The San Francisco-based company reported net income of $74.7 million, or 94 cents a share, down from net income of $81.4 million, or $1, a year ago. Non-GAAP earnings came to $1.02 a share. Revenue totaled $1.44 billion, up from 1.36 billion a year ago.
Analysts had called for earnings of $1 a share on revenue of $1.42 billion.
Comparable brand revenue grew 5.5%, primarily driven by West Elm at 14.1% and Pottery Barn at 3.4%, while comparable sales at Williams-Sonoma were down 2.1%.
"In a fragmented home furnishings industry, it is hard to overstate how important it has been for us to continually evolve to stay ahead of the pack and remain at the forefront of driving profitable growth. Importantly, our digital-first model is a key component of our success," Laura Alber, president and CEO, said in a statement.
Alber said operating margins held flat compared with last year despite increased tariff headwinds. The U.S. and China have been locked in a lengthy trade war that have seen both countries raise tariffs on each others products.
"Despite the impact (of tariffs) nearly doubling quarter-to-quarter, we saw sequential improvement in gross margin deleverage from Q2," Alber said in a phone call with analysts. "This is a result of a hard work of all of our teams. We've been moving production out of China, renegotiating product costs with our Chinese vendors and we have successfully taken selective price increases. In addition, we've been reducing the level of promotions."
Julie Whalen, executive vice president and chief financial officer, said gross margin for the third quarter was 36% compared with 36.5% last year.
"The gross margin deleverage of 50 basis points was driven by the incremental impact from the China tariffs as well as higher shipping costs, primarily from a higher mix of furniture sales, which is more expensive to ship, partially offset by occupancy leverage," she said.
Looking ahead, the company said it expected full-year revenue of $5.77 billion to $5.9 billion, with comparable brand revenue growth of 3.5% to 6%.