emerging brand. With our proven ability to incubate, scale brands in-house, these concepts represent sizable growth opportunities for us.

Speaker #1: And if you're going to be in Napa this weekend, please give me a call. Now, I'd like to update you on B2B. B2B started the year strong with another record-breaking quarter, delivering growth of 13.7%.

Laura Alber: If you're going to be in Napa this weekend, please give me a call. Now I'd like to update you on B2B. B2B started the year strong with another record-breaking quarter, delivering growth of 13.7%. We saw the strength across B2B with continued momentum in both trade, which grew 9%, and contracts, which grew 22%. Our B2B team continues to strengthen our position as a preferred partner.

Speaker #3: Starting with rejuvenation, which has another strong quarter with double-digit comp growth. Performance was drove by continued momentum in project-led categories including cabinet hardware, bath, lighting, and mirrors.

Speaker #1: We saw strength across B2B, with continued momentum in both trade, which grew 9%, and contract, which grew 22%. Our B2B team continues to strengthen our position as a preferred partner.

Speaker #3: Rejuvenation also continues to see strong engagement from the trade, which reinforces the brand's position with design and renovation customers. And in DTC, growth was supported by continued engagement in our core categories.

Speaker #1: We're winning because of our deep relationships with designers, developers, procurement groups, and brands and because our design to deliver capabilities are difficult to replicate.

Laura Alber: We're winning because of our deep relationships with designers, developers, procurement groups, and brands, and because our design to deliver capabilities are difficult to replicate. We also delivered several marquee projects in the quarter, including hospitality work for Delano Miami Beach, Bernardus Lodge & Spa, multiple locations with national developers like Amaray and Greystar, and continued momentum in sports and entertainment with Capital One Arena, Live Nation Philadelphia, and upcoming work with the US Open. As Q2 started, the team was recognized at the Hospitality Design Expo, winning the Best in Show award. Overall, we are pleased with the start to the year in B2B, and we remain excited about the pipeline and the opportunity ahead. Now I'd like to update you on our emerging brands. With our proven ability to incubate and scale brands in-house, these concepts represent sizable growth opportunities for us.

Speaker #1: We also delivered several marquee projects in the quarter, including hospitality work for Delano Miami, Verna Dust Resort and Spa, multiple locations with national developers like Ammar and Great Star, and continued momentum in sports and entertainment with Capital One Arena, Live Nation Philadelphia, and upcoming work with the US Open.

Speaker #3: Product innovation continued to be a focus in the brand with high-quality design-driven products distinctive details and customizable options that matter in home project categories.

Speaker #3: With only 13 stores and great online growth, we are thrilled with the progress in rejuvenation and we continue to believe in the opportunity for rejuvenation to be our next billion-dollar brand.

Speaker #1: And to start Q2, the team was recognized as a hospitality design expo winning the best in show award. Overall, we are pleased with the start of the year in B2B and we remain excited about the pipeline.

Laura Alber: As Q2 started, the team was recognized at the Hospitality Design Expo, winning the Best in Show award. Overall, we are pleased with the start to the year in B2B, and we remain excited about the pipeline and the opportunity ahead. Now I'd like to update you on our emerging brands. With our proven ability to incubate and scale brands in-house, these concepts represent sizable growth opportunities for us.

Speaker #3: Mark and Graham also have strong Q1 with a double-digit positive comp. The brand continues to build momentum across key categories and it remains a distinctive destination for personalized gifts for life's meaningful moments.

Speaker #1: And the opportunity ahead. Now I'd like to update you on our emerging brands. With our proven ability to incubate and scale brands in-house, these concepts represent sizable growth opportunities for us.

Speaker #3: As we look ahead, we are leaning into major seasonal milestones, like graduation, Father's Day, wedding season, and summer entertaining. And we are doing that with compelling new products and elevating this coastal Port of View.

Speaker #1: Starting with Rejuvenation, which had another strong quarter with double-digit comp growth. Performance was driven by continued momentum in project-led categories, including cabinet hardware, bath, lighting, and mirrors.

Laura Alber: Starting with Rejuvenation, which had another strong quarter with double-digit comp growth. Performance was driven by continued momentum in project led categories, including cabinet hardware, bath, lighting, and mirrors. Rejuvenation also continued to see strong engagement from the trade, which reinforces the brand's position with design and renovation customers. In DTC, growth was supported by continued engagement in our core categories. Product innovation continued to be a focus in the brand with high quality, design driven product, distinctive details, and customizable options that matter in home project categories. With only 13 stores and great online growth, we are thrilled with the progress in Rejuvenation. We continue to believe in the opportunity for Rejuvenation to be our next billion-dollar brand. Mark and Graham also had a strong Q1 with a double-digit positive comp.

Speaker #3: And last, but certainly not least, Green Rock. Green Rock continues to deliver growth in Q1. We opened our first store in March, and it's been great manifestation of the brand.

Speaker #1: Rejuvenation also continued to see strong engagement from the trade which reinforces the brand's position with design and renovation customers. And in DTC, growth was supported by continued engagement in our core categories.

Speaker #3: And since we've last talked, I hope you have had an opportunity to stop by and see the store yourself in Sonoma. Green Rock focuses on sustainable, responsibly crafted vintage-inspired design.

Speaker #1: Product innovation continued to be a focus in the brand with high-quality design-driven products distinctive details and customizable options that matter in home project categories.

Laura Alber: Product innovation continued to be a focus in the brand with high quality, design driven product, distinctive details, and customizable options that matter in home project categories. With only 13 stores and great online growth, we are thrilled with the progress in Rejuvenation. We continue to believe in the opportunity for Rejuvenation to be our next billion-dollar brand. Mark and Graham also had a strong Q1 with a double-digit positive comp.

Speaker #3: The brand combines colorful, eclectic styling with heirloom quality materials and low-impact manufacturing practices. Finally, I'd like to talk about our global business. We continue to see strong performance across our strategic global markets, including Canada, Mexico, and the UK, driven by differentiated products, ongoing omni-channel improvements, and continued growth in our design and trade businesses.

Speaker #1: With only 13 stores and great online growth, we are thrilled with the progress in rejuvenation and we continue to believe in the opportunity for rejuvenation to be our next billion-dollar brand.

Speaker #1: Mark and Graham also had a strong Q1 with a double-digit positive comp. The brand continued to build momentum across key categories and it remains a distinctive destination for personalized gifts for life's meaningful moments.

Laura Alber: The brand continues to build momentum across key categories, it remains a distinctive destination for personalized gifts for life's meaningful moments. As we look ahead, we are leading into major seasonal milestones like graduation, Father's Day, wedding season, and summer entertaining. We are doing that with compelling new products and elevated coastal point of view. Last, but certainly not least, GreenRow. GreenRow continues to deliver growth in Q1. We opened our first store in March, it's a great manifestation of the brand. Since we last talked, I hope you have had an opportunity to stop by and see the store yourself in Soho. GreenRow focuses on sustainable, responsibly crafted, vintage inspired design. The brand combines colorful, eclectic styling with heirloom quality materials and low impact manufacturing practices. Finally, I'd like to talk about our global business.

Speaker #3: So in closing, as you can see, we are off to a strong start in fiscal 2026. I would summarize Q1 with three accomplishments. First, we delivered strong top-line growth with every brand positive.

Speaker #1: As we look ahead, we are leaning into major seasonal milestones. Like graduation, Father's Day, wedding season, and summer entertaining. And we are doing that with compelling new products and elevated coastal point of view.

Speaker #3: Second, we drove operating margins that exceeded expectations. And third, we delivered earnings growth. And we did all of this in a dynamic and uncertain external environment.

Speaker #1: And last, but certainly not least, Green Row. Green Row continued to deliver growth in Q1. We opened our first store in March and it's a great manifestation of the brand.

Speaker #3: This quarter, reflected what we set out to do in 2026. We are accelerating growth through strong execution across channels, strengthened both furniture and non-furniture, and continued momentum in collaboration, product newness, and product innovation.

Laura Alber: We opened our first store in March, it's a great manifestation of the brand. Since we last talked, I hope you have had an opportunity to stop by and see the store yourself in Soho. GreenRow focuses on sustainable, responsibly crafted, vintage inspired design. The brand combines colorful, eclectic styling with heirloom quality materials and low impact manufacturing practices. Finally, I'd like to talk about our global business.

Speaker #1: And since we've last talked, I hope you have had an opportunity to stop by and see the store yourself in SoHo. Green Row focuses on sustainable, responsibly crafted, vintage-inspired design.

Speaker #3: We are continuing to invest in the customer experience and making progress in service and supply chain. And finally, we are staying disciplined on cost and productivity, which supports strong profitability and returns to our shareholders.

Speaker #1: The brand combines colorful, eclectic styling with heirloom quality materials and low-impact manufacturing practices. Finally, I'd like to talk about our global business. We continue to see strong performance across our strategic global markets including Canada, Mexico, and the UK driven by differentiated products, ongoing omnichannel improvements, and continued growth in our design and trade businesses.

Speaker #3: We feel good about the start of the year, and we remain confident in our priorities and our strategies for 2026. And while the external environment can shift quickly, our model and our team are built to navigate volatility and peak delivery.

Laura Alber: We continue to see strong performance across our strategic global markets, including Canada, Mexico, and the UK, driven by differentiated products, ongoing omnichannel improvements, and continued growth in our design and trade businesses. In closing, as you can see, we are off to a strong start in fiscal 2026. I would summarize Q1 with three accomplishments. First, we delivered strong top-line growth with every brand positive. Second, we drove operating margin that exceeded expectations. Third, we delivered earnings growth. We did all of this in a dynamic and uncertain external environment. This quarter reflected what we set out to do in 2026. We are accelerating growth through strong execution across channels, strength in both furniture and non-furniture, and continued momentum in collaborations, product newness, and product innovation. We are continuing to invest in the customer experience and making progress in service and supply chain.

Speaker #3: And with that, I want to thank our teams again for their work and their commitment, and I also want to thank our vendors and our shareholders for their partnership and support.

Speaker #1: So in closing, as you can see, we are off to a strong start in fiscal 2026. I would summarize Q1 with three accomplishments. First, we delivered strong top-line growth with every brand positive.

Speaker #3: Now I will turn it over to Jeff to walk you through the numbers and our outlook in more detail.

Speaker #1: Thank you, Laura, and good morning, everyone. We delivered another quarter of growth in strong earnings in Q1. Our results reflect the power of Williamson Inc.'s operating model.

Speaker #1: Second, we drove operating margin that exceeded expectations. And third, we delivered earnings growth. We did all of this in a dynamic and uncertain external environment.

Laura Alber: Third, we delivered earnings growth. We did all of this in a dynamic and uncertain external environment. This quarter reflected what we set out to do in 2026. We are accelerating growth through strong execution across channels, strength in both furniture and non-furniture, and continued momentum in collaborations, product newness, and product innovation. We are continuing to invest in the customer experience and making progress in service and supply chain.

Speaker #1: And our team's strong execution on the priorities we laid out for fiscal year 26. Accelerating growth, delivering world-class customer service, and driving earnings. As I walk through the numbers, you'll see how we delivered on all three priorities this quarter.

Speaker #1: This quarter, reflected what we set out to do in 2026. We are accelerating growth through strong execution across channels, strengthened both furniture and non-furniture, and continued momentum in collaborations, product newness, and product innovation.

Speaker #1: I'll start with our Q1 results, and then review our guidance for fiscal year 26. Q1 net revenues finished at $1.81 billion, with comp growth of 4.8%.

Speaker #1: We are continuing to invest in the customer experience and making progress in service and supply chain. And finally, we are staying disciplined on cost and productivity, which supports strong profitability and returns to our shareholders.

Laura Alber: Finally, we are staying disciplined on cost and productivity, which supports strong profitability and returns to our shareholders. We feel good about the start of the year, and we remain confident in our priorities and our strategies for 2026. While the external environment can shift quickly, our model and our team are built to navigate volatility and keep delivering. With that, I want to thank our teams again for their work and their commitment, and I also want to thank our vendors and our shareholders for their partnership and support. Now I will turn it over to Jeff to walk you through the numbers and our outlook in more detail.

Speaker #1: Both our one-year and two-year comps accelerated from Q4 to Q1. Reflecting the continued strength and momentum of our business. Both furniture and non-furniture categories posted positive comps in the quarter, and the trend in both categories accelerated significantly from Q4.

Speaker #1: We feel good about the start of the year. And we remain confident in our priorities and our strategies for 2026. And while the external environment can shift quickly, our model and our team are built to navigate volatility and keep delivering.

Speaker #1: And with that, I want to thank our teams again for their work and their commitment. And I also want to thank our vendors and our shareholders for their partnership and support.

Speaker #1: From a channel perspective, both e-commerce and retail delivered strong comps, with e-commerce up 4.8% and retail up 4.7%. We accelerated our market share gain as the home furnishings market declined in the low single digits in Q1.

Speaker #1: Now, I will turn it over to Jeff to walk you through the numbers and our outlook in more detail.

Speaker #2: Thank you, Laura. And good morning, everyone. We delivered another quarter of growth and strong earnings in Q1. Our results reflect the power of Williams-Sonoma, Inc.'s operating model.

Jeff: Thank you, Laura. Good morning, everyone. We delivered another quarter of growth and strong earnings in Q1. Our results reflect the power of Williams-Sonoma, Inc.'s operating model and our team's strong execution on the priorities we laid out for fiscal year 2026. Accelerating growth, delivering world-class customer service, and driving earnings. As I walk through the numbers, you'll see how we delivered on all three priorities this quarter. I'll start with our Q1 results and then review our guidance for fiscal year 2026. Q1 net revenues finished at $1.81 billion with comp growth of 4.8%. Both our one-year and two-year comps accelerated from Q4 to Q1, reflecting the continued strength and momentum of our business. Both furniture and non-furniture categories posted positive comps in the quarter, and the trend in both categories accelerated significantly from Q4.

Jeff Howie: Thank you, Laura. Good morning, everyone. We delivered another quarter of growth and strong earnings in Q1. Our results reflect the power of Williams-Sonoma, Inc.'s operating model and our team's strong execution on the priorities we laid out for fiscal year 2026. Accelerating growth, delivering world-class customer service, and driving earnings.

Speaker #1: We accomplished this even as we maintained our level of full-price selling. Our strong results demonstrate the power of our portfolio of brands. Which span different aesthetics, life stages, and price points.

Speaker #2: And our team's strong execution on the priorities we laid out for fiscal year 2026: accelerating growth, delivering world-class customer service, and driving earnings. As I walk through the numbers, you'll see how we delivered on all three priorities this quarter.

Speaker #1: Combined with our growth strategies, our portfolio sets Williamson Inc. apart in the home furnishings industry. Moving down the income statement, Q1 gross margin was 44%, down approximately 30 basis points versus last year.

Jeff Howie: As I walk through the numbers, you'll see how we delivered on all three priorities this quarter. I'll start with our Q1 results and then review our guidance for fiscal year 2026. Q1 net revenues finished at $1.81 billion with comp growth of 4.8%. Both our one-year and two-year comps accelerated from Q4 to Q1, reflecting the continued strength and momentum of our business. Both furniture and non-furniture categories posted positive comps in the quarter, and the trend in both categories accelerated significantly from Q4.

Speaker #2: I'll start with our Q1 results. And then review our guidance for fiscal year 2026. Q1 net revenues finished at $1.81 billion. With comp growth of 4.8%.

Speaker #1: Our focus on growth, customer service, and supply chain efficiency partially offset the headwinds from tariffs and higher fuel costs. Merchandise margins declined 100 basis points versus last year.

Speaker #2: Both our one-year and two-year comps accelerated from Q4 to Q1, reflecting the continued strength and momentum of our business. Both furniture and non-furniture categories posted positive comps in the quarter.

Speaker #1: Higher tariffs flowing through to our weighted average cost of goods sold drove this decline. Full-price selling was essentially flat year over year. Ocean freight costs were also pressured by higher oil prices.

Speaker #2: And the trend in both categories accelerated significantly from Q4. From a channel perspective, both e-commerce and retail delivered strong comps, with e-commerce up 4.8% and retail up 4.7%.

Speaker #1: However, our size and scale and our talented supply chain team helped mitigate the impact. Supply chain efficiencies, including a lower shrink accrual, delivered approximately 50 basis points of gross margin benefit in the quarter.

Jeff: From a channel perspective, both e-commerce and retail delivered strong comps, with e-commerce up 4.8% and retail up 4.7%. We accelerated our market share gains as the home furnishings market declined in the low single digits in Q1. We accomplished this even as we maintained our level of full price selling. Our strong results demonstrate the power of our portfolio of brands, which span different aesthetics, life stages, and price points. Combined with our growth strategies, our portfolio sets Williams-Sonoma, Inc. apart in the home furnishings industry. Moving down the income statement, Q1 gross margin was 44%, down approximately 30 basis points versus last year. Our focus on growth, customer service, and supply chain efficiency partially offset the headwinds from tariffs and higher fuel costs. Merchandise margins over year. Ocean freight costs were also pressured by higher oil prices.

Jeff Howie: From a channel perspective, both e-commerce and retail delivered strong comps, with e-commerce up 4.8% and retail up 4.7%. We accelerated our market share gains as the home furnishings market declined in the low single digits in Q1. We accomplished this even as we maintained our level of full price selling. Our strong results demonstrate the power of our portfolio of brands, which span different aesthetics, life stages, and price points.

Speaker #2: We accelerated our market share gains, as the home furnishings market declined in the low single digits in Q1. We accomplished this even as we maintained our level of full-price selling.

Speaker #1: Our focus in execution on customer service continued to drive efficiency across our supply chain. Enabling us to offset the impact of higher fuel prices to domestic shipping costs.

Speaker #2: Our strong results demonstrate the power of our portfolio of brands, which span different aesthetics, life stages, and price points. Combined with our growth strategies, our portfolio sets Williams-Sonoma Inc. apart in the home furnishings industry.

Speaker #1: I'd like to acknowledge and thank our supply chain team for their relentless focus on service and efficiency that is helping us offset higher fuel prices.

Jeff Howie: Combined with our growth strategies, our portfolio sets Williams-Sonoma, Inc. apart in the home furnishings industry. Moving down the income statement, Q1 gross margin was 44%, down approximately 30 basis points versus last year. Our focus on growth, customer service, and supply chain efficiency partially offset the headwinds from tariffs and higher fuel costs. Merchandise margins over year. Ocean freight costs were also pressured by higher oil prices.

Speaker #1: Occupancy costs leverage approximately 20 basis points versus last year. With our strong top-line growth, more than offsetting the 3% increase in occupancy dollars. Overall, our gross margin came in ahead of our expectations.

Speaker #2: Moving down the income statement, Q1 gross margin was 44%, down approximately 30 basis points versus last year. Our focus on growth, customer service, and supply chain efficiency partially offset the headwinds from tariffs and higher fuel costs.

Speaker #1: We are pleased with our ability to partially offset tariff-related merchandise margin pressure and higher fuel prices through supply chain efficiencies and occupancy leverage. Turning now to SG&A, Q1 SG&A ran at 27.8% of revenues, approximately 30 basis points higher than last year.

Speaker #2: Merchandise margins over year. Ocean freight costs were also pressured by higher oil prices. However, our size and scale and our talented supply chain team helped mitigate the impact.

Speaker #1: Employment expense delivered 30 basis points, we continue to manage variable employment costs in line with top-line trends, while staying focused on investing in talent.

Jeff: However, our size and scale and our talented supply chain team helped mitigate the impact. Supply chain efficiencies, including a lower shrink to grow, delivered approximately 50 basis points of gross margin benefit versus domestic shipping costs. I'd like to acknowledge and thank our supply chain team for their relentless focus on service and efficiency that is helping us offset higher fuel prices. Occupancy costs leveraged approximately 20 basis points versus last year, with our strong top-line growth more than offsetting the 3% increase in occupancy dollars. Overall, our gross margin came in ahead of our expectations. We are pleased with our ability to partially offset tariff-related merchandise margin approximately 30 basis points higher than last year. Employment expense deleveraged 30 basis points. We continue to manage variable employment costs in line with top-line trends while staying focused on investing in talent.

Jeff Howie: However, our size and scale and our talented supply chain team helped mitigate the impact. Supply chain efficiencies, including a lower shrink to grow, delivered approximately 50 basis points of gross margin benefit versus domestic shipping costs. I'd like to acknowledge and thank our supply chain team for their relentless focus on service and efficiency that is helping us offset higher fuel prices. Occupancy costs leveraged approximately 20 basis points versus last year, with our strong top-line growth more than offsetting the 3% increase in occupancy dollars.

Speaker #1: Advertising expense is a percent of revenues leveraged 10 basis points, our in-house marketing team continued to test, scale, and optimize across our portfolio of brands.

Speaker #2: Supply chain efficiencies including a lower shrink accrual slid approximately 50 basis points of gross margin versus the domestic shipping costs. I'd like to acknowledge and thank our supply chain team for their relentless focus on service and efficiency.

Speaker #1: Driving strong customer engagement while remaining disciplined on spend. We also invested in social media, using compelling content, collaborations, and influencer partnerships to increase relevance, expand reach, and drive brand heat.

Speaker #1: Lastly, general expense deleveraged approximately 10 basis points, primarily from timing. On the bottom line, we delivered operating income of $292 million. With operating margin at 16.2%.

Speaker #2: That is helping us offset higher fuel prices. Occupancy costs leverage approximately 20 basis points versus last year. With our strong top-line growth, more than offsetting the 3% increase in occupancy dollars.

Speaker #1: Diluted earnings per share were $1.93, up 4% versus last year. On the balance sheet, merchandise inventories were $1.46 billion, up 9% to last year.

Speaker #2: Overall, our gross margin came in ahead of our expectations. We are pleased with our ability to partially offset tariff-related merchandise margin, approximately 30 basis points higher than last year.

Jeff Howie: Overall, our gross margin came in ahead of our expectations. We are pleased with our ability to partially offset tariff-related merchandise margin approximately 30 basis points higher than last year. Employment expense deleveraged 30 basis points. We continue to manage variable employment costs in line with top-line trends while staying focused on investing in talent.

Speaker #1: Included in our inventory is approximately $60 million of embedded incremental tariff costs. Excluding these tariff costs, inventories would have been in line with our top-line growth.

Speaker #2: Employment expense delivered 30 basis points. We continue to manage variable employment costs in line with top-line trends while staying focused on investing in talent.

Speaker #1: Our inventory levels and composition continue to be well positioned to support our sales growth and customer service goals. During the quarter, we invested $58 million in capital expenditures to support our long-term growth.

Speaker #2: Advertising expense as a percent of revenues leveraged 10 basis points. Our in-house marketing team continued to test, scale, and optimize across our portfolio of brands driving strong customer engagement while remaining disciplined on spend.

Jeff: Advertising expense as a percent of revenues leveraged 10 basis points. Our in-house marketing team continued to test, scale, and optimize across our portfolio of brands, driving strong customer engagement while remaining disciplined on spend. We also invested in social media using compelling content, collaborations, and influencer partnerships to increase relevance, expand reach, and drive brand heat. Lastly, general expense deleveraged approximately 10 basis points, primarily from timing. On the bottom line, we delivered operating income of $292 million, with operating margin at 16.2%. Diluted earnings per share were $1.93, up 4% versus last year. On the balance sheet, merchandise inventories were $1.46 billion, up 9% to last year. Included in our inventory is approximately $60 million of embedded incremental tariff costs. Excluding these tariff costs, inventories would've been in line with our top-line growth.

Jeff Howie: Advertising expense as a percent of revenues leveraged 10 basis points. Our in-house marketing team continued to test, scale, and optimize across our portfolio of brands, driving strong customer engagement while remaining disciplined on spend. We also invested in social media using compelling content, collaborations, and influencer partnerships to increase relevance, expand reach, and drive brand heat. Lastly, general expense deleveraged approximately 10 basis points, primarily from timing.

Speaker #1: We also returned $373 million to shareholders through share repurchases and dividends. We repurchased $288 million of stock, or approximately $1.4% of shares outstanding. We also paid $85 million in dividends, a 15% increase year over year.

Speaker #2: We also invested in social media using compelling content, collaborations, and influencer partnerships to increase relevance, expand reach, and drive brand heat. Lastly, general expense delivered approximately 10 basis points primarily from timing.

Speaker #1: Summing up our Q1 results, we are proud of the strong execution across the business. We accelerated our top-line growth, continued to improve customer service and supply chain efficiency, and grew earnings per share.

Speaker #2: On the bottom line, we delivered operating income of $292 million. With operating margin at 16.2%. Diluted earnings per share were $1.93 up 4% versus last year.

Jeff Howie: On the bottom line, we delivered operating income of $292 million, with operating margin at 16.2%. Diluted earnings per share were $1.93, up 4% versus last year. On the balance sheet, merchandise inventories were $1.46 billion, up 9% to last year. Included in our inventory is approximately $60 million of embedded incremental tariff costs. Excluding these tariff costs, inventories would've been in line with our top-line growth.

Speaker #1: These results speak to the power of our operating model. But none of it would be possible without the incredible team we have here, Williamson Inc. I'd like to thank our team for their outstanding execution this quarter.

Speaker #2: On the balance sheet, merchandise inventories were $1.46 billion, up 9% to last year. Included in our inventory is approximately $60 million of embedded incremental tariff costs.

Speaker #1: Now, let's turn to our fiscal year 26 outlook. As Laura mentioned, we remain confident in our strategy and momentum. We are reiterating our guidance as it's still early in the year and the environment is uncertain.

Speaker #2: Excluding these tariff costs, inventories would have been in line with our top-line growth. Our inventory levels and composition continue to be well positioned to support sales growth and customer service goals.

Speaker #1: We expect fiscal year 26 net revenue comps to be in the range of 2% to 6%. With total net revenue growth of 2.7% to 6.7%.

Jeff: Our inventory levels and composition continue to be well-positioned to support our sales growth and customer service goals. During the quarter, we invested $58 million in capital expenditures to support our long-term growth. We also returned $373 million to shareholders through share repurchases and dividends. We repurchased $288 million of stock, or approximately 1.4% of shares outstanding. We also paid $85 million in dividends, a 15% increase year over year. Summing up our Q1 results, we are proud of the strong execution across the business. We accelerated our top-line growth, continued to improve customer service and supply chain efficiency, and grew earnings per share. These results speak to the power of our operating model, but none of it would be possible without the incredible team we have here at Williams-Sonoma, Inc. I'd like to thank our team for their outstanding execution this quarter.

Jeff Howie: Our inventory levels and composition continue to be well-positioned to support our sales growth and customer service goals. During the quarter, we invested $58 million in capital expenditures to support our long-term growth. We also returned $373 million to shareholders through share repurchases and dividends. We repurchased $288 million of stock, or approximately 1.4% of shares outstanding. We also paid $85 million in dividends, a 15% increase year over year.

Speaker #2: During the quarter, we invested $58 million in capital expenditures to support our long-term growth. We also returned $373 million to shareholders through share purchases and dividends.

Speaker #1: We expect operating margin to be in the range of 17.5% to 18.1%. Our guidance continues to assume no material changes in the macroeconomic environment.

Speaker #1: Warehousing turnover, or interest rates. We remain focused on accelerating growth, delivering world-class customer service, and driving earnings. As we discussed guidance, I'd like to address three topics top of mind for investors.

Speaker #2: We repurchased $288 million of stock, or approximately 1.4% of shares outstanding. We also paid $85 million in dividends, a 15% increase year over year.

Speaker #2: Summing up our Q1 results, we are proud of the strong execution across the business. We accelerated our top-line growth, continued to improve customer service and supply chain efficiency, and grew earnings per share.

Speaker #1: Higher oil prices, tariff refunds, and tariffs. First, higher oil prices. Higher oil prices are pressuring transportation costs. With ocean freight, we believe our size and scale, combined with the outstanding work of our experienced transportation team, will allow us to continue to mitigate the impact.

Jeff Howie: Summing up our Q1 results, we are proud of the strong execution across the business. We accelerated our top-line growth, continued to improve customer service and supply chain efficiency, and grew earnings per share. These results speak to the power of our operating model, but none of it would be possible without the incredible team we have here at Williams-Sonoma, Inc. I'd like to thank our team for their outstanding execution this quarter.

Speaker #2: These results speak to the power of our operating model. But none of it would be possible without the incredible team we have here at Williams-Sonoma, Inc. I'd like to thank our team for their outstanding execution this quarter.

Speaker #1: For domestic shipping expense, fuel prices near today's levels are embedded in our guidance. While the direction of oil prices is difficult to predict, our guidance reflects our best estimate of the impact of higher oil prices on our business.

Speaker #2: Now, let's turn to our fiscal year 26 outlook. As Laura mentioned, we remain confident in our strategy and momentum. We are reiterating our guidance as it's still early in the year and the environment is uncertain.

Jeff: Now, let's turn to our fiscal year 2026 outlook. As Laura mentioned, we remain confident in our strategy and momentum. We are reiterating our guidance as it's still early in the year and the environment is uncertain. We expect fiscal year 2026 net revenue comps to be in the range of 2% to 6%, with total net revenue growth of 2.7% to 6.7%. We expect operating margin to be in the range of 17.5% to 18.1%. Our guidance continues to assume no material changes in the macroeconomic environment, housing turnover, or interest rates. We remain focused on accelerating growth, delivering world-class customer service, and driving earnings. As we discuss guidance, I'd like to address three topics top of mind for investors: higher oil prices, tariff refunds, and tariffs. First, higher oil prices. Higher oil prices are pressuring transportation costs.

Jeff Howie: Now, let's turn to our fiscal year 2026 outlook. As Laura mentioned, we remain confident in our strategy and momentum. We are reiterating our guidance as it's still early in the year and the environment is uncertain. We expect fiscal year 2026 net revenue comps to be in the range of 2% to 6%, with total net revenue growth of 2.7% to 6.7%. We expect operating margin to be in the range of 17.5% to 18.1%.

Speaker #1: Second, tariff refunds. Our guidance does not contemplate recognizing any benefit from tariff refunds due to the uncertainty surrounding the timing and potential of recovery.

Speaker #2: Expect fiscal year '26 net revenue comps to be in the range of 2% to 6%, with total net revenue growth of 2.7% to 6.7%.

Speaker #1: Finally, tariffs. Our assumptions on tariffs remain unchanged as well. As discussed last quarter, we continue to expect the impact of tariffs to be front-half weighted.

Speaker #2: We expect operating margin to be in the range of 17.5% to 18.1%. Our guidance continues to assume no material changes in the macroeconomic environment.

Speaker #1: And then moderate over the balance of the year. Our guidance continues to assume all tariffs currently in place remain in effect for the balance of the year.

Jeff Howie: Our guidance continues to assume no material changes in the macroeconomic environment, housing turnover, or interest rates. We remain focused on accelerating growth, delivering world-class customer service, and driving earnings. As we discuss guidance, I'd like to address three topics top of mind for investors: higher oil prices, tariff refunds, and tariffs. First, higher oil prices. Higher oil prices are pressuring transportation costs.

Speaker #2: For housing turnover, for interest rates. We remain focused on accelerating growth, delivering world-class customer service, and driving earnings. As we discussed guidance, I'd like to address three topics top of mind for investors.

Speaker #1: Including the Section 232 tariffs, the current Section 301 tariffs, and the Section 122 tariffs. While the Section 122 tariffs are currently set to expire in July, our guidance assumes they will be replaced with tariffs at a similar rate.

Speaker #2: Higher oil prices, tariff refunds, and tariffs. First, higher oil prices. Higher oil prices are pressuring transportation costs. With ocean freight, we believe our size and scale, combined with the outstanding work of our experienced transportation team, will allow us to continue to mitigate the impact.

Speaker #1: With the ongoing uncertainty around tariffs, it is impossible to say where they will ultimately land, and it is difficult to determine what impact they will have on our business.

Jeff: With ocean freight, we believe our size and scale, combined with the outstanding work of our experienced transportation team, will allow us to continue to mitigate the impact. For domestic shipping expense, fuel prices near today's levels are embedded in our guidance. While the direction of oil prices is difficult to predict, our guidance reflects our best estimate of the impact of higher oil prices on our business. Second, tariff refunds. Our guidance does not contemplate recognizing any benefit from tariff refunds due to the uncertainty surrounding the timing and potential of recovery. Finally, tariffs. Our assumptions on tariffs remains unchanged as well. As discussed last quarter, we continue to expect the impact of tariffs to be front-half weighted, and then moderate over the balance of the year.

Jeff Howie: With ocean freight, we believe our size and scale, combined with the outstanding work of our experienced transportation team, will allow us to continue to mitigate the impact. For domestic shipping expense, fuel prices near today's levels are embedded in our guidance. While the direction of oil prices is difficult to predict, our guidance reflects our best estimate of the impact of higher oil prices on our business.

Speaker #1: Our guidance reflects our best estimates based on the tariffs in place as of this call. As tariff policy changes, we may need to update our guidance.

Speaker #2: For domestic shipping expense, fuel prices near today's levels are embedded in our guidance. While the direction of oil prices is difficult to predict, our guidance reflects our best estimate of the impact of higher oil prices on our business.

Speaker #1: Also today, we are providing some further inputs for modeling purposes. We expect our full-year interest income to be approximately $25 million, and our full-year effective tax rate to be approximately 25.5%.

Speaker #2: Second, tariff refunds. Our guidance does not contemplate recognizing any benefit from tariff refunds due to the uncertainty surrounding the timing and potential of recovery.

Jeff Howie: Second, tariff refunds. Our guidance does not contemplate recognizing any benefit from tariff refunds due to the uncertainty surrounding the timing and potential of recovery. Finally, tariffs. Our assumptions on tariffs remains unchanged as well. As discussed last quarter, we continue to expect the impact of tariffs to be front-half weighted, and then moderate over the balance of the year.

Speaker #1: Turning now to capital allocation, we will continue to prioritize funding our business operations and investing in long-term growth. Our capital expenditure guidance is unchanged.

Speaker #2: Finally, tariffs. Our assumptions on tariffs remain unchanged as well. As discussed last quarter, we continue to expect the impact of tariffs to be front-half weighted.

Speaker #1: We expect to spend approximately $275 million in capital expenditures for the year. About 95% of that investment will be focused on e-commerce, retail, and supply chain.

Speaker #2: And then moderate over the balance of the year. Our guidance continues to assume all tariffs currently in place remain in effect for the balance of the year.

Jeff: Our guidance continues to assume all tariffs currently in place remain in effect for the balance of the year, including the Section 232 tariffs, the current Section 301 tariffs, and the Section 122 tariffs. While the Section 122 tariffs are currently set to expire in July, our guidance assumes they will be replaced with tariffs at a similar rate. With the ongoing uncertainty around tariffs, it is impossible to say where they will ultimately land, and it is difficult to determine what impact they will have on our business. Our guidance reflects our best estimates based on the tariffs in place as of this call. As tariff policy changes, we may need to update our guidance. Also today, we are providing some further inputs for modeling purposes. We expect our full-year interest income to be approximately $25 million and our full-year effective tax rate to be approximately 25.5%.

Jeff Howie: Our guidance continues to assume all tariffs currently in place remain in effect for the balance of the year, including the Section 232 tariffs, the current Section 301 tariffs, and the Section 122 tariffs. While the Section 122 tariffs are currently set to expire in July, our guidance assumes they will be replaced with tariffs at a similar rate.

Speaker #1: With regards to investment in retail, we continue to expect our year-end store count to be essentially flat to last year. After which we anticipate 1 to 3% growth in store count each year starting in fiscal year 27.

Speaker #2: Including the Section 232 tariffs, the current Section 301 tariffs, and the Section 122 tariffs. While the Section 122 tariffs are currently set to expire in July, our guidance assumes they will be replaced with tariffs at a similar rate.

Speaker #1: Embedded in our fiscal year 26 guidance continues to be approximately 70 basis points of non-comp growth from our investment in retail. We remain committed to returning excess cash to shareholders through a combination of increased dividends and ongoing share repurchases.

Speaker #2: With the ongoing uncertainty around tariffs, it is impossible to say where they will ultimately land, and it is difficult to determine what impact they will have on our business.

Jeff Howie: With the ongoing uncertainty around tariffs, it is impossible to say where they will ultimately land, and it is difficult to determine what impact they will have on our business. Our guidance reflects our best estimates based on the tariffs in place as of this call. As tariff policy changes, we may need to update our guidance. Also today, we are providing some further inputs for modeling purposes. We expect our full-year interest income to be approximately $25 million and our full-year effective tax rate to be approximately 25.5%.

Speaker #2: Our guidance reflects our best estimates based on the tariffs in place as of this call. As tariff policy changes, we may need to update our guidance.

Speaker #1: On dividends, we will continue to pay our quarterly dividend of $76 per share, which is a 15% increase year over year. We are proud to say that fiscal year 26 is the 17th consecutive year of increased dividend payouts.

Speaker #2: Also today, we are providing some further inputs for modeling purposes. We expect our full-year interest income to be approximately $25 million, and our full-year effective tax rate to be approximately 25.5%.

Speaker #1: On share repurchases, we have approximately $1.1 billion remaining under our current authorizations and we will continue to repurchase shares opportunistically as part of our disciplined approach to delivering shareholder return.

Speaker #2: Turning now to capital allocation, we will continue to prioritize funding our business operations and investing in long-term growth. Our capital expenditure guidance is unchanged.

Jeff: Turning now to capital allocation. We will continue to prioritize funding our business operations and investing in long-term growth. Our capital expenditure guidance is unchanged. We expect to spend approximately $275 million in capital expenditures for the year. About 95% of that investment will be focused on e-commerce, retail, and supply chain. With regards to our investment in retail, we continue to expect our year-end store count to be essentially flat to last year, after which we anticipate 1% to 3% growth in store count each year starting in fiscal year 2027. Embedded in our fiscal year 2026 guidance continues to be approximately 70 basis points of non-comp growth from our investment in retail.

Jeff Howie: Turning now to capital allocation. We will continue to prioritize funding our business operations and investing in long-term growth. Our capital expenditure guidance is unchanged. We expect to spend approximately $275 million in capital expenditures for the year. About 95% of that investment will be focused on e-commerce, retail, and supply chain.

Speaker #1: Looking beyond fiscal year 26, we are reiterating our long-term outlook for mid to high single-digit revenue growth and operating margins in the mid to high teens.

Speaker #2: We expect to spend approximately $275 million in capital expenditures for the year. About 95% of that investment will be focused on e-commerce, retail, and supply chain.

Speaker #1: Wrapping up our comments, we are proud to have delivered yet another strong quarter for our shareholders. We're confident we'll continue to outperform our peers and deliver shareholder returns for these five reasons that remain consistent.

Speaker #2: With regards to our investment in retail, we continue to expect our year-end store count to be essentially flat to last year. After which, we anticipate 1 to 3% growth in store count each year starting in fiscal year 27.

Jeff Howie: With regards to our investment in retail, we continue to expect our year-end store count to be essentially flat to last year, after which we anticipate 1% to 3% growth in store count each year starting in fiscal year 2027. Embedded in our fiscal year 2026 guidance continues to be approximately 70 basis points of non-comp growth from our investment in retail.

Speaker #1: Our ability to gain market share in the fragmented home furnishings industry. The strength of our in-house proprietary design. The competitive advantage of our digital-first but not digital-only channel strategy.

Speaker #2: Embedded in our fiscal year 26 guidance continues to be approximately 70 basis points of non-comp growth from our investment in retail. We remain committed to returning excess cash to shareholders through a combination of increased dividends and ongoing share repurchases.

Speaker #1: The ongoing strength of our growth initiatives. And the resiliency of our fortress balance sheet. With that, I'll open the call for questions. We will now begin the question and answer session.

Jeff: We remain committed to returning excess cash to shareholders through a combination of increased dividends and ongoing share repurchases. On dividends, we will continue to pay our quarterly dividend of $0.76 per share, which is a 15% increase year over year. We are proud to say that fiscal year 2026 is the 17th consecutive year of increased dividend payouts. On share repurchases, we have approximately $1.1 billion remaining under our current authorizations, and we will continue to repurchase shares opportunistically as part of our disciplined approach to delivering shareholder returns. Looking beyond fiscal year 2026, we are reiterating our long-term outlook for mid to high single-digit revenue growth and operating margins in the mid to high teens. Wrapping up our comments, we are proud to have delivered yet another strong quarter for our shareholders.

Jeff Howie: We remain committed to returning excess cash to shareholders through a combination of increased dividends and ongoing share repurchases. On dividends, we will continue to pay our quarterly dividend of $0.76 per share, which is a 15% increase year over year. We are proud to say that fiscal year 2026 is the 17th consecutive year of increased dividend payouts.

Speaker #2: On dividends, we will continue to pay our quarterly dividend of $76 per share, which is a 15% increase year over year. We are proud to say that fiscal year '26 is the 17th consecutive year of increased dividend payouts.

Speaker #1: Please limit yourself. To one question and one follow-up. If you would like to ask a question, please press star one. To raise your hand.

Speaker #2: On share repurchases, we have approximately $1.1 billion remaining under our current authorizations, and we will continue to repurchase shares opportunistically as part of our disciplined approach to delivering shareholder returns.

Jeff Howie: On share repurchases, we have approximately $1.1 billion remaining under our current authorizations, and we will continue to repurchase shares opportunistically as part of our disciplined approach to delivering shareholder returns. Looking beyond fiscal year 2026, we are reiterating our long-term outlook for mid to high single-digit revenue growth and operating margins in the mid to high teens. Wrapping up our comments, we are proud to have delivered yet another strong quarter for our shareholders.

Speaker #1: To withdraw your question, press star one again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Pete McShane, of Goldman Sachs.

Speaker #2: Looking beyond fiscal year '26, we are reiterating our long-term outlook for mid- to high-single-digit revenue growth and operating margins in the mid- to high-teens.

Speaker #2: Wrapping up our comments, we are proud to have delivered yet another strong quarter for our shareholders. We're confident we'll continue to outperform our peers and deliver shareholder returns for these five reasons that remain consistent.

Speaker #1: Your line is open. Please go ahead. Thank you. Good morning. We wanted to first ask about the health of the consumer. If you saw any change in behavior during the quarter, any differences between income cohorts and if you've seen any changes made to date.

Jeff: We're confident we'll continue to outperform our peers and deliver shareholder returns for these five reasons that remain consistent. Our ability to gain market share in the fragmented home furnishings industry. The strength of our in-house proprietary design. The competitive advantage of our digital-first, but not digital-only, channel strategy. The ongoing strength of our growth initiatives. The resiliency of our fortress balance sheet. With that, I'll open the call for questions.

Jeff Howie: We're confident we'll continue to outperform our peers and deliver shareholder returns for these five reasons that remain consistent. Our ability to gain market share in the fragmented home furnishings industry. The strength of our in-house proprietary design. The competitive advantage of our digital-first, but not digital-only, channel strategy. The ongoing strength of our growth initiatives. The resiliency of our fortress balance sheet. With that, I'll open the call for questions.

Speaker #2: Our ability to gain market share in the fragmented home furnishings industry. The strength of our in-house proprietary design. The competitive advantage of our digital-first but not digital-only channel strategy.

Speaker #2: Sure, sure. Good morning, Kate. How are you? I can't really speak for others. And then what they're saying, but the consumer, our consumer, is responding to our products and our strategies across our channels and across our brands, as you can see by this morning's set of numbers.

Speaker #2: The ongoing strength of our growth initiatives. And the resiliency of our fortress balance sheet. With that, I'll open the call for questions.

Speaker #2: And it's from furniture to smaller items, and the collaborations across the board, really. I think that the truth is that we have put together a pipeline of products that is very appealing and distinctive in the market.

Speaker #1: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Kate McShane of Goldman Sachs. Your line is open. Please go ahead.

Speaker #2: And people trust us for our great prices and quality. And they're coming into our stores because of our engaging store experiences and service. And it seems like they are very interested in spending with us.

Speaker #1: To withdraw your question, press star 1 again. Please stand by while we compile the Q&A roster. Your first question comes from the line of Pete McShane.

Speaker #2: And we believe that that's going to continue, as we look through the year, because the strategies that we've built through the year that are going to come look like the ones we've been implementing.

Speaker #2: And so I think you're going to continue to see the momentum that we've seen in the first quarter.

Speaker #1: Thank you. And it does appear that you were able to offset a lot of the higher fuel costs with the efficiency of the supply chain that you laid out on the call.

Speaker #1: But I was wondering if this inflationary environment were to persist, do you think you will have to look to increasing prices at all?

Speaker #2: I think it's too early to comment on that. And remember, we don't just compete on price. We're competing on the whole, which is the product itself.

Speaker #2: And then since we're market versus other similar products and we have incredible finishes and product design with exclusive exciting stuff in the works. And that's where we see the customer being less price sensitive.

Speaker #1: Of Goldman Sachs, your line is open. Please go ahead.

Speaker #2: Thank you. Good morning. We wanted to first ask about the health of the consumer. If you saw any change of behavior during the quarter, any differences between income cohorts, and if you have seen any changes made to date.

Kate McShane: Thank you. Good morning. We wanted to first ask about the health of the consumer, if you saw any change of behavior during the quarter, any differences between income cohorts, and if you've seen any changes made to date?

Speaker #2: That said, be careful to make sure that they feel really good about buying from us. And we want to continue to invest in our customer.

Speaker #2: And give them the best value in the market.

Speaker #3: Can I just add, Kate, that as I said in our opening remarks, oil prices at today's levels are embedded in our guidance. And we are seeing ocean freight prices pressured, but given our size and scale, we're able to mitigate them.

Speaker #3: Sure. Good morning, Kate. How are you? I can't really speak for others. And what they're saying, but the consumer, our consumer, is responding to our products and our strategies across our channels and across our brands, as you can see by this morning set of numbers.

Laura Alber: Sure. Good morning, Kate. How are you? I can't really speak for others and what they're seeing, but the consumer, our consumer, is responding to our products and our strategies across our channels and across our brands, as you can see by this morning's set of numbers. It's from furniture to smaller items and collaborations, across the board really. I think that the truth is that we have put together a pipeline of products that is very appealing and distinctive in the market, and people trust us for our great prices and quality, and they're coming into our stores because of our engaging store experiences. The strategies that we built through the years that are-

Speaker #3: And then with domestic transportation, we are seeing higher costs but our supply chain efficiencies are really offsetting them. And I want to take a moment just to acknowledge and recognize and thank our entire supply chain organization for their ongoing focus on just efficiency and driving customer service, which is everyone has seen is really producing phenomenal results for the company.

Speaker #3: And it's from furniture to smaller items, and collaborations across the board, really. I think that the truth is that we have put together a pipeline of products that is very appealing and distinctive in the market, and people trust us for our great prices and quality.

Laura Alber: I think that the truth is that we have put together a pipeline of products that is very appealing and distinctive in the market, and people trust us for our great prices and quality, and they're coming into our stores because of our engaging store experiences. The strategies that we built through the years that are-

Speaker #1: Thank you. Your next question. Comes from the line of Seth Sigman. Of Barclays. Your line is open. Please go ahead.

Speaker #3: And they're coming into our stores because of our engaging store experiences. Because the strategies that we built through the year that are

Speaker #4: Thanks so much. Good morning, everyone. So with comp accelerating this quarter relative to prior quarters, at a time when it seems like you've raised prices, but it seems like those price increases are maybe starting to stabilize, so it would imply that the composition of the business is maybe shifting, meaning more volume is improving.

Speaker #2: You were able to offset a lot of the higher fuel costs with the efficiencies in the supply chain that you laid out on the call.

Speaker #4: Is that right directionally? And if so, what do you think is changing that is driving that? And how do you think about the sustainability as you move through this year?

Kate McShane: You were able to offset a lot of the higher fuel costs with the efficiencies in the supply chain that you laid out on the call. I was wondering if this inflationary environment were to persist, do you think you will have to look to increasing prices at all?

Speaker #2: But was wondering if this inflationary environment were to persist, do you think you will have to look to increasing prices at all?

Speaker #2: You are right. And so we're seeing broad-based comp lever improvements. And we're very excited to see it across channels. It's based on our strategy, Seth.

Speaker #3: I think it's too early to comment on that. And remember, we don't just compete on price. We're competing on the whole, which is the product itself.

Laura Alber: I think it's too early to comment on that. Remember, we don't just compete on price. We're competing on the whole, which is the product itself and where it sits in the market versus other similar products. We have incredible finishes and product design, exclusive. Continue to invest in our customer and give them the best value.

Speaker #2: The execution of our strategy, which we're very competitive. But we did lay out a bunch of them in the last conference call. And in this one.

Speaker #3: And we're in the market for a similar product. And we have incredible finishes and product design, exclusive to invest in our customer. And give them the best value.

Speaker #2: And so we're thrilled to see furniture recovery. We had a good Easter. We're going into back to school. We've invested in the dorm experience, total customer experience, in-stock at retail.

Speaker #2: All these things are good for the comp levers. I always think of comp levers as the output of the strategy, not the thing to focus on.

Speaker #2: But just to tell you, it's not just price.

Speaker #4: Okay. That's helpful. And then maybe for Jeff on the merchandise margins, they were down this quarter, but a little bit better than I think expected.

Speaker #4: Price is pressured. But given our size and scale, we're able to mitigate them. And then with domestic transportation, we are seeing higher costs. But our supply chain is efficiencies are really offsetting them.

Speaker #4: You're going to start to lap very healthy merchandise margins, particularly in the second and third quarter. Can you just remind us how you're thinking about that?

Jeff: Prices pressured. Given our size and scale, we're able to mitigate them. With domestic transportation, we are seeing higher costs, but our supply chain efficiencies are really offsetting them. I want to take a moment just to acknowledge and recognize and thank our entire supply chain organization for their ongoing focus on just efficiency and driving customer service, which as everyone has seen, is really producing phenomenal results for the company.

Jeff Howie: Prices pressured. Given our size and scale, we're able to mitigate them. With domestic transportation, we are seeing higher costs, but our supply chain efficiencies are really offsetting them. I want to take a moment just to acknowledge and recognize and thank our entire supply chain organization for their ongoing focus on just efficiency and driving customer service, which as everyone has seen, is really producing phenomenal results for the company.

Speaker #4: How you would expect the cadence to play out throughout the year?

Speaker #3: Yeah. Good morning, Seth. So margin was down about 100 basis points in the MMU in Q1, a little better than Q4 and a little better than we expected.

Speaker #4: And I want to take a moment just to acknowledge, recognize, and thank our entire supply chain organization for their ongoing focus on efficiency and driving customer service, which, as everyone has seen, is really producing phenomenal results for the company.

Speaker #3: But we still are guiding that the impact of tariffs will be heavily front-weighted. And then moderate across the back half of the year. Simply because the way the tariffs are flowing through on our weighted average cost accounting.

Speaker #3: Now, Q1 had an easier compare because we were, again, up against some timing items. And last year, Q2 won't have that benefit. So Q2 will probably be peak impact of the tariffs.

Speaker #2: Thank you.

Speaker #1: Please go ahead.

Speaker #5: Thanks so much. Good morning, everyone. So with comps accelerating this quarter relative to prior quarters, at a time when it seems like you've raised prices but it seems like those price increases are maybe starting to stabilize, so it would imply that the composition of the business is maybe shifting, meaning more volume is improving.

Laura Alber: Thanks.

Operator: Please go ahead.

Speaker #3: But after that, we expect it to moderate for the balance of the year.

Seth: Thanks so much. Good morning, everyone. With comps accelerating this quarter relative to prior quarters, at a time when it seems like you've raised prices, but it seems like those price increases are maybe starting to stabilize. It would imply that the composition of the business is maybe shifting, meaning more volume is improving. Is that right directionally? If so, what do you think is changing that is driving that, and how do you think about the sustainability as you move through this year?

[Analyst]: Thanks so much. Good morning, everyone. With comps accelerating this quarter relative to prior quarters, at a time when it seems like you've raised prices, but it seems like those price increases are maybe starting to stabilize. It would imply that the composition of the business is maybe shifting, meaning more volume is improving. Is that right directionally? If so, what do you think is changing that is driving that, and how do you think about the sustainability as you move through this year?

Speaker #4: Okay. Great. Thanks, good. Bye.

Speaker #1: Your next question. Comes from the line of Chuck Grom. Of Gordon Haskett, your line is open. Please go ahead.

Speaker #5: Is that right directionally? And if so, what do you think is changing that is driving that? And how do you think about the sustainability as you move through this year?

Speaker #4: Hey, guys. Andy Craig Porter. Can you help us think about the underlying demand curve in the business? I'm m skeptical to say that this is tax refund-driven, but I don't think that's the case.

Speaker #3: You are right. And so we're seeing broad-based comp leverage improvements, and we're very excited to see it across channels. Thrilled to see furniture recovering.

Speaker #4: And I was hoping maybe you could opine on strength at West Elm and the recovery in PV, specifically. But more importantly, just getting a better sense for the demand curve, the underlying demand curve in the business.

Laura Alber: You are right. We're seeing broad-based comp leverage improvements, and we're very excited to see it across channels. We're obviously seeing furniture recovering. We had a good Easter. We're going into back to school. We've invested in the dorm experience, total customer experience, in-stock at retail. All these things are good for the comp leverage. I always think of comp leverage as the output of the strategy, not the thing to focus on. Just to tell you, it's not just price.

Speaker #2: Yeah. We're thrilled with the results in West Elm. We're not entirely surprised, though. We've been building this foundation for growth. And then remember, many years ago, I mentioned that we're still starting to see new business really working on the appreciation standards.

Speaker #3: We had a good Easter. We're going into better school. We've invested in the dorm experience, total customer experience, in-stock at retail. All these things are good for the comp levers.

Speaker #3: I always think of comp levers as the output of the strategy, not the thing to focus on. But just to tell you, it's not just price.

Speaker #2: Now we have that stock and we have that confidence a little bit more business focused in corporate. And then also in collaboration. And in this project, so the cash output is always passed out.

Speaker #5: Okay, that's helpful. And then maybe for Jeff on the merchandise margins—they were down this quarter, but a little bit better than, I think, expected.

Speaker #2: We also have new cash outputs that are being performed all across. And focusing on not just furniture, but the things that customers come regularly and buy.

Seth: Okay, that's helpful. Then maybe for Jeff, on the merchandise margins, they were down this quarter, but a little bit better than I think expected. You're going to start to lap very healthy merchandise margins, particularly in Q2 and Q3. Can you just remind us how you're thinking about that, how you would expect the cadence to play out throughout the year?

[Analyst]: Okay, that's helpful. Then maybe for Jeff, on the merchandise margins, they were down this quarter, but a little bit better than I think expected. You're going to start to lap very healthy merchandise margins, particularly in Q2 and Q3. Can you just remind us how you're thinking about that, how you would expect the cadence to play out throughout the year?

Speaker #5: You're going to start to lap very healthy merchandise margins, particularly in the second and third quarter. Can you just remind us how you're thinking about that?

Speaker #2: And then the combination of the two things is great. I also will just say that this is not emotionally led. We have had a very, very strong regulatory cycle.

Speaker #5: How you would expect the cadence to play out throughout the year?

Speaker #4: Yeah. Good morning, Seth. So margin was down about 100 basis points in the MMU in Q1. A little better than Q4 and a little better than we expected.

Speaker #2: And in West Elm, and it gives us those numbers. So I would say that it's very important to note that it is not emotionally driven at all.

Jeff: Good morning, Seth. Margin was down about 100 basis points on the MMU in Q1, a little better than Q4 and a little better than we expected. We still are guiding that the impact of tariffs will be heavily front-weighted and then moderate across H2. Simply because the way the tariffs are flowing through on our weighted average cost of inventory. Q1 had an easier compare because we were up against some timing items last year. Q2 won't have that benefit, Q2 will probably be peak impact of the tariffs. After that, we expect it to moderate for the balance of the year.

Jeff Howie: Good morning, Seth. Margin was down about 100 basis points on the MMU in Q1, a little better than Q4 and a little better than we expected. We still are guiding that the impact of tariffs will be heavily front-weighted and then moderate across H2. Simply because the way the tariffs are flowing through on our weighted average cost of inventory. Q1 had an easier compare because we were up against some timing items last year. Q2 won't have that benefit, Q2 will probably be peak impact of the tariffs. After that, we expect it to moderate for the balance of the year.

Speaker #4: But we still are guiding that the impact of tariffs will be heavily front-weighted. And then moderate across the back half of the year. Simply because the way the tariffs are flowing accounting.

Speaker #2: And we believe that this is sustainable. The brand is very well positioned in terms of competition. And then without a headline, it's extremely exciting.

Speaker #2: And the latest product we continue to see improvements. Based on the strategy that I laid out, we're looking for multiple key strategies and measuring our results.

Speaker #4: Now, Q1 had an easier compare because we were, again, up against some timing items. In last year, Q2 won't have that benefit. So Q2 will probably be peak impact of the tariffs.

Speaker #2: And having a lot of changes, especially to our website, our photography, our brand positioning, and then getting back to what is the traditional popular marketing, which is really resonating with customers.

Speaker #4: But after that, we expect it to moderate for the balance of the year.

Speaker #5: Okay. Great. Thanks, guys. Bye.

Speaker #2: And then we're only going to implement that strategy. And so I think if you're going to see continuing improvements in the product comps as we go, not just this year but next.

Seth: Okay, great. Thanks, guys. Bye.

[Analyst]: Okay, great. Thanks, guys. Bye.

Speaker #1: Your next question. Comes from the line of Chuck Graham. Of Gordon Haskett, your line is open. Please go ahead.

Operator: Your next question comes from the line of Chuck Grom of Gordon Haskett. Your line is open. Please go ahead.

Speaker #2: And we're confident.

Speaker #6: Hey, guys. I'm Greg Porter. Can you help us think about the underlying demand curve in the business? I mean, skeptics are going to say that this is tax refund-driven, but I don't think that's the case.

Speaker #3: Okay. Great. Thanks for that, Laura. And then just Jeff, on the supply chain, and another 50 basis of improvement there to help offset some of the merchandise margin pressure.

Chuck Grom: Hey, guys. Great quarter. Can you help us think about the underlying demand curve in the business? I mean, skeptics are going to say that this is tax refund driven, but I don't think that's the case. I was hoping maybe you could opine on strength at West Elm and the recovery in PB specifically. More importantly, just getting a better sense for the demand curve, the underlying demand curve in the business.

Speaker #6: And I was hoping maybe you could opine on strength at West Elm and the recovery in PB specifically. But more importantly, just getting a better sense for the demand curve, the underlying demand curve in the business.

Speaker #3: Can you walk through some of these APIs that the metrics you follow to give us a sense of kind of where you are on that journey and the visibility you have to continue the game?

Speaker #3: Yeah. We're thrilled with the results in West Elm. We're not entirely surprised. We've been building this foundation for growth. And remember, many, many quarters ago, I mentioned we're starting to see newness really working.

Speaker #3: Gain on the supply chain side. Thank you.

Laura Alber: Yeah, we're thrilled with the results in West Elm. We're not entirely surprised, though. We've been building this foundation for growth. If you remember, many quarters ago, I mentioned that we're starting to see newness really working, but we were chasing inventory. Now we have that in stock, and we have confidence in building more newness both in the core and then also in the collaborations. It is broad-based. The categories we've always had, but we also have new categories that are really performing well for us and focusing on not just furniture, but things that customers come more regularly and buy. The combination of the two things is great. I also will just say that this is not promotionally led. We have very, very strong regular price selling in West Elm.

Speaker #4: Absolutely, Chuck. So supply chain efficiencies continue to be a big benefit for us. And our goal remains the same. It's having a perfect order on time, damage-free, every time.

Speaker #3: Now we have that stock and we have confidence building more newness, both in the core and then also in collaboration. And it is broad-based.

Speaker #4: And those are really the key KPIs that we track. Is the order on time? Is it damage-free? Are there no issues with it? And is the customer satisfied?

Speaker #3: So the categories always have. We also have new categories that are really performing well for us. And we're focusing on not just furniture, but the things that customers come regularly and buy.

Laura Alber: It is broad-based. The categories we've always had, but we also have new categories that are really performing well for us and focusing on not just furniture, but things that customers come more regularly and buy. The combination of the two things is great. I also will just say that this is not promotionally led. We have very, very strong regular price selling in West Elm.

Speaker #4: And at the end of the day, it's really about making sure that customer is satisfied. And we have an incredible supply chain team that really makes a difference in terms of our customer service.

Speaker #3: And the combination of the two things is great. I also want to say that this is not emotionally led. We had a very, very strong regulated selling in West Elm.

Speaker #4: And as many of you have heard me say, we don't just compete on price. We also compete on service. We compete on service in our stores.

Speaker #4: With our free interior design services, which is help you propel the strength of our retail division. And we also compete on our in-home delivery.

Speaker #3: And it gives us those numbers that I would say that it's very important to note that it is not emotionally driven at all. And we believe that this is sustainable.

Laura Alber: I don't give those numbers, but I would just say that it's very important to note that it is not promotionally driven at all. We believe that the sustainability of the brand is very well positioned versus the competition, and our product pipeline is extremely exciting. As it relates to Pottery Barn, we continue to see improvements based on the strategy that I laid out. We're working quarter to quarter on multiple key strategies and measuring our results, and have made a lot of changes, especially to our website, our photography, and our transitioning and getting back to what is the traditional Pottery Barn aesthetic, which is really resonating with the customer. We've only begun to implement that strategy. I think you're going to see continuing improvements in the Pottery Barn comp as we go, not just this year, but next. We're confident.

Speaker #4: We make 2.4 million in-home deliveries a year. That's about 7,000 a day. And we do it better than just about anybody else out there.

Speaker #3: The brand is very well-positioned in terms of competition. And the product pipeline is extremely exciting. As it relates to product, we continue to see improvements.

Speaker #4: And we do it by focusing on making sure that customer is happy and that the order comes perfect every time. Is it on time?

Speaker #3: Based on the strategy that I laid out, we're working forward on multiple key strategies and measuring our results. And have had a lot of changes, especially to our website, our photography, our brand positioning, and then getting back to what is a traditional popular marketing, which is really resonating with the customer.

Speaker #4: Did we hit the delivery? Does it have all the pieces together? Did we put it where the customer wanted it? Are they happy with it?

Laura Alber: We're working quarter to quarter on multiple key strategies and measuring our results, and have made a lot of changes, especially to our website, our photography, and our transitioning and getting back to what is the traditional Pottery Barn aesthetic, which is really resonating with the customer. We've only begun to implement that strategy. I think you're going to see continuing improvements in the Pottery Barn comp as we go, not just this year, but next. We're confident.

Speaker #4: And at the end of every order, they actually have to sign and acknowledge that they're happy with it. We take pictures of the order and we make sure that it's what they want.

Speaker #4: And that customer service is really what differentiates us. And the more we service our customer, the better our results are.

Speaker #3: And we've only gone into that strategy, and so I think you're going to see continuing improvements in our comps as we go—not necessarily the next for confidence.

Speaker #3: Great. Thank you both.

Speaker #1: Your next question. Comes from the line of Jonathan Matuszewski, of Jefferies. Your line is open. Please go ahead.

Speaker #6: Okay, great. Thanks for that, Laura. And then just, Jeff, on the supply chain, another 50 days of improvement there to help offset some of the merchandise margin pressure.

Chuck Grom: Okay, great. Thanks for that, Laura. Then just Jeff, on the supply chain, in another 50 basis of improvement there to help offset some of the merchandise margin pressure. Can you walk through some of the KPIs, Chuck, the metrics you follow to give us a sense of kind of where you are on that journey and the visibility you have to continue to gain on the supply chain side? Thank you.

Speaker #4: Great. Good morning and thanks for the time. My question was on the trade channel. It's promotional in the industry for consumers. But it's also increasingly promotional in the industry for the trade channel.

Speaker #6: Can you walk through some of the KPIs across the metrics you follow to give us a sense of kind of where you are on that journey and the visibility you have to continue to gain on the supply chain side?

Speaker #4: Seems like many retailers are increasingly trying to quote the interior design community it looks like your trade channel business with strong this quarter up around 9%, I believe.

Speaker #6: Thank you.

Speaker #4: Absolutely, Chuck. So supply chain efficiencies continue to be a big benefit for us. And our goal remains the same. It's having a perfect order on time, damage-free, every time.

Jeff: Absolutely, Chuck. Supply chain efficiencies continue to be a big benefit for us. Our goal remains the same. It's having a perfect order on time, damage-free, every time. Those are really the key KPIs that we track. Is the order on time? Is it damage-free? Are there no issues with it? Is the customer satisfied? At the end of the day, it's really about making sure that customer is satisfied. We have an incredible supply chain team that really makes a difference in terms of our customer service. As many of you have heard me say, we don't just compete on price. We also compete on service. We compete on service in our stores with our free interior design services, which has helped propel the strength of our retail division. Also, we compete on our in-home delivery.

Jeff Howie: Absolutely, Chuck. Supply chain efficiencies continue to be a big benefit for us. Our goal remains the same. It's having a perfect order on time, damage-free, every time. Those are really the key KPIs that we track. Is the order on time? Is it damage-free? Are there no issues with it? Is the customer satisfied? At the end of the day, it's really about making sure that customer is satisfied.

Speaker #4: So my question is, what's on the horizon in terms of initiatives to maintain that momentum and neutralize maybe some of the higher promotions that some competitors are doing to court those designers?

Speaker #4: And those are really the key KPIs that we track. Is the order on time? Is it damage-free? Are there no issues with it? And is the customer satisfied?

Speaker #4: And at the end of the day, it's really about making sure that the customer is satisfied. And we have an incredible supply chain team that really makes a difference in terms of our customer service.

Speaker #4: Thanks.

Speaker #3: Good morning, Jonathan. And then we continue to believe in our B2B business. Had another really strong quarter of 14%. That was our largest quarter ever to date at B2B.

Jeff Howie: We have an incredible supply chain team that really makes a difference in terms of our customer service. As many of you have heard me say, we don't just compete on price. We also compete on service. We compete on service in our stores with our free interior design services, which has helped propel the strength of our retail division. Also, we compete on our in-home delivery.

Speaker #4: And as many of you have heard me say, we don't just compete on price. We also compete on service. We compete on service in our stores with our free interior design services, which is helping propel the strength of our retail division.

Speaker #3: Now, trade is an important part of it. To your point, it was up 9% in the quarter. And that's not really being driven on price.

Speaker #4: And also, we compete on our in-home delivery. We make 2.4 million in-home deliveries a year—that's about 7,000 a day. And we do it better than just about anybody else out there.

Speaker #3: We're not changing anything regarding the pricing we do with our trade consumers. Our promotional activity. We're competing on service. And it comes down to our local stores, partnering with their local trade community.

Jeff: We make 2.4 million in-home deliveries a year. That's about 7,000 a day, and we do it better than just about anybody else out there. We do it by focusing on making sure the customer is happy and that the order comes perfect every time. Is it on time? Did we hit the delivery window? Does it have all the pieces together? Did we put it where the customer wanted it? Are they happy with it? At the end of every order, they actually have to sign and acknowledge that they're happy with it. We take pictures of the order, and we make sure that it's what they want. That customer service is really what differentiates us. The more we service our customer, the better our results are.

Jeff Howie: We make 2.4 million in-home deliveries a year. That's about 7,000 a day, and we do it better than just about anybody else out there. We do it by focusing on making sure the customer is happy and that the order comes perfect every time. Is it on time? Did we hit the delivery window? Does it have all the pieces together?

Speaker #4: And we do it by focusing on making sure the customer is happy and that the order comes perfect every time. Is it on time?

Speaker #3: Building those relationships. And really executing on all the different strategies we have around product and service. And delivery. And then the place we're really focused in B2B is on the contract side, which had a 22% increase on the quarter.

Speaker #4: Did we hit the delivery window? Does it have all the pieces together? Did we put it where the customer wanted it? Are they happy with it?

Speaker #4: And at the end of every order, they actually have to sign and acknowledge that they're happy with it. We take pictures of the order and we make sure that it's what they want.

Jeff Howie: Did we put it where the customer wanted it? Are they happy with it? At the end of every order, they actually have to sign and acknowledge that they're happy with it. We take pictures of the order, and we make sure that it's what they want. That customer service is really what differentiates us. The more we service our customer, the better our results are.

Speaker #3: We continue to have incredibly robust pipelines. And we're making really big inroads here. I'll share that as many of you guys know, I manage B2B.

Speaker #4: And that customer service is really what differentiates us. And the more we service our customer, the better our results are.

Speaker #3: And earlier this month, I joined our B2B team down in Las Vegas at the Hospitality Design Expo. Where we won Best Food, which was signed how much attention we get in the industry.

Speaker #6: Great. Thank you both.

Speaker #1: Your next question comes from the line of Jonathan Matuszewski of Jefferies. Your line is open. Please go ahead.

Chuck Grom: Great. Thank you both.

Speaker #3: And I'll just share with you, it was incredible visits. I've never seen a team more motivated to drive results. And so much activity in our groups with customers coming in.

Operator: Your next question comes from the line of Jonathan Matuszewski of Jefferies. Your line is open. Please go ahead.

Speaker #5: Great. Good morning, and thanks for the time. My question was on the trade channel. It's promotional in the industry for consumers, but it's also increasingly promotional in the industry for the trade channel.

Speaker #3: It left me incredibly excited about our ability to achieve our goal, which was to drive it to $2 trillion.

Jonathan Matuszewski: Great. Good morning, and thanks for the time. My question was on the trade channel. It's promotional in the industry for consumers, but it's also increasingly promotional in the industry for the trade channel. Seems like many retailers are increasingly trying to court the interior design community. It looks like your trade channel business was strong this quarter, up around 9%, I believe. My question is what's on the horizon in terms of initiatives to maintain that momentum and neutralize maybe some of the higher promotions some competitors are doing to court those designers? Thanks.

Speaker #4: Thank you.

Speaker #5: It seems like many retailers are increasingly trying to court the interior design community. It looks like your trade channel business was strong this quarter, up around 9%, I believe.

Speaker #1: Your next Horvers, of JPM, your line is open. Please go ahead.

Speaker #4: Thanks for taking my question. I feel like I'm at a Pink Floyd concert right now. Laura, can you maybe talk about the West Elm Acceleration a bit more?

Speaker #5: So my question is, what's on the horizon in terms of initiatives to maintain that momentum and neutralize maybe some of the higher promotions that some competitors are doing to court those designers?

Speaker #4: There's a lot going on at the brand. You're running that PB Playbook of category expansion. Rooms outdoors, kids. You have the B2B side, which I think is a big driver of the West Elm business.

Speaker #5: Thanks.

Speaker #4: Good morning, Jonathan. We continue to believe in our B2B business. We had another really strong quarter, up 14%. In fact, it was our largest quarter ever to date for B2B.

Speaker #4: And then you had the Emma Collaboration. So as we think about that sequential improvement, could you maybe qualitatively bucket how the drivers which one of these drivers have been more significant?

Jeff: Good morning, Jonathan. We continue to believe in our B2B business. It had another really strong quarter, up 14%. In fact, it was our largest quarter ever to date at B2B. Trade is an important part of it. To your point, it was up 9% in the quarter, and that's not really being driven on price. We're not changing anything regarding the pricing we do with our trade consumers or promotional activity. It works with the in-home service, and it comes down to our local stores partnering with their local trade community, building those relationships, and really executing on all the different strategies we have around product and service and delivery.

Jeff Howie: Good morning, Jonathan. We continue to believe in our B2B business. It had another really strong quarter, up 14%. In fact, it was our largest quarter ever to date at B2B. Trade is an important part of it. To your point, it was up 9% in the quarter, and that's not really being driven on price. We're not changing anything regarding the pricing we do with our trade consumers or promotional activity. It works with the in-home service, and it comes down to our local stores partnering with their local trade community, building those relationships, and really executing on all the different strategies we have around product and service and delivery.

Speaker #4: Now, trade is an important part of it. To your point, it was up 9% in the quarter. And that's not really being driven on price.

Speaker #5: Thank you. I'm assuming you're commenting about the Echo. Which we're very sorry for. Is it any better now?

Speaker #4: We're not changing anything regarding the pricing we do with our trade consumers. Our promotional activity—we're competing on service. And it comes down to our local stores partnering with our local trade community, building those relationships, and really executing on all the different strategies we have around product and service.

Speaker #4: It's a little better.

Speaker #5: Okay. I mean, it's our partner, Q4, and they're working on it as we speak. But I apologize. It's distracting for us too. But I'm not so amazing West Elm business, which is driven by multiple things.

Speaker #4: And delivery. And then the place where really I'll share that as many of you guys know, I manage B2B. And earlier this month, I joined our B2B team down in Las Vegas at the Hospitality Design Expo.

Speaker #5: We laid out the strategies and we have been executing against them. And it's not one thing. Emma Chamberlain is amazing. She has got such a wonderful following and she continues to gain momentum knowing her.

Jeff: I'll share that, as many of you guys know, I manage B2B. Earlier this month, I joined our B2B team down in Las Vegas at the Hospitality Design Expo, where we won Best Booth, which is a sign of how much attention we get in the industry. I'll just share with you, it was an incredible visit. I've never seen a team more motivated to drive results and so much activity and energy with customers coming in. It left me incredibly excited about our ability to achieve our goal, which is to drive us to $2 billion.

Jeff Howie: I'll share that, as many of you guys know, I manage B2B. Earlier this month, I joined our B2B team down in Las Vegas at the Hospitality Design Expo, where we won Best Booth, which is a sign of how much attention we get in the industry. I'll just share with you, it was an incredible visit. I've never seen a team more motivated to drive results and so much activity and energy with customers coming in. It left me incredibly excited about our ability to achieve our goal, which is to drive us to $2 billion.

Speaker #4: Where we won Best Food, which was a sign of how much attention we get in the industry. And I'll just share with you, it was an incredible visit.

Speaker #5: And the team started working with her a while back and they put together a beautiful line of products that is really bringing in new customers, younger customers to the brand.

Speaker #4: I've never seen a team more motivated to drive results and so much activity in our group with customers coming in. It left me incredibly excited about our ability to achieve our goals, to drive us to $2 billion.

Speaker #5: And bringing back that hip feeling. And that surprise. I think when great retailers execute it's not what you always expect. It's this new layer that makes you smile and that's what Emma did.

Speaker #5: Thank you.

Speaker #5: All her great products from Pigeons to beautiful beds. I mean, it's across the categories. And that's just one thing. There's a bunch of really exciting other collaborators coming.

Jonathan Matuszewski: Thank you.

Speaker #1: Your next question comes from the line of Christopher Horvers of JPM. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Christopher Horvers of JPMorgan. Your line is open. Please go ahead.

Speaker #5: Thanks for taking my question. I feel like I'm at a Pink Floyd concert right now. Laura, can you maybe talk about the West Elm Acceleration a bit more?

Speaker #5: And you can imagine when you have one hit like that and people see it, a lot of people want to work with you. So we have a wonderful opportunity to continue to feed the collaboration pipeline with really interesting names.

Christopher Horvers: Thanks for taking my question. I feel like I'm at a Pink Floyd concert right now. Laura, can you maybe talk about the West Elm acceleration a bit more? There's a lot going on at the brand. You're running that PB playbook of category expansion, rooms, outdoor, kids. You have the B2B side, which I think is a big driver of the West Elm business, and then you have the Emma collaboration. As we think about that sequential improvement, could you maybe qualitatively bucket which one of these drivers have been more significant?

Speaker #5: There's a lot going on at the brand. You're running that PB Playbook of category expansion. Rooms outdoor, kids. You have the B2B side, which I think is a big driver of the West Elm business.

Speaker #5: And then it's the same time we've been working on filling white space in the market with West Elm's unique designs. Modern aesthetic and price point.

Speaker #5: And then you had the Emma Collaboration. So as we think about that sequential improvement, could you maybe qualitatively bucket how the drivers which one of these drivers have been more significant?

Speaker #5: And we're making progress against the categories of furniture. We've I would say we've added more looks. We've seen Pearson Ward continue to do well.

Speaker #5: And then we have our core categories, textiles and rugs and decadec and tabletop. And we have wins across the board. So it really isn't pointing to just one thing.

Speaker #7: Thank you. I'm assuming your commenting about the echo. Which were very sorry for. Is it any better now?

Laura Alber: Thank you. I'm assuming you're commenting about the Echo, which we're very sorry for. Is it any better now?

Speaker #5: It's a little better.

Speaker #7: Okay. I mean, it's our partner Q4 and they're working on it as we speak. But I apologize. It's distracting for us too. But I'm not so distracted.

Speaker #5: But there's a lot of room to go. I mean, there's still areas where we are underdeveloped versus Pottery Barn. And areas where we haven't hit it.

Christopher Horvers: It's a little better.

Laura Alber: Okay. It's our partner, Q4, and they're working on it as we speak. I apologize, it's distracting for us, too. I'm not so distracted I won't tell you about the amazing West Elm business, which is driven by multiple things. We laid out the strategies, and we have been executing against them, and it's not one thing. Emma Chamberlain is amazing. She has got such a wonderful following, and she continues to gain momentum in the world, and people knowing her. The team started working with her a while back, and they put together a beautiful line of products that is really bringing in new customers, younger customers to the brand, and bringing back that hip feeling and that surprise. I think when great retailers execute, it's not what you always expect. It's this new layer that makes you smile, and that's what Emma did.

Speaker #7: I won't tell you about the amazing West Elm business, which is driven by multiple things. We laid out the strategies and we have been executing against them.

Speaker #5: And that's what we're focused on. We're just going to keep driving it. And we're going to keep pushing for even higher comps. I think this brand has a lot of growth in it.

Speaker #5: And it's positioning. And we're going to go get it.

Speaker #7: And it's not one thing. Emma Chamberlain is amazing. She has got such a wonderful following and she continues to gain momentum in the world and people knowing her.

Speaker #4: Excellent. And then, Jeff, as a follow-up, can you help us with the price cost lap? You mentioned gross margin, troughs year over year in the second quarter.

Laura Alber: She has got such a wonderful following, and she continues to gain momentum in the world, and people knowing her. The team started working with her a while back, and they put together a beautiful line of products that is really bringing in new customers, younger customers to the brand, and bringing back that hip feeling and that surprise. I think when great retailers execute, it's not what you always expect. It's this new layer that makes you smile, and that's what Emma did.

Speaker #7: And the team started working with her a while back and they put together a beautiful line of product that is really bringing in new customers, younger customers to the brand.

Speaker #4: How much of the how much did Q25 have the price cost benefit? And does that $60 million of tariff costs that's hung up in inventory right now essentially flow through in the second quarter?

Speaker #7: And bringing back that hip feeling and that surprise I think in great retailers. Execute it's not what you always expect. It's this new layer that makes you smile and that's what Emma did.

Speaker #4: Thanks so much.

Speaker #3: Yeah. So not all of the $60 million flows through in the second quarter. But some of the thousands, like I said earlier, Q2 will be a big impact that generates the front half will be heavily impacted as the tariffs do flow through.

Speaker #7: All her great products from Pigeons to beautiful beds. I mean, it's across the categories. And that's just one thing. There's a bunch of really exciting other collaborators.

Laura Alber: All her great products, from pigeons to beautiful beds. It's across the categories. That's just one thing. There's a bunch of really exciting other collaborators coming, and you can imagine when you have one hit like that and people see it, a lot of people want to work with you. Continue to feed the collaboration pipeline with really interesting names. At the same time, we've been working on filling white space in the market with West Elm's unique design, modern aesthetic, and price point, and we're making progress against the categories of furniture. I would say we've added more looks. We've seen Pearson Ward continue to do well. We have our core categories, textiles and rugs and deck and tabletop, and we have wins across the board. It really isn't pointing to just one thing. There's a lot of room to go.

Speaker #3: But as I've said, this quarter and last moderate as we travel throughout the year. Q2, tariffs are essentially still being non-top. We did take some price in action in Q2 last year as well.

Speaker #7: Coming. And you can imagine when you have one hit like that and people see it, a lot of people want to work with you.

Speaker #7: So. Continue to feed the collaboration pipeline. With really interesting names. And then at the same time, we've been working on filling white space in the market.

Speaker #3: We were up against that. And then in Q3, partially gone for the first quarter. And then in Q4, they're full-con. So when you think about that across the year, it goes back to Q2 will feel the pressure.

Speaker #7: West Elm's unique designs. Modern aesthetic and price point. And we're making progress against the categories of furniture. We've I would say we've added more looks.

Laura Alber: At the same time, we've been working on filling white space in the market with West Elm's unique design, modern aesthetic, and price point, and we're making progress against the categories of furniture. I would say we've added more looks. We've seen Pearson Ward continue to do well. We have our core categories, textiles and rugs and deck and tabletop, and we have wins across the board. It really isn't pointing to just one thing. There's a lot of room to go.

Speaker #3: And then it'll moderate across the back half. In terms of pricing overall, I think Laura touched on that. We don't give out the specifics regarding traffic transactions or AOS.

Speaker #7: We've seen Pearson Ward continue to do well. And then we have our core categories, textiles and rugs and decac and tabletop. And we have wins across the board.

Speaker #3: But Q1 was not just the price. It was broadly across all of those. We're piloting on the board.

Speaker #7: So it really isn't pointing to just one thing. But there's a lot of room to go. I mean, there's still areas where we are underdeveloped versus Pottery Barn.

Speaker #4: Thank you.

Speaker #1: Your next question. Comes from the line of Peter Benedict. Of Bears. Your line is open. Please go ahead.

Speaker #7: And areas where we haven't hit it. And that's what we're focused on. We're just going to keep driving it. And we're going to keep pushing for even higher comps.

Laura Alber: There's still areas where we are underdeveloped versus Pottery Barn and areas where we haven't hit it, and that's what we're focused on. We're just going to keep driving it, and we're going to keep pushing for even higher comps. I think this brand has a lot of growth in it, in its positioning, and we're going to go get it.

Speaker #4: Hey, guys. Thanks for taking the question. I guess, Jeff, so the full year guide still embeds about a 70 basis point gap between your comp brand revenue growth and your total revenue growth.

Speaker #7: I think this brand has a lot of growth in it, and its positioning, and we're going to go get it.

Speaker #5: Excellent. And then, Jeff, as a follow-up, can you help us with the price/cost lap? You mentioned gross margin troughs year over year in the second quarter.

Speaker #4: But first quarter, it was a 40 basis point negative, I guess. So just help us understand the cadence and what's going to drive that as we think about over the balance of the year.

Christopher Horvers: Excellent. Then Jeff, as a follow-up, can you help us with the price cost lap? You mentioned gross margin troughs year over year in Q2. How much did Q2 2025 have the price cost benefit? Does that $60 million of tariff costs that's hung up in inventory right now essentially flow through in Q2? Thanks so much.

Speaker #5: How much of the—how much did Q2 2025 have the price/cost benefit? And does that $60 million of tariff costs that's hung up in inventory right now essentially flow through in the second quarter?

Speaker #3: Yeah. Good morning, Peter. It really comes down to our store opening schedule as we talked about last fall. We did say that Q1 would have the benefit of the 70 basis point benefit.

Speaker #3: That we were at 24 here. Because we have all this retail activity that we discussed, which includes opening 20 new stores and repositioning 19 stores.

Speaker #5: Thanks so much.

Speaker #8: Yeah, so not all of the $60 million flows through in the second quarter, but some of it does. And like I said earlier, Q2 of B2B can pass the tariffs.

Speaker #3: We'll all have them later in the year just based upon the construction timelines. So we still anticipate a full year benefit of 70 basis points to revenues.

Jeff: Good morning, Chris. Not all of the $60 million flows through in Q2. Some of it does. Like I said earlier, Q2 will be the peak impact that tariffs has. We've guided that H1 will be heavily impacted as the tariffs Q2 flow through. As I said, this quarter and last quarter, the tariffs will moderate as we travel throughout the year. Q2, the tariffs are essentially still the non-comp. We did take some pricing action in Q2 last year, we'll be up against that. In Q3, they're partially comp for part of the quarter, in Q4, they're full comp. When you think about that across the year, it goes back to Q2 will feel the pressure, it'll moderate across H2.

Jeff Howie: Good morning, Chris. Not all of the $60 million flows through in Q2. Some of it does. Like I said earlier, Q2 will be the peak impact that tariffs has. We've guided that H1 will be heavily impacted as the tariffs Q2 flow through. As I said, this quarter and last quarter, the tariffs will moderate as we travel throughout the year. Q2, the tariffs are essentially still the non-comp. We did take some pricing action in Q2 last year, we'll be up against that. In Q3, they're partially comp for part of the quarter, in Q4, they're full comp. When you think about that across the year, it goes back to Q2 will feel the pressure, it'll moderate across H2.

Speaker #8: They've got it at the front half. We'll be heavily impacted. And the tariffs do flow through. But as I've said, this quarter and last quarter, the tariffs will moderately get that as we travel throughout the year.

Speaker #3: From all this retail activity, and it'll accelerate as we go throughout the year.

Speaker #4: Okay. Makes sense. And then my other question is just on the shrink accrual. I don't recall if you framed the size of that in the quarter, if that was just part of maybe the one of the other buckets.

Speaker #8: Q2, the tariffs are essentially still be non-comm. We did take some spicy action in Q2 last year. We'll be up against that. And then in Q3, there's partially comm for part of the quarter.

Speaker #8: And then in Q4, they're full comp. So when you think about that across the year, it goes back to Q2. We'll feel the pressure.

Speaker #4: But can you talk about the shrink accrual and the third quarter? And if we should expect that to continue to be a good guy, I guess, over the balance of the next couple of quarters before we cycle the positive in the fourth quarter of last year.

Speaker #8: And then we'll moderate across the back half. In terms of pricing overall, I think Laura touched on that. We don't give out the specifics.

Speaker #4: Thank you.

Speaker #3: Yeah. Happy to do it. And as you may recall, we had this result already in our accrual this year '25. And for fiscal year '26, we screwed up the accrual rates to reflect that outcome.

Speaker #8: We've got traffic transit actions or AOS. But Q1 was not just price. It was broad-based across all levels. We're positive on the board. Thank you.

Jeff: In terms of pricing overall, I think Laura touched on that, is we don't give out the specifics regarding traffic, transactions or AOS. Q1 was not just price, it was broad-based across all levers were positive on the board.

Jeff Howie: In terms of pricing overall, I think Laura touched on that, is we don't give out the specifics regarding traffic, transactions or AOS. Q1 was not just price, it was broad-based across all levers were positive on the board.

Speaker #3: As a result, we will see benefit in quarters one, two, three. And then come up against the benefit we saw last year in Q4.

Speaker #1: Your next question. Comes from the line of Peter Benedict. Of bears. Your line is open. Please go ahead.

Speaker #3: In terms of how much it was in Q1, we got half the benefit that we reported since last year. Benefits. And here's the thing.

Christopher Horvers: Thank you.

Jeff: Thank you.

Jeff Howie: Thank you.

Operator: Your next question comes from the line of Peter Benedict of Baird. Your line is open. Please go ahead.

Speaker #3: You never know what's going to happen until you take physical inventory and reconcile everything. We think we have the right accrual for this year.

Speaker #9: Hey, guys. Thanks for taking the question. I guess, Jeff, so the full year guide still embeds about a 70 basis point gap between your comp brand revenue growth and your total revenue growth.

Speaker #3: And all of this is embedded in our guidance.

Speaker #4: Great. Thanks so much.

Peter Benedict: Hey, guys. Thanks for taking the question. I guess, Jeff, the full year guide still embeds about a 70 basis point gap between your comp brand revenue growth and your total revenue growth. In Q1, it was a -40 basis point, I guess. Just help us understand the cadence and what's going to drive that as we think about over the balance of the year.

Speaker #1: Thanks, Peter. Your next question. Comes from the line of Christina Fernandez. Of Chelsea Advisory Group. Your line is open. Please go ahead. Thank you.

Speaker #9: The first quarter, it was a 40 basis point negative, I guess. So just help us understand the cadence and what's going to drive that as we think about over the balance of the year.

Speaker #8: Yeah, good morning. It really comes down to our store opening schedule. Gusts, which includes opening 20 new stores and repositioning 19 stores, will all happen later in the year just based upon the construction timelines.

Speaker #1: Good morning. I wanted to ask about the accelerating trends in DTCs. Can you talk perhaps what you're doing on the advertising that's different and driving traffic to the website in that environment that has seemed more promotional to us?

Jeff: Yeah. Good morning, Peter. It really comes down to our store opening schedule, which includes opening 20 new stores and repositioning 9 stores. It will all happen later in the year, today's comping is struck on timelines. We still anticipate a full year benefit of 70 basis points to revenues from all this retail activity. It'll accelerate as we go throughout the year.

Jeff Howie: Yeah. Good morning, Peter. It really comes down to our store opening schedule, which includes opening 20 new stores and repositioning 9 stores. It will all happen later in the year, today's comping is struck on timelines. We still anticipate a full year benefit of 70 basis points to revenues from all this retail activity. It'll accelerate as we go throughout the year.

Speaker #8: So we still anticipate a full-year benefit of 70 basis points to revenue from all this retail activity, and it'll accelerate as we go.

Speaker #1: Not from you, from the competition.

Speaker #5: Well, I'd say that we're always looking at where we can make a tweak to our mix that drives incremental traffic and conversion. And we are using our brand heat to fuel social organic and paid.

Speaker #8: Throughout the year.

Speaker #9: Okay, makes sense. And then my other question is just on the shrink accrual. I don't recall if you framed the size of that in the quarter, or if that was just part of maybe one of the other buckets.

Peter Benedict: Okay. Makes sense. My other question is just on the shrink accrual. I don't recall if you framed the size of that in the quarter, if that was just part of maybe one of the other buckets. Can you talk about the shrink accrual in Q1, and if we should expect that to continue to be a good guide, I guess, over the balance of the next couple quarters before we cycle the positive in Q4 of last year. Thank you.

Speaker #5: And influencers are doing a great job for us. With our partners, we are continuing to invest in the high ROIC ad costs. Terms and programs and we're doing a lot of testing with these groups to find what will matter in this new world and how we feed the LLMs and I do have Samir here with me and I'm going to before we run out of time, use your question to turn it to him to talk a little bit more.

Speaker #9: But can you talk about the shrink accrual in the first quarter, and if we should expect that to continue to be a good guy, I guess, over the balance of the next couple of quarters before we cycle the positive in the fourth quarter last year?

Speaker #9: Thank you.

Speaker #8: Yeah, happy to, Peter. As you recall, you're anticipating the first results came in lower than our accrual. This is Q2 '25, and particularly in '26, we chewed up the accrual rate.

Jeff: Happy to, Peter. As you may recall, your fiscal inventory results came in lower than our accrual for fiscal year 2025. For fiscal year 2026, we trued up the accrual rate to reflect that outcome. As a result, we will see benefits in Q1 through Q3, then come up against the benefit we saw last year in Q4. In terms of how much it was in Q1, it was about half the benefit as we were reporting some supply chain benefits. Here's the thing, you never know what's going to happen until you take physical inventory and reconcile everything. We think we have the right accrual for this year. All of this is embedded in our guidance.

Jeff Howie: Happy to, Peter. As you may recall, your fiscal inventory results came in lower than our accrual for fiscal year 2025. For fiscal year 2026, we trued up the accrual rate to reflect that outcome. As a result, we will see benefits in Q1 through Q3, then come up against the benefit we saw last year in Q4. In terms of how much it was in Q1, it was about half the benefit as we were reporting some supply chain benefits. Here's the thing, you never know what's going to happen until you take physical inventory and reconcile everything. We think we have the right accrual for this year. All of this is embedded in our guidance.

Speaker #8: Reflect that outcome. As a result, we will keep. Benefit in quarter one, two, three. And then come up against the benefit we saw last year in Q4.

Speaker #5: About what we're doing with AI and how we're using that to accelerate really all of our strategies and if you don't mind, I'm going to give him the chance to do that now.

Speaker #8: In terms of how much it was in Q1, we got past the benefit that we reported supply chain benefits. And here's the thing. You never know what's going to happen until you take physical inventory and reconcile everything.

Speaker #5: It's relevant to your question.

Speaker #3: Yeah. Appreciate you. So you heard Laura talk about her remarks about how we're accelerating the AI and the impact it's having. You talked right now about digital marketing, how impactful the work that we're doing with Bears.

Speaker #8: I think we have the right accrual for this year. And all of this is embedded in our guidance.

Speaker #9: Great. Thanks so much.

Speaker #3: But I do want to take a minute and talk about what we're already the acceleration is going to impact we're seeing and how that's starting to come to life.

Peter Benedict: Great. Thanks so much.

Laura Alber: Thanks, Peter.

Speaker #3: I think Q1, I think I shared Q2 a little bit. So first, we talked about how our William-Sonoma culinary assistant and all this continues to get smarter and smarter.

Operator: Your next question comes from the line of Cristina Fernandez of Telsey Advisory Group. Your line is open. Please go ahead.

Speaker #3: And we want our service questions and the best questions and everything in cooking. And now she's helping to sell. She's on the product pages.

Speaker #3: She's helping customers with questions and she's driving customers into checkout sites multiple of what our sales average. It's really just incredible results. Game player is another area.

Cristina Fernández: Thank you. Good morning. I wanted to ask about the accelerating trends in DTC. Can you talk perhaps what you're doing on the advertising that's different and driving traffic to the website in an environment that has seemed more promotional to us, not from you, from the competition?

Speaker #3: And so we're using generative AI movement to help customers visualize the actual room plan with photo realistic quality. It's giving them confidence and helping guide them through the generative tools.

Thank you. Good morning. I wanted to ask about the accelerating trends in DTC. Can you talk perhaps about what you're doing on the advertising—what's different and what's driving traffic to the website in that environment? It has seemed more promotional to us—not from you, but from the competition.

Laura Alber: Well, I'd say that we're always looking at where we can make a tweak to our mix that drives incremental traffic and conversion. We are using our brand heat to fuel social, organic, and paid. Influencers are doing a great job for us. We are continuing to invest in the high ROIC ad cost terms and programs, and we're doing a lot of testing with these groups to find what will matter in this new world and how we feed the LLMs. I do have Samir here with me, and I'm going to, before we run out of time, use your question to turn it to him to talk a little bit more about what we're doing with AI and how we're using that to accelerate really all of our strategies.

Speaker #3: A very complex interior design experience. It's really impactful stuff that others just aren't paying for the data, paying for the expertise. And we're able to bring it together with AI in a way that nobody else can.

Well, I'd say that we're always looking at, you know, where we can make a tweak to our

Speaker #3: Our AI engine studio is producing lifestyle imagery and brand standard or scale like we've never seen before. Design representations translate with signals and thoughts.

the trees incremental, traffic and conversion, and, um, we are using our brand Heat

Speaker #3: Everything that the customer is doing. And not just providing them concrete predictions, but helping them drive it completely close. Here's how we're completely interior design.

Laura Alber: We are continuing to invest in the high ROIC ad cost terms and programs, and we're doing a lot of testing with these groups to find what will matter in this new world and how we feed the LLMs. I do have Samir here with me, and I'm going to, before we run out of time, use your question to turn it to him to talk a little bit more about what we're doing with AI and how we're using that to accelerate really all of our strategies.

To fuel social, organic and paid, and, uh, influencers are doing a great job for us, um, with our partners, you know?

Speaker #3: Here's how helping come together. In a way that's personalized to the customer's style and customer's preference. We talked about supply chains. We're seeing massive efficiencies come through the AI and the supply chain.

Speaker #3: Identifying opportunities in our order life cycle, supply chain life cycle, taking concept to transportation. Taking concept to order delivery process. And productivity. Within our corporate associates, code automation and accelerating quickly.

Speaker #3: We rolled out agendas training and workflow tools to every corporate function with champions embedded into every part of our company. With people moving from the users of AI to really leading coming builders.

Laura Alber: If you don't mind, I'm going to give him the chance to do that now. It's relevant to your question.

Samir: Yeah. Appreciate you, Laura. You heard Laura talk a lot about her prepared remarks about how we're accelerating in AI and the impact it's having. You talked right now about digital marketing and how it can impact all the work that we're doing there. I do want to take a minute and talk about more broadly the acceleration we're seeing, the impact we're seeing, and how that's starting to come to life in Q1. I think I can share a few examples of that. First, we've talked about Olive, our Williams-Sonoma culinary assistant, and Olive just continues to get smarter and smarter, handling more customer service questions, complex questions that enter into cooking. Now she's helping with sales. She's on our product pages. She's helping customers with questions, and she's driving customers into checkout at multiples of other traffic averages. It's really incredible results.

[Company Representative] (Williams-Sonoma): Yeah. Appreciate you, Laura. You heard Laura talk a lot about her prepared remarks about how we're accelerating in AI and the impact it's having. You talked right now about digital marketing and how it can impact all the work that we're doing there. I do want to take a minute and talk about more broadly the acceleration we're seeing, the impact we're seeing, and how that's starting to come to life in Q1.

Question to turn it to him to talk a little bit more about what we're doing with AI, and how we're using that to accelerate really all of our strategies. And, um, if you don't mind, I'm just—I'm gonna give him the chance to do that now. It's relevant to your question.

Speaker #3: It's just really exciting to see that. We're just not just deploying AI tools. We're becoming an AI tool now.

Speaker #1: Thank you for that. And then as a second question, could you talk about Pottery Barn? I mean, it was good to see the improvement this quarter, but what areas are you focused on as we look at the rest of the year to even accelerate growth in that brand?

[Company Representative] (Williams-Sonoma): I think I can share a few examples of that. First, we've talked about Olive, our Williams-Sonoma culinary assistant, and Olive just continues to get smarter and smarter, handling more customer service questions, complex questions that enter into cooking. Now she's helping with sales. She's on our product pages. She's helping customers with questions, and she's driving customers into checkout at multiples of other traffic averages. It's really incredible results.

Speaker #5: Great. We continue to make improvements on our DTC channel. In the way that the customer finds products and shops is Samir just told you.

Speaker #5: And that is across the board, but in particular, we've been very focused in Pottery Barn in really having everyone study where we can make those improvements the fastest and also in the photography.

Samir: Room Planner is another area. We're using generative AI in Room Planner to help customers visualize their actual room plan with photorealistic quality, giving them confidence and helping guide them through, with GenAI tools, a very complex interior design experience. It's really impactful stuff that leverages our proprietary data, our proprietary expertise, and we're able to bring it together with AI in a way that nobody else can. Our AI design studio is producing lifestyle imagery at a brand standard and scale we've never seen before. Design recommendations is triangulating signals across everything that a customer is doing, and not just providing them with product recommendations, but helping them visualize a complete look. Here's how we complete your interior design. Here's how it's all going to come together in a way that's personalized to a customer's style, to a customer's preference. We talk about supply chain.

[Company Representative] (Williams-Sonoma): Room Planner is another area. We're using generative AI in Room Planner to help customers visualize their actual room plan with photorealistic quality, giving them confidence and helping guide them through, with GenAI tools, a very complex interior design experience. It's really impactful stuff that leverages our proprietary data, our proprietary expertise, and we're able to bring it together with AI in a way that nobody else can.

Speaker #5: So the photography, if you go on, you'll see just I think some of the best photography we've had. And it's going to get even better into the fall season.

Speaker #5: I've had the chance to look at the fall film with the new product. And I think it's going to really it's going to really blow everybody's socks off.

Speaker #5: I mean, it's great. It is appealing. It is fresh. And it's also what you would imagine when Pottery Barn is at when it's at its best, what it should look like.

[Company Representative] (Williams-Sonoma): Our AI design studio is producing lifestyle imagery at a brand standard and scale we've never seen before. Design recommendations is triangulating signals across everything that a customer is doing, and not just providing them with product recommendations, but helping them visualize a complete look. Here's how we complete your interior design. Here's how it's all going to come together in a way that's personalized to a customer's style, to a customer's preference. We talk about supply chain.

Speaker #5: And multiple layers of different aesthetics that are all working well together. So creatively, I'm excited about how that feeds the brand. And the stores have looked great.

Speaker #5: We've done really well with the stores. And so focusing on the DTC channel is going to really help improve the performance because that has been where it's been lagging.

Samir: We're seeing massive efficiencies come through the AI into the supply chain, identifying opportunities in our order life cycle and supply chain life cycle, taking costs out of transportation, taking costs out of the order delivery process. Productivity. Within our corporate associates, code automation is accelerating quickly. We rolled out generative training and workflow tools to every corporate function, with champions embedded in every part of our company, with people moving from being users of AI to really thinking, becoming builders. It's just really exciting to see that. We're not just deploying AI tools. We're becoming an AI-fluent company.

[Company Representative] (Williams-Sonoma): We're seeing massive efficiencies come through the AI into the supply chain, identifying opportunities in our order life cycle and supply chain life cycle, taking costs out of transportation, taking costs out of the order delivery process. Productivity. Within our corporate associates, code automation is accelerating quickly. We rolled out generative training and workflow tools to every corporate function, with champions embedded in every part of our company, with people moving from being users of AI to really thinking, becoming builders. It's just really exciting to see that. We're not just deploying AI tools. We're becoming an AI-fluent company.

Speaker #5: And then from a product perspective, we are seeing, and this is competitive, so I have to be careful not to tell too much, but we're seeing some new things work.

Speaker #5: And it was what we expected. And we're going to continue to develop more into those looks. Across the board, both in textiles and in furniture.

Speaker #5: Those are the big pieces. There's a lot of other things too. That we're working on in the store experience. And all of it will be incremental and we're very, very confident.

Of.

People.

Speaker #4: I'll break for a minute.

Cristina Fernández: Thank you for that. As a second question, could you talk about Pottery Barn? It was good to see the improvement this quarter. What areas are you focused on as we look at the rest of the year to even accelerate growth in that brand?

Speaker #1: Thank you. There are no further questions at this time. I would now like to pass the call back to Laura Alber. Chief Executive Officer for Closing Remarks.

Laura Alber: Great. We continue to make improvements on our DTC channel and the way that the customer finds products and shops, as Samir just told you, and that is across the board. In particular, we've been very focused in Pottery Barn and really having everyone study where we can make those improvements the fastest, and also in the photography. The photography, if you go on, you'll see just, I think, some of the best photography we've had, and it's going to get even better into the fall season. I've had the chance to look at the fall film with the new product, and I think it's going to really blow everybody's socks off. It's great. It is appealing. It is fresh. It's also what you would imagine when Pottery Barn is at its best, what it should look like.

Speaker #5: Okay. Well, thank you all for your patience on this call. I hope you could hear everything. And we appreciate your support. We're confident in our business and we can't wait to talk to you next time.

Laura Alber: The photography, if you go on, you'll see just, I think, some of the best photography we've had, and it's going to get even better into the fall season. I've had the chance to look at the fall film with the new product, and I think it's going to really blow everybody's socks off. It's great. It is appealing. It is fresh. It's also what you would imagine when Pottery Barn is at its best, what it should look like.

Thank you for that. And then second question, could you talk about um, Pottery Barn? I mean it was good to see the Improvement this quarter, but what areas are you focused on as we look at the rest of the year to even, um, accelerate growth in that brand great, we continue to make improvements on our DTC Channel and the way that, um, the customer finds products and shops is Samir just told you and that is across the board. But in particular, um, we've been very focused in Pottery Barn and and really having everyone study where we can make those improvements, the fastest and also, um, in the photography. So, the photography, if you go on, you'll see, just I think the some of the best photography we've had and it's going to get even better Into The Fall season. I've had the chance to look at the fall films with the new products. And I think it's going to really, um,

You know, it's gonna—it's, it's gonna really blow everybody's, um, socks off. I mean, it's—

Laura Alber: Multiple layers of different aesthetics that are all working well together. Creatively, I'm excited about how that feeds the brand. The stores have looked great. We've done really well with the stores. Focusing on the DTC channel is going to really help improve the performance because that has been where it's been lagging. From a product perspective, we are seeing, and this is competitive, so I have to be careful not to tell too much, but we're seeing some new things work, and it's what we expected, and we're going to continue to develop more into those looks across the board, both in textiles and in furniture. Those are the big pieces. There's a lot of other things too that we're working on in the store experience, and all of it will be incremental, and we're very, very confident.

It's great. It is, um, appealing. It is fresh. And it's also, um, what you would imagine when Potter says, at when it's at its best, what it should look like, uh, and multiple layers of different Aesthetics that are all working well together. So,

You know, creatively, I'm excited about how that feeds the brand, and the stores have looked great. We've done really well with the stores, and so—

Laura Alber: From a product perspective, we are seeing, and this is competitive, so I have to be careful not to tell too much, but we're seeing some new things work, and it's what we expected, and we're going to continue to develop more into those looks across the board, both in textiles and in furniture. Those are the big pieces. There's a lot of other things too that we're working on in the store experience, and all of it will be incremental, and we're very, very confident.

Focusing on the DTC channel is going to really help improve the performance because that has been where it's been lagging. And then from a product perspective, um we are seeing and this is competitive so I have to be careful not to tell too much but we're seeing some new things work and it was what we expected and we're going to continue to develop more into those looks um across the board, both in textiles and in furniture.

Those are the big pieces. There's a lot of other things too that, um, we're working on in the store experience, and, um, you know, all of it will be incremental and we're very, very confident.

Samir: Operator, we're ready for the next question.

[Company Representative] (Williams-Sonoma): Operator, we're ready for the next question.

Operator, we're ready for the next question.

Operator: Thank you. There are no further questions at this time. I would now like to pass the call back to Laura Alber, Chief Executive Officer, for closing remarks.

Thank you. There are no further questions at this time.

I would now like to pass the call back to Laura, Albert.

Laura Alber: Okay. Well, thank you all for your patience on this call. I hope you could hear everything, and we appreciate your support. We're confident in our business, and we can't wait to talk to you next time.

Chief executive officer for closing remarks. Okay. Well, thank you all for your patience on this call. Um, I hope you could hear everything and, um, we appreciate your support, we're confident in our business and we can't wait to talk to you next time.

Operator: This concludes today's call. Thank you for attending. You may now.

This concludes today's call.

Thank you for attending.

You may now disc.