Restoration Hardware Sparks Rally With Beat-And-Raise

By EarningsFOXBusiness

Restoration Hardware Holdings (NYSE:RH) surged nearly 14% on Thursday after the company posted a first-quarter beat and hiked its outlook.

The retailer, which sells luxury home goods, has benefited from an uptick in home sales and construction, despite a slowdown in the first half of the year. Restoration Hardware is also changing its business model, phasing out mall locations in favor of larger stores.

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After Wednesday’s closing bell, the Corte Madera, Calif.-based company said it signed leases for six design galleries and is in talks for at least 25 more.

“Once our real estate transformation is complete in North America, we believe we will deliver $4 billion to $5 billion in annual sales,” chairman and chief executive Gary Friedman said in a statement.

For the full year, Restoration Hardware is forecasting per-share earnings of $2.24 to $2.30, up from a previous estimate of $2.14 to $2.22. Its outlook for revenue was raised to between $1.86 billion and $1.89 billion, compared to $1.825 billion to $1.86 billion.

The company also provided guidance for earnings of 62 cents to 64 cents a share and revenue of $443 million to $453 million in the current period. Analysts were looking for 61 cents and $452.1 million.

Restoration Hardware reported a profit of $1.8 million, or four cents a share, for the first quarter ended May 3. A year earlier, the retailer booked a loss of $161,000, or less than a penny a share.

Excluding one-time items, adjusted earnings climbed to 18 cents a share from six cents. Revenue jumped 22% to $366.3 million, as same-store sales rose 18%. Gross margin ticked higher to 34% from 33.8%.

Wall Street’s consensus estimate called for a profit of 11 cents a share and revenue of $347.7 million.

Shares rallied to $81.11 in recent trading, bringing the stock to a 20.2% gain since the start of 2014.

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