Restoration Hardware Still A Fixer-Upper

Shares of Restoration Hardware Holdings Inc (NYSE: RH) plunged more than 15 percent on Friday after the company slashed its full-year guidance in conjunction with its third-quarter earnings report, citing "consumer softness" during the U.S. presidential election cycle.

Restoration Hardware also cited a later-than-expected delivery of its catalogs to customers and that its holiday themed items weren't performing as expected thus far.

The company now expects to earn $1.19 to $1.29 per share for the full year after previously guiding its earnings per share to be $1.60 to $1.90. Revenue for the full year was also guided to be $2.11 billion to $2.14 billion which represents a flat to 1 percent growth rate from the prior year.

Analyst's Take

In a research report on Friday Brian Nagel of Oppenheimer maintained a Perform rating on the stock with no assigned price target but cautioned clients to "stay on the sidelines" for the time being.

Nagel stated that Restoration Hardware's guidance supports his ongoing cautious stance on the stock. However, over the longer term, the analyst believes management can improve its business and "release the power of its superior omni-channel model and merchandising acumen."

As a result of management's revised guidance Nagel now expects Restoration Hardware to earn $1.19 per share for the full-year (versus a prior estimate of $1.60). For the full fiscal year 2017 (ending January 2018) the analyst now expects the company to earn $1.70 per share (versus a prior estimate of $2.00), which is also below the current consensus estimate of $2.32 per share.

At last check, shares of Restoration Hardware were down 15.62 percent at $32.90.