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 Williams-Sonoma, Inc. announces second quarter 2017 results
   Wednesday, August 23, 2017 4:15:03 PM ET

Williams-Sonoma, Inc. (WSM ) today announced operating results for the second fiscal quarter ended July 30, 2017 ("Q2 17") versus the second fiscal quarter ended July 31, 2016 ("Q2 16").

2nd QUARTER 2017 RESULTS

          -   Q2 17 net revenues grew 3.7% to $1.202 billion versus $1.159 billion
                                                                                                             in Q2 16 with comparable brand revenue growth of 2.8%.
                                                                                                            
                                                                                                         -   Q2 17 operating margin was 6.8% versus 7.2% in Q2 16.
                                                                                                            
                                                                                                         -   Q2 17 diluted earnings per share ("EPS") was $0.61 versus $0.58 in
                                                                                                             Q2 16.
                                                                                                            
                                                                                                         -   Cash returned to stockholders totaled $89 million, comprising $55
                                                                                                             million in stock repurchases and $34 million in dividends.
                                                                                                            


Laura Alber, President and Chief Executive Officer, commented: "Our second quarter results with accelerated revenue and comp growth of 3.7% and 2.8%, respectively, demonstrate that the investments and actions we have undertaken to deliver value, quality and excellent customer service are driving improved top-line performance. These results reflect the strength of our brands and our competitive advantages, as well as our relentless focus on our initiatives to drive innovation and operational excellence. And, we are aggressively building upon these initiatives to further differentiate ourselves and to drive profitable growth."

Net revenues increased to $1.202 billion in Q2 17 from $1.159 billion in Q2 16.

Comparable brand revenue in Q2 17 increased 2.8% on top of 0.6% in Q2 16 as shown in the table below:

 
                                                                                                               2nd Quarter Comparable Brand Revenue
                                                                                                                        Growth by Concept*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                 Q2 17                   Q2 16
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------- -------------------- -------------------- -------------------- -------------------- --------------
Pottery Barn                      1.2 %                  (4.8 %)
Williams Sonoma                                                                                                                  1.9 %                                                                                                                  0.0 %
West Elm                                                                                                                        10.1 %                                                                                                                 15.8 %
Pottery Barn Kids                                                                                                               (3.9 %)                                                                                                                 0.1 %
PBteen                            0.2 %                  (5.2 %)
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------ ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ ------
Total                             2.8 %                   0.6 %
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------ ------ -------------------- -------------------- -------------------- -------------------- -------------------- ------ ------
* See the Company’s 10-K and 10-Q filings for the definition of
comparable brand revenue.

E-commerce net revenues in Q2 17 increased 5.2% to $631 million from $600 million in Q2 16. E-commerce net revenues generated 52.5% of total company net revenues in Q2 17 and 51.7% of total company net revenues in Q2 16.

Retail net revenues in Q2 17 increased 2.1% to $571 million from $559 million in Q2 16.

Operating margin in Q2 17 was 6.8% compared to 7.2% in Q2 16:

          -   Gross margin was 35.2% in Q2 17 versus 35.4% in Q2 16.
                                                                                                            
                                                                                                         -   Selling, general and administrative ("SG&A") expenses were $341
                                                                                                             million, or 28.4% of net revenues in Q2 17, versus $327 million, or
                                                                                                             28.2% of net revenues, in Q2 16.

The effective income tax rate in Q2 17 was 34.8% versus 37.7% in Q2 16. The year-over-year tax rate improvement was driven by the overall mix and level of earnings, as well as the incremental benefits we are seeing from improved profitability across our international operations, which are taxed at a lower tax rate.

EPS in Q2 17 was $0.61 versus $0.58 in Q2 16.

Merchandise inventories at the end of Q2 17 increased 11.4% to $1.073 billion from $963 million at the end of Q2 16. A large portion of this inventory growth, however, was associated with inventory that is in-transit and not yet received at our distribution centers. The biggest drivers of inventory growth are associated with our higher growth brands, particularly West Elm. There was also higher growth in PBteen, where sales had previously been most impacted by lower in-stock inventory levels.

STOCK REPURCHASE PROGRAM

During Q2 17, we repurchased 1,160,381 shares of common stock at an average cost of $47.41 per share and a total cost of approximately $55 million. As of July 30, 2017, there was approximately $317 million remaining under our current stock repurchase authorization.

FISCAL YEAR 2017 FINANCIAL GUIDANCE

                                                  
                                                                                         3rd Quarter 2017 Financial Guidance
                                                                                                                                                   
Total Net Revenues (millions)                                                                                                                     $1,270 - $1,310
Comparable Brand Revenue Growth                                                                                                                       2% - 5%
Diluted EPS                                                                                                                                        $0.80 - $0.87
                                                                                                                                                   
                                 
---------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------
                                                                                                                                                   
                                                                                         Fiscal Year 2017 Financial Guidance
                                                                                                                                                   
Total Net Revenues (millions)                                                                                                                                        $5,165 - $5,265
Comparable Brand Revenue Growth                                                                                                                                          1% - 3%
Non-GAAP Operating Margin*                                                                                                                                             9.4% - 9.6%
Non-GAAP Diluted EPS*                                                                                                                                                 $3.45 - $3.65
Income Tax Rate                                                                                                                                                       36.5% - 37.5%
Capital Spending (millions)                                                                                                                                            $200 - $220
Depreciation and Amortization (millions)                                $185 - $195
---------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------
* Excludes certain items affecting comparability. See Notes 1 and
2 in Exhibit 1. Including
these items, GAAP operating margin guidance would be 9.3% to 9.5%.
See Exhibit 1 for a
reconciliation of GAAP to non-GAAP EPS.
                                                                                                                                                                                        
                                                                                                       Store Opening and Closing Guidance by Retail Concept*
                                                                                                                                                                                                                                                                                         
                                                          FY 2016 ACT                                                                          FY 2017 GUID
------------------------------------------------------------------------------------------                      -------------------- -------------------- ---------------------------------------------------------------------------------------------------------
       Total                               New      Close        End
-------------------- -------------------- -------------------- ------ --------------------                      -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------
Williams Sonoma             234                                                                                          4        (7)        231
Pottery Barn                                                      201                                                                                          8                                              (6)                                              203
West Elm                                                           98                                                                                         11                                              (3)                                              106
Pottery Barn Kids                                                  89                                                                                          -                                              (4)                                               85
Rejuvenation                  7                                 1          -          8
-------------------- -------------------- -------------------- ------ --------------------                      -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------
Total                       629                                24       (20)        633
==================== ==================== ==================== ====== ====================                      ==================== ==================== ====== ==================== ==================== ====== ==================== ==================== ======
*  Included in the FY 16 store count are 19 stores in Australia
and one store in the UK. 
FY 17 guidance includes one additional UK store.
                                                                                                                                                                                                                                                           

CONFERENCE CALL AND WEBCAST INFORMATION

Williams-Sonoma, Inc. will host a live conference call today, August 23, 2017, at 2:00 P.M. (PT). The call, hosted by Laura Alber, President and Chief Executive Officer, will be open to the general public via live webcast and can be accessed at http://ir.williams-sonomainc.com/events . A replay of the webcast will be available at http://ir.williams-sonomainc.com/events .

SEC REGULATION G -- NON-GAAP INFORMATION

This press release includes non-GAAP operating margin and diluted EPS. These non-GAAP financial measures exclude the impact of severance-related charges in Q1 16, Q3 16 and Q1 17, a one-time favorable tax adjustment associated with intercompany transactions in Q4 16, and tax expense related to the adoption of new accounting rules related to stock-based compensation in Q1 17. We have reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in the text of this release and in Exhibit 1. We believe that these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful evaluation of our actual results and Q3 17 and FY 17 guidance on a comparable basis with prior periods. Our management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements relating to: our investments and initiatives; our future financial guidance, including Q3 17 and FY 17 guidance; our stock repurchase program; and our proposed store openings and closures.

The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include: accounting adjustments as we close our books for Q2 17; continuing changes in general economic conditions, and the impact on consumer confidence and consumer spending; new interpretations of or changes to current accounting rules; our ability to anticipate consumer preferences and buying trends; dependence on timely introduction and customer acceptance of our merchandise; changes in consumer spending based on weather, political, competitive and other conditions beyond our control; delays in store openings; competition from companies with concepts or products similar to ours; timely and effective sourcing of merchandise from our foreign and domestic vendors and delivery of merchandise through our supply chain to our stores and customers; effective inventory management; our ability to manage customer returns; successful catalog management, including timing, sizing and merchandising; uncertainties in e-marketing, infrastructure and regulation; multi-channel and multi-brand complexities; our ability to introduce new brands and brand extensions; challenges associated with our increasing global presence; dependence on external funding sources for operating capital; disruptions in the financial markets; our ability to control employment, occupancy and other operating costs; our ability to improve our systems and processes; changes to our information technology infrastructure; general political, economic and market conditions and events, including war, conflict or acts of terrorism; and other risks and uncertainties described more fully in our public announcements, reports to stockholders and other documents filed with or furnished to the SEC, including our Annual Report on Form 10-K for the fiscal year ended January 29, 2017 and all subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

ABOUT WILLIAMS-SONOMA, INC.

Williams-Sonoma, Inc. is a specialty retailer of high-quality products for the home. These products, representing eight distinct merchandise strategies - Williams Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams Sonoma Home, Rejuvenation, and Mark and Graham - are marketed through e-commerce websites, direct mail catalogs and retail stores. Williams-Sonoma, Inc. currently operates in the United States, Canada, Australia and the United Kingdom, offers international shipping to customers worldwide, and has unaffiliated franchisees that operate stores in the Middle East, the Philippines and South Korea, and stores and e-commerce websites in Mexico.

                                                      
                                                                                                                                                                                                                            Williams-Sonoma, Inc.
                                                                                                                                                                                                          Condensed Consolidated Statements of Earnings (unaudited)
                                                                                                                                                                                                            Thirteen weeks ended July 30, 2017 and July 31, 2016
                                                                                                                                                                                                         (Dollars and shares in thousands, except per share amounts)
                                                                                                                                                       
                                                                                                                                                                                                                                                                                                            2nd Quarter
                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                      2017                                                                                                                                                                                                           2016
                                                                                                                                                      ----------------------------------------------------------------------------------------------------                                                                                                         ---------------------------------------------------------------------------------------------------------
                                                                                                                                                             $                              % of                                                                                                                 $                                   % of
                                                                                                                                                                                                                                                 Revenues                                                                                                                                                                                                          Revenues
                                                                                                                                                      -------------------- --------- -------------------- -------------------- -------------------------                                                                                                           -------------------- --------- -------------------- -------------------- ------------------------------
E-commerce net revenues                                                                                                                                                  $   630,793      52.5 %                                                                                                                                                $   599,683           51.7 %
Retail net revenues                                                                                                                                       570,813      47.5                                                                                                                559,346           48.3  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Net revenues                                                                                                                                                               1,201,606                                           100.0                                                                                                                                                    1,159,029                                                100.0
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Cost of goods sold                                                                                                                                        778,895      64.8                                                                                                                748,490           64.6  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Gross profit                                                                                                                                                                 422,711                                            35.2                                                                                                                                                      410,539                                                 35.4
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Selling, general and administrative expenses                                                                                                              341,127      28.4                                                                                                                327,263           28.2  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Operating income                                                                                                                                                              81,584                                             6.8                                                                                                                                                       83,276                                                  7.2
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Interest expense, net                                                                                                                                         483         -                                                                                                                    167              -  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Earnings before income taxes                                                                                                                                                  81,101                                             6.7                                                                                                                                                       83,109                                                  7.2
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Income taxes                                                                                                                                               28,184       2.3                                                                                                                 31,324            2.7  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Net earnings                                                                                                                                                             $    52,917       4.4 %                                                                                                                                                $    51,785            4.5 %
                                                                                                                                                      ==================== ========= ==================== ==================== ===== ====================                                                                                                          ==================== ========= ==================== ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Earnings per share (EPS):
Basic                                                                                                                                                                          $0.61                                                                                                                                                                                                        $0.58
Diluted                                                                                                                                                                        $0.61                                                                                                                                                                                                        $0.58
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Shares used in calculation of EPS:
Basic                                                                                                                                                                         86,429                                                                                                                                                                                                       89,039
Diluted                                                                                                                                                                       86,848                                                                                                                                                                                                       89,736
                                                      
                                                                                                                                                                                                                            Williams-Sonoma, Inc.
                                                                                                                                                                                                          Condensed Consolidated Statements of Earnings (unaudited)
                                                                                                                                                                                                           Twenty-six weeks ended July 30, 2017 and July 31, 2016
                                                                                                                                                                                                         (Dollars and shares in thousands, except per share amounts)
                                                                                                                                                       
                                                                                                                                                                                                                                                                                                           Year-to-Date
                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                      2017                                                                                                                                                                                                           2016
                                                                                                                                                      ----------------------------------------------------------------------------------------------------                                                                                                         ---------------------------------------------------------------------------------------------------------
                                                                                                                                                             $                              % of                                                                                                                 $                                   % of
                                                                                                                                                                                                                                                 Revenues                                                                                                                                                                                                          Revenues
                                                                                                                                                      -------------------- --------- -------------------- -------------------- -------------------------                                                                                                           -------------------- --------- -------------------- -------------------- ------------------------------
E-commerce net revenues                                                                                                                                                  $ 1,211,303      52.4 %                                                                                                                                                $ 1,175,917           52.1 %
Retail net revenues                                                                                                                                     1,101,810      47.6                                                                                                              1,080,929           47.9  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Net revenues                                                                                                                                                               2,313,113                                           100.0                                                                                                                                                    2,256,846                                                100.0
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Cost of goods sold                                                                                                                                      1,494,642      64.6                                                                                                              1,453,790           64.4  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Gross profit                                                                                                                                                                 818,471                                            35.4                                                                                                                                                      803,056                                                 35.6
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Selling, general and administrative expenses                                                                                                              674,413      29.2                                                                                                                656,255           29.1  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Operating income                                                                                                                                                             144,058                                             6.2                                                                                                                                                      146,801                                                  6.5
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Interest expense, net                                                                                                                                         380         -                                                                                                                     99              -  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Earnings before income taxes                                                                                                                                                 143,678                                             6.2                                                                                                                                                      146,702                                                  6.5
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Income taxes                                                                                                                                               51,206       2.2                                                                                                                 55,320            2.5  
                                                                                                                                                      -------------------- --------- -------------------- -------------------- ----- --------------------                                                                                                          -------------------- --------- -------------------- -------------------- ---------- --------------------
Net earnings                                                                                                                                                             $    92,472       4.0 %                                                                                                                                                $    91,382            4.0 %
                                                                                                                                                      ==================== ========= ==================== ==================== ===== ====================                                                                                                          ==================== ========= ==================== ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Earnings per share (EPS):
Basic                                                                                                                                                                          $1.07                                                                                                                                                                                                        $1.02
Diluted                                                                                                                                                                        $1.06                                                                                                                                                                                                        $1.01
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Shares used in calculation of EPS:
Basic                                                                                                                                                                         86,696                                                                                                                                                                                                       89,169
Diluted                                                                                                                                                                       87,238                                                                                                                                                                                                       90,098
                                                                                                                                                                                               
                                                                                                                                                                                                                                     Williams-Sonoma, Inc.
                                                                                                                                                                                                                                     Condensed Consolidated Balance Sheets (unaudited)
                                                                                                                                                                                                                                     (Dollars and shares in thousands, except per share amounts)
                                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                   ----------------------------------------------------                                                                                                         ----------------------------------------------------                                                                                                         ----------------------------------------------------
                                                                                                                                                                                       Jul. 30, 2017                                                                                                                                                Jan. 29, 2017                                                                                                                                                Jul. 31, 2016
                                                                                                                                                                   ----------------------------------------------------                                                                                                         ----------------------------------------------------                                                                                                         ----------------------------------------------------
Assets
Current assets
   Cash and cash equivalents                                                                                                                                                          $   103,109                                                                                                                                                  $   213,713                                                                                                                                                  $   111,122
   Accounts receivable, net                                                                                                                                                                78,735                                                                                                                                                       88,803                                                                                                                                                       98,053
   Merchandise inventories, net                                                                                                                                                         1,072,976                                                                                                                                                      977,505                                                                                                                                                      962,943
   Prepaid catalog expenses                                                                                                                                                                23,830                                                                                                                                                       23,625                                                                                                                                                       27,097
   Prepaid expenses                                                                                                                                                                        73,662                                                                                                                                                       52,882                                                                                                                                                       68,300
   Other assets                                                                                                                                                         12,066                                                                                                                 10,652                                                                                                                 11,589  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
Total current assets                                                                                                                                                 1,364,378                                                                                                              1,367,180                                                                                                              1,279,104  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Property and equipment, net                                                                                                                                                               929,331                                                                                                                                                      923,283                                                                                                                                                      908,562
Deferred income taxes, net                                                                                                                                                                130,212                                                                                                                                                      135,238                                                                                                                                                      134,721
Other assets, net                                                                                                                                                       55,939                                                                                                                 51,178                                                                                                                 51,177  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
Total assets                                                                                                                                                                          $ 2,479,860                                                                                                                               $ 2,476,879                                                                                                                               $ 2,373,564  
                                                                                                                                                                   ==================== ========= ====================                                                                                                          ==================== ========= ====================                                                                                                          ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Liabilities and stockholders’ equity
Current liabilities
   Accounts payable                                                                                                                                                                   $   429,700                                                                                                                                                  $   453,710                                                                                                                                                  $   391,597
   Accrued salaries, benefits and other liabilities                                                                                                                                       100,550                                                                                                                                                      130,187                                                                                                                                                      103,040
   Customer deposits                                                                                                                                                                      287,698                                                                                                                                                      294,276                                                                                                                                                      283,779
   Borrowings under revolving line of credit                                                                                                                                              115,000                                                                                                                                                            -                                                                                                                                                      125,000
   Income taxes payable                                                                                                                                                                    35,582                                                                                                                                                       23,245                                                                                                                                                        1,670
   Other liabilities                                                                                                                                                    51,540                                                                                                                 59,838                                                                                                                 53,331  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
Total current liabilities                                                                                                                                            1,020,070                                                                                                                961,256                                                                                                                958,417  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Deferred rent and lease incentives                                                                                                                                                        196,982                                                                                                                                                      196,188                                                                                                                                                      193,819
Other long-term obligations                                                                                                                                             74,284                                                                                                                 71,215                                                                                                                 66,516  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
Total liabilities                                                                                                                                                    1,291,336                                                                                                              1,228,659                                                                                                              1,218,752  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Stockholders’ equity
Preferred stock: $.01 par value; 7,500 shares authorized;                                                                                                                                       -                                                                                                                                                            -                                                                                                                                                            -
none
issued
Common stock: $.01 par value; 253,125 shares authorized;                                                                                                                                      858                                                                                                                                                          873                                                                                                                                                          888
85,754,
87,325 and 88,738 shares issued and outstanding
at July 30,
2017, January 29, 2017 and July 31, 2016,
respectively
Additional paid-in capital                                                                                                                                                                556,702                                                                                                                                                      556,928                                                                                                                                                      542,711
Retained earnings                                                                                                                                                                         640,368                                                                                                                                                      701,702                                                                                                                                                      622,608
Accumulated other comprehensive loss                                                                                                                                                       (8,599 )                                                                                                                                                     (9,903 )                                                                                                                                                     (9,860 )
Treasury stock, at cost                                                                                                                                                   (805 )                                                                                                                                  (1,380 )                                                                                                                                  (1,535 )
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
Total stockholders’ equity                                                                                                                1,188,524                                                                                                              1,248,220                                                                                                              1,154,812  
                                                                                                                                                                   -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------                                                                                                          -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                   ----------------------------------------------------                                                                                                         ----------------------------------------------------                                                                                                         ----------------------------------------------------
Total liabilities and stockholders’ equity                                                                                                                                            $ 2,479,860                                                                                                                               $ 2,476,879                                                                                                                               $ 2,373,564  
                                                                                                                                                                   ==================== ========= ====================                                                                                                          ==================== ========= ====================                                                                                                          ==================== ========= ====================
 
                                                                                                                                                                                         Williams-Sonoma, Inc.
                                                                                                                                                                      Condensed Consolidated Statements of Cash Flows (unaudited)
                                                                                                                                                                        Twenty-six weeks ended July 30, 2017 and July 31, 2016
                                                                                                                                                                                        (Dollars in thousands)
 
                                                                                                                                                                             Year-to-Date
                                                                                                                                                                                    
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
                                                                                                                                                                         2017                                                                                                                              2016          
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
Cash flows from operating activities
Net earnings                                                                                                                                                                      $               92,472                                                                                                                                                  $               91,382
                                                                                                                                                                                                                                                                                                                                        
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization                                                                                                                                                                     90,048                                                                                                                                                                  83,369
Loss on disposal/impairment of assets                                                                                                                                                                845                                                                                                                                                                   1,520
Amortization of deferred lease incentives                                                                                                                                                        (12,680 )                                                                                                                                                               (12,550 )
Deferred income taxes                                                                                                                                                                             (8,937 )                                                                                                                                                               (10,472 )
Tax benefit related to stock-based awards                                                                                                                                                         14,511                                                                                                                                                                  21,864
Excess tax benefit related to stock-based awards                                                                                                                                                       -                                                                                                                                                                  (4,727 )
Stock-based compensation expense                                                                                                                                                                  22,829                                                                                                                                                                  27,476
Other                                                                                                                                                                                                102                                                                                                                                                                    (866 )
                                                                                                                                                                                                                                                                                                                                        
Changes in:
   Accounts receivable                                                                                                                                                                            10,658                                                                                                                                                                 (19,021 )
   Merchandise inventories                                                                                                                                                                       (92,711 )                                                                                                                                                                18,221
   Prepaid catalog expenses                                                                                                                                                                         (205 )                                                                                                                                                                 1,822
   Prepaid expenses and other assets                                                                                                                                                             (26,918 )                                                                                                                                                               (22,724 )
   Accounts payable                                                                                                                                                                              (37,092 )                                                                                                                                                               (71,614 )
   Accrued salaries, benefits and other liabilities                                                                                                                                              (36,036 )                                                                                                                                                               (12,867 )
   Customer deposits                                                                                                                                                                              (6,795 )                                                                                                                                                               (13,500 )
   Deferred rent and lease incentives                                                                                                                                                             12,635                                                                                                                                                                  21,534
   Income taxes payable                                                                                                                                                        12,409                                                                                                                           (65,399 )
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
Net cash provided by operating activities                                                                                                                                      35,135                                                                                                                            33,448  
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                        
Cash flows from investing activities:
Purchases of property and equipment                                                                                                                                                              (82,727 )                                                                                                                                                               (77,877 )
Other                                                                                                                                                                              44                                                                                                                               363  
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
Net cash used in investing activities                                                                                                                                         (82,683 )                                                                                                                                            (77,514 )
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                        
Cash flows from financing activities:
Borrowings under revolving line of credit                                                                                                                                                        115,000                                                                                                                                                                 125,000
Repurchases of common stock                                                                                                                                                                      (93,361 )                                                                                                                                                               (76,166 )
Payment of dividends                                                                                                                                                                             (68,197 )                                                                                                                                                               (67,571 )
Tax withholdings related to stock-based awards                                                                                                                                                   (14,117 )                                                                                                                                                               (24,635 )
Excess tax benefit related to stock-based awards                                                                                                                                                       -                                                                                                                                                                   4,727
Proceeds related to stock-based awards                                                                                                                                                                 -                                                                                                                                                                   1,532
Other                                                                                                                                                                               -                                                                                                                               (47 )
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
Net cash used in financing activities                                                                                                                                         (60,675 )                                                                                                                                            (37,160 )
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                        
Effect of exchange rates on cash and cash equivalents                                                                                                                                             (2,381 )                                                                                                                                                                (1,299 )
Net decrease in cash and cash equivalents                                                                                                                                                       (110,604 )                                                                                                                                                               (82,525 )
Cash and cash equivalents at beginning of period                                                                                                                              213,713                                                                                                                           193,647  
                                                                                                                                                               -------------------- -------------------- --------------------                                                                                                          -------------------- -------------------- --------------------
Cash and cash equivalents at end of period                                                                                                                                        $              103,109                                                                                                                               $              111,122  
                                                                                                                                                               ==================== ==================== ====================                                                                                                          ==================== ==================== ====================
 
                                                                                                                                                                                                                                     Exhibit 1
                                                                                                                                                                                                                                     (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                     2nd Quarter Operating Margin by
                                                                                                                                                                                                                                     Segment*
                                                                                                                                                                                                                                     ($ in thousands)
                                                                                                                                                                                                                                                                                                                                                                                 
                                                                   E-commerce                                                                                                                                                           Retail                                                                                                                                         Unallocated                                                                                                                                           Total
-------------------------- -------------------- -------------------- -------------------------------------------------------------------------------------------------------------------------                                          -------------------------------------------------------------------------------------------------------------------------                                          -------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------
                                   Q2 17                                               Q2 16                                                                                       Q2 17                                               Q2 16                                                                              Q2 17                             Q2 16                                                                               Q2 17                                                 Q2 16
-------------------------- -------------------- -------------------- ---------------------------------------------------------------------- --------------------------------------------------                                          ---------------------------------------------------------------------- --------------------------------------------------                                          ---------------------------------------------------- --------------------------------                                          ------------------------------------------------------------------------ ----------------------------------------------------
Net Revenues                                                                            $ 630,793                                           $ 599,683                                                                                   $ 570,813                                           $ 559,346                                                                                   $       -                         $       -                                                                 $ 1,201,606                                           $ 1,159,029
Operating Income/(Expense)       135,139       132,733                                                34,592        33,217                                               (88,147 )      (82,674 )                                                 81,584          83,276  
-------------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ------- -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ------- -- -------------------- -------------------- ------- --                                           -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Operating Margin                    21.4 %                           22.1 %                                                                    6.1 %                            5.9 %                                                                   (7.3 %)        (7.1 %)                                                   6.8 %                              7.2 %
========================== ==================== ==================== ==================== ======= ==================== ==================== ==================== ======= ====================                                           ==================== ======= ==================== ==================== ==================== ======= ====================                                           ==================== ======= == ==================== ==================== ======= ==                                           ==================== ========= ==================== ==================== ==================== ========= ====================
* See the Company’s 10-K and 10-Q filings for additional
information on segment reporting and the definition of Operating
Income/(Expense) and Operating Margin.
                                                                                                                                                                           
                                                                                                                                                                                                                                     Reconciliation of Quarterly and Fiscal Year GAAP to Non-GAAP
                                                                                                                                                                                                                                     Diluted Earnings Per Share**
                                                                                                                                                                                                                                     (Totals rounded to the nearest cent per diluted share)
                                                                                                 
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                      Q1 17                                                                                                                         Q2 17                                                                                                                         Q3 17                                                                                                                         FY 17
                                                                     ACT                            ACT                           GUID                           GUID
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
2017 GAAP Diluted EPS                                                                  $0.45                          $0.61                      $0.80 - $0.87                  $3.39 - $3.59
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Impact of Severance-related Charges(1)                                                 $0.04                            -                              -                            $0.04
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Unfavorable Tax Impact from the Adoption of New Accounting Rules (2)                   $0.02                            -                              -                            $0.02
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
2017 Non-GAAP Diluted EPS (5)                                                          $0.51                          $0.61                      $0.80 - $0.87                  $3.45 - $3.65
==================================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                 
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                      Q1 16                                                                                                                         Q2 16                                                                                                                         Q3 16                                                                                                                         FY 16
                                                                     ACT                            ACT                            ACT                            ACT
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
2016 GAAP Diluted EPS                                                                  $0.44                          $0.58                          $0.78                          $3.41
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Impact of Severance-related Charges(3)                                                 $0.09                            -                            $0.01                          $0.10
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
One-time Favorable Tax Adjustment(4)                                                     -                              -                              -                           ($0.08)
-------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
2016 Non-GAAP Diluted EPS (5)                                                          $0.53                          $0.58                          $0.79                          $3.43
==================================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================

** Due to the differences between the quarterly and year-to-date weighted average share count calculations and rounding to the nearest cent per diluted share, totals may not equal the sum of the line items and fiscal year diluted EPS may not equal the sum of the quarters.

 
                                                                                                                                                                                                                                     Store Statistics
                                                                                                                                                                                                                                                                                                                                                                           Avg. Leased Square Footage
                                                                                                                                                                                                                        Store Count                                                                                                                                                                                                          Per Store
------------------------------------------------------------------------------------------------------------------------      ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                                                             ------------------------------------------------------------------
             Apr. 30, 2017    Openings     Closings      Jul. 30, 2017     Jul. 31, 2016                                                                Jul. 30, 2017     Jul. 31, 2016
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------- -------------------- -------------------- -------- -------------------- -------------------- -------  -------------------- -------------------- ------------- -------------------- -------------------- -------------                                                                ------------- -------------------- -------------------- -------------
Williams Sonoma                                             233            1            -               234               241                                                                        6,600                                6,600
Pottery Barn                                                                                                                            199                                                  6                                                (1)                                                     204                                                     201                                                                       13,800                                                  13,800
West Elm                                                                                                                                 99                                                  2                                                  -                                                     101                                                      89                                                                       13,200                                                  13,300
Pottery Barn Kids                                                                                                                        89                                                  -                                                (1)                                                      88                                                      89                                                                        7,400                                                   7,500
Rejuvenation                               8            -            -                 8                 6                                                                        8,800             9,000
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------- -------------------- -------------------- -------- -------------------- -------------------- ----------------------------- -------------------- ------------- -------------------- -------------------- -------------                                                                ------------- -------------------- -------------------- -------------
Total                                    628            9          (2)               635               626                                                                       10,100            10,000
==================== ==================== ==================== ==================== ==================== ==================== ============= ==================== ==================== ======== ==================== ==================== ============================= ==================== ============= ==================== ==================== =============                                                                ============= ==================== ==================== =============
                                                                                        
                                                                                                                                                                                                           --------------------                                                                                                                                                                         --------------------                                                                                                                                                                         --------------------
                                                                                                                                                                                                                  Apr. 30, 2017                                                                                                                                                                                Jul. 30, 2017                                                                                                                                                                                Jul. 31, 2016
                                                                                                                                                                                                           --------------------                                                                                                                                                                         --------------------                                                                                                                                                                         --------------------
Total store selling square footage                                                                                                                                                                                    3,942,000                                                                                                                                                                                    3,998,000                                                                                                                                                                                    3,894,000
Total store leased square footage                                                                                                                                                                                     6,341,000                                                                                                                                                                                    6,428,000                                                                                                                                                                                    6,262,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Notes:

(1)   During Q1 17 we incurred severance-related charges associated with
      the previously announced departure of the former President of the
      Pottery Barn brands, as well as other severance-related charges, of
      approximately $6 million, or $0.04 per diluted share. These charges
      were recorded as SG&A expense within the unallocated segment.
(2)   During Q1 17 we incurred tax expense of approximately $1 million, or
      $0.02 per diluted share, associated with the adoption of new
      accounting rules related to stock-based compensation.
(3)   During Q1 16 and Q3 16 we incurred severance-related reorganization
      charges due to headcount reduction primarily in our corporate
      functions totaling approximately $13 million, or $0.09 per diluted
      share, and $1 million, or $0.01 per diluted share, respectively.
      These charges were recorded as SG&A expense within the unallocated
      segment.
(4)   During Q4 16 we incurred a benefit of approximately $8 million, or
      $0.08 per diluted share, related to a one-time tax adjustment
      associated with intercompany transactions.
(5)
      SEC Regulation G - Non-GAAP Information - These tables include
      non-GAAP diluted EPS. We believe that this non-GAAP financial
      measure provides meaningful supplemental information for investors
      regarding the performance of our business and facilitates a
      meaningful evaluation of our actual results and Q3 17 and FY 17
      guidance on a comparable basis with prior periods. Our management
      uses this non-GAAP financial measure in order to have comparable
      financial results to analyze changes in our underlying business
      from quarter to quarter. This non-GAAP financial measure should be
      considered as a supplement to, and not as a substitute for, or
      superior to, financial measures calculated in accordance with GAAP.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170823006042r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170823006042/en/

SOURCE: Williams-Sonoma, Inc.

WILLIAMS-SONOMA, INC. 
Julie P. Whalen, 415-616-8524 
EVP, Chief Financial Officer 
-or- 
Beth Potillo-Miller, 415-616-8643 
SVP, Finance & Corporate Treasurer 
Investor Relations


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