Williams-Sonoma didn’t disappoint.

The home furnishings retailer was one of the last to feel the impact of the sector’s slowdown over the past two years, thanks to solid management and its counterbalancing business in the housewares and cookware sides of the business. So all eyes were on the company this Wednesday when it released its latest quarterly results. After glimmers of hope from such retailers as Home Depot, Wayfair and RH, would Williams-Sonoma confirm that an industry recovery may be on the horizon?

They did.

Despite nicely beating analyst forecasts, Williams-Sonoma’s revenue was down 3 percent from last year. But on the much more encouraging side, the retailer projected a more positive forecast for the balance of the year in both overall and comp sales. Just as importantly, more of that revenue dropped to the bottom line as the company said its third-quarter profit rose to $249 million (or $1.96 a share), up from $237 million (or $1.83 a share) a year ago.

Wall Street loved what it heard, driving Williams-Sonoma’s stock up more than 30 percent in trading Wednesday morning to an all-time high of just over $175. Admittedly the price fell back a little by Thursday, but the increase was among the biggest single-day leaps in the brand’s 40-year history as a public company.

Even with the top-line loss—something virtually every other home furnishings retailer has experienced to one degree or another in recent years—the company said it was feeling so much better about what’s ahead. “As we head into the last quarter of the year, we are optimistic and confident about our business,” said Laura Alber, president and chief executive officer, in announcing the results. “The fourth quarter is the time of year when we shine.”

A deeper dive into the results shows a mix of strengths and weaknesses within the company’s portfolio. Notably, its smallest single brand, the Williams-Sonoma kitchen and housewares division, has balanced out the still-struggling furniture and home decor side of the company. Pottery Barn (its largest nameplate) and West Elm each showed declines in both total revenues and comp store sales, though the latter decreases were significantly smaller than a year ago. The kitchen business was flat, while Pottery Barn’s Kids and Teen divisions showed modest gains, as did all of the company’s other labels—collectively, Rejuvenation, Mark and Graham, and the new GreenRow brand.

“We are pleased with the results of our third quarter, beating both top and bottom-line expectations,” said Alber. “The quarter was driven by continued improvement in our sales trend, market-share gains and strong profit. ... Our operating results reflect the operational improvements that we have been focused on all year, and demonstrate the strength of our margin profile in a difficult environment.”

Williams-Sonoma’s encouraging news joins similar results from other key home furnishings retailers that have reported their earnings. Both Home Depot and Lowe’s lifted their forecasts; Walmart and TJX specifically cited their home businesses as better performers this past quarter; and La-Z-Boy’s revenue is up.

Alber acknowledged that the overall sector is still seeing challenges, but credited her team for safely navigating the choppy waters: “Our strategy of focusing on returning to growth, enhancing our world-class customer service and driving margin is working.”

____________

Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.