The Thursday Show: Williams-Sonoma keeps on winning. Plus: A summer camp for aspiring designers

Business of Home Podcast

Host Dennis Scully and BOH executive editor Fred Nicolaus discuss major industry news, including a trade war with Canada, Williams-Sonoma's

Key takeaways

• Williams-Sonoma posted another strong quarter with 6.7% revenue growth and raised full-year guidance, signaling continued confidence in its portfolio brands.
• The U.S.-Canada trade war has escalated with a 50% tariff on specific imports like antiques and plywood, increasing costs and uncertainty for the design industry.

Main topics

• Trade war with Canada
• Williams-Sonoma financial performance

Notable quotes

Alex Shuford wants his hand on the tiller as opposed to the tiller of a sailboat in Nantucket.

Conclusion

Despite ongoing challenges like trade tensions and industry shifts, companies like

Transcript preview

Speaker 5 (0:07) This is Business of Home. I'm Dennis Scully, and welcome to the Thursday Show. Later on, I'll be speaking with Rainie Richardson about her summer camp for aspiring designers. But first, we're going to catch up on the news, including a trade war with Canada, lovesack drama, and whether designers should give away their services. To do all that, I'm joined by Business of Home's executive editor, Fred Nikolaos. Hi, Fred. Speaker 3 (0:32) Hi, Dennis. How's it going? Great. How are you doing? I'm doing good. Summer's fruit is dying on the vine. The September party invites are rolling in. Changing of the seasons. How are you feeling about it? Speaker 5 (0:46) I'm feeling stressed, Fred. I'm being told I'm traveling to many different locations in the coming weeks and months, and there's going Speaker 3 (0:52) to be a lot going on come the fall. Well, pack your microphone because we're going to be recording 500 episodes of the Business of Home podcast in between now and the end of the year. Speaking of the Business of Home podcast, let's look back on Monday's episode of Conversation with Rockhouse designer brands, Alex Shuford. He wants robots in his factories and he wants them now. Great conversation. Always love having him on. I think he's our number one guest, right? He's always been on the most times. Speaker 5 (1:16) You know, I think he's Speaker 3 (1:17) a Speaker 5 (1:17) number one guest in a lot of ways. And I know that I'm not supposed to play favorites, but I think anyone who listens to the conversations that I have with Alex Shuford know that I enjoy every conversation and any time that I get to spend with him. What was interesting about the AI conversation, and I wasn't going to reveal this unless he did, but Alex had actually been thinking, How long before I am actually on that sailboat in Nantucket? How long before I say, you know what, someone else can take care of the tariffs and figuring out all of the challenges of running multiple furniture brands in this environment? But AI has reengaged him in a way that he wants to be part of shaping the future for his factories, seeing. what he sees now as the future for AI and robotics and how the whole industry can be changed. He wants his hand involved in a lot of it. And so it's reengaged him in a way that actually pleased me to no end. Speaker 3 (2:16) Yeah, he wants his hand on that tiller as opposed to the tiller of Speaker 5 (2:20) a Speaker 3 (2:20) sailboat in Nantucket. Yeah, I think it's great. But it's funny because you say that, and I think there are a lot of people who are a little farther along in their career who are making the opposite decision, who are being like, tariffs, AI, robots, oh my, I'm going to sell it and go get that country house. There are a lot of people who I think are phasing out of the furniture business for the very reasons that Alex is most engaged, which is too bad, but all the more reason to hear from him because he's such an interesting... thoughtful guy right in the mix, the ultimate insider, but wants to push things forward. It's really, I, you know, I can't say enough good things about this episode. If you, if you listen to one episode of the Monday show all year, and I suggest you listen to all of them, but definitely listen to this one. It's, it's a great one. Speaker 5 (2:59) Well, and I get so many notes from designers who say that they just appreciate how the conversation breaks down a lot of the big macroeconomic issues. And some of them are very complex. And Alex manages to sort of bring them all back to designers and to furniture and to the industry that we. are all in and love. And interestingly, AI helped him to bring a new brand to market, which we'll be seeing in October. And from April to October. AI was able to propel that brand. So I look forward to seeing that. And as always, looking forward to the reunion, as he refers to it, at High Point. So I hope everyone enjoys the conversation. Please do give it a listen if you haven't already. Okay, we're going to take a quick break and we'll get into the news. Speaker 5 (3:55) This podcast is sponsored by Lutron. Lutron's premium lighting solutions allow designers to control light like never before. Create beautiful, bespoke lighting experiences for your clients with Lutron's unrivaled light fixtures, motorized window treatments, and custom engraved controls. Visit Lutron.com slash luxury to get inspired today. This podcast is sponsored by Joomla Loy. The Total Home Brand just launched their second collaboration with renowned interior designer Heidi Callier. Complete with rugs and pillows that capture Heidi's signature style. The designs lend themselves to feeling cozy and lived in, featuring nostalgic motifs, warm, muted colors, and patterns that are meant to be layered. Explore the entire collection and get the Heidi Callier look. at joomlaloi.com. That's J-O-O-N-L-O-L-O-I dot com. And we're back. Oh, Speaker 3 (5:04) Canada, Fred. Late last week, trade talks broke down with our neighbors to the north, and the U.S. has laid down a 50 % tariff. Canada has in turn responded with their own tariffs. We're in a trade war, Dennis. How's it feel? Well, we were Speaker 5 (5:19) hoping to avoid the trade war, but... Buckle in because here it is. Yeah, Speaker 3 (5:24) last week we were very confidently saying, oh, you know, talks are going well. Because, you know, Mark Carney listens to the Business of Home podcast. It seemed like we were going to come to a deal with Canada and avoid this 50 % tariff. It didn't happen. You know, it's not really worth getting into the particulars, but both sides couldn't come to a deal. So now we do have this new, you know, levy on Canadian imports. You know, to try and quickly break down the particulars, this is not on literally everything coming in from Canada. This is a relatively small section of our business with them. But it does cover some stuff that people in our business care about. It covers antiques of all things, which is so ironic because our production, our U.S. production of antiques really needs to be revitalized. You know, it covers plywood, which is really important for home building. So people are speculating that this is going to, you know, send the price of home building up even more. You know, one thing it doesn't add on to is the cost of importing kitchen. cabinetry and upholstered furniture because those were already covered in another tariff, section 232, if you're keeping score with your bingo card there. So this is not necessarily going to make everything designers import from Canada go up 50 % or another 25%. But, you know, it's more tariffs, it's more expense, it's more administrative headache. And, you know, there's there's no currently no end in sight. And Speaker 5 (6:35) that's exactly it. It's more administrative headache. It's more. instability. It's more uncertainty. It's less, okay, everybody knows what the number is, and we send everyone out to do business with the number in hand. It's another reminder of just the randomness of all of this. Last week, we thought it wasn't going to happen. Now it is. And it all seems just coming from a place of spite and anger rather than sort of well-thought-out and well-considered policies with our most important trading partner. And that's also what is so challenging in all of this is it just stirs up a lot of negative emotions and tension. Speaker 3 (7:17) Yeah, I know. What is the official reason for this? It's about dairy or something like that? They can't say that these are spite-related tariffs. They have to be dairy-related. But we should talk about the emotional side of it because we're kind of joking because, of course, we're sort of beaten down by the recurrence of all these tariffs. But for people in the Canadian design industry, this isn't funny. And I think Canadians are almost 100 % behind Mark Carney in pushing back on this. Now, whether it'll ultimately come to a deal, who knows? But this is... very seriously testing relationships. And there are a lot of cross-border relationships in the design industry. And I'm sure that, you know, there are a lot of heated conversations about this. And I think it's just too bad. Speaker 5 (7:54) No, I completely agree. It is real. And again, I referenced this in last week's show about, oh, I hope this will make it easier for people to come to market. But. Last market, multiple people coming from Canada just talked to me about the expense and the challenges and just the feeling of ill will that they didn't want to have and how many people stayed away from market because of this tension. So it's real. Let's move on and talk about Williams-Sonoma because just this morning, the company released its second quarter results. And it was another strong Speaker 3 (8:25) earnings call. Kind of high fives all around, Fred. It was another banger from our friends in San Francisco. I mean, just to quickly go over the numbers, revenue grew 6.7%. They raised their guidance for the rest of the year. So they're feeling optimistic about the rest of 2026. Every one of the brands in their portfolio grew. I didn't actually get to listen to the earnings call, but you were saying it was kind of like the locker room after a big win. Like what was the vibe on the call? Yeah, I mean, it was a very Speaker 5 (8:49) upbeat earnings call. Laura Alba, who is the CEO. She couldn't wait to take questions from people. Yes, no, you're right. That division is growing. Yes, we do have great collaborations going. We do have a lot of things working. I mean, it's fun when in the midst of, let's not forget, this wildly challenging environment, tariffs, which we've talked about, but also, hey, guess what? No housing recovery whatsoever. If anything, the numbers keep getting worse and interest rates keep going higher. And yet here's a brand coming out that. says, okay, well, guess what? We're actually doing better across all of our brands. And in fact, in some areas, we were even surprised at how robust some of the numbers were. Speaker 3 (9:30) Well, let's break down like a few things from the call. So one thing you mentioned earlier is that they're getting tariff refunds. I think they got something like a hundred and almost $200 million of IEPA refunds. And it was sort of interesting what they chose to do with it. Of course, I'm always hoping that they're going to beef up the platters at high point, but it seems like they spent some of it on Speaker 5 (9:49) Yeah, I Speaker 3 (9:49) mean, Speaker 5 (9:49) very interesting. And they really wanted to spell this out. And again, it was this feel good message. So they said, you know what, we're giving more than $47 million back to some of our vendors who really helped us out and said, hey, we're going to give you a discount on this merchandise. And hopefully in the future, you'll be able to come back to us. And so they said, yeah. We are going to come back to you. We've got these great relationships here. Here's 47 and a half million back and we really appreciate it. And then they took 10 million and they said, hey, employees across the board, we're contributing $10 million to everyone's 401k plan. Thanks for helping us get through this crazy difficult time. And how great. And then they're going to. kind of bank the rest for now until they figure out what else they want to do. And Laura Albers is like, yeah, we like cash. Fine. Sure. We can, we can sit on the rest for a little while. They, they actually have a lot of room left to buy back shares and not right now they increase their dividend a little bit. So this is a company that has a lot of options. They have a lot of flexibility and, uh, and they're being very thoughtful about what they're doing with this, with this cash, Speaker 3 (10:49) but they're. Pretty happy to Speaker 5 (10:51) have Speaker 3 (10:51) $200 Speaker 5 (10:51) million back, clearly. Speaker 3 (10:52) How come we didn't get a taste of that money? Come on. I know. Yeah, I mean, I think, you know, it's kind of a sign of strength, right? As they get this $200 million payment, they're like, we're Speaker 5 (10:59) going Speaker 3 (10:59) to give it to our employees. You know, it's a confident company doing something, you know, benevolent with its money because it can afford to, you know, unlike a lot of other people, you know, in the home retail world. You know, just to break down the brands that grew the most, I mean, I was interested to see that Williams-Sonoma, sort of the house brand or the... name plate brand grew the most. It was 7.6 % growth. All of them grew to be clear. It was a wins all around, but that one grew the most. And it's kind of made me think about, I was thinking about your conversation with Sophie Lou Jacobson, how she was talking about like, you know, she got the initial tailwind for her glassware tabletop company during COVID because everyone was buying stuff for the home, but it kind of kept going because after COVID ended, people were hosting dinner parties and wanting to be experiential and inviting everyone over. And I kind of feel like that might be in these numbers a little bit too. It was like, everyone's updating their kitchen and buying glassware and having parties. And maybe that's part of the reason why William Sonoma is doing well. But you mentioned that William Sonoma Home is also kind of taking off too. Speaker 5 (11:52) Which is their really big hope that William Sonoma Home can start to grow aggressively again. And those numbers were stronger than they had been. So they were very pleased about that. I think that's one of the areas where they see perhaps the biggest opportunity because that is the most high end of the home brands. And so they'd love to see that working. The other thing that was interesting that- to be working well as the business to business side where they're going after contract. They saw very healthy growth in their designer and trade business. So areas that aren't yet enormous for them grew pretty dramatically. And again, it's all about collaborations. It's all about great partnerships. And they're really good at that. Speaker 3 (12:35) Yeah. I mean, right now, they're just the right company. at the right time and the right place doing the right things. I know that's a little boring, but I think that's an accurate assessment of what's going on over there. Speaker 5 (12:46) Fair enough. And we'll see, because you know what happens when you look