Restoration Hardware Beats Q1 Expectations

Restoration Hardware Holdings Inc RH reported better-than-expected results for the first quarter and raised its forecast for the year. However, the company issued a weak forecast for the current quarter. For the fiscal year ending January 30, 2016, Restoration Hardware now expects earnings of $3.02 to $3.15 per share, on revenue of $2.146 billion to $2.176 billion. The company had earlier expected earnings of $2.95 to $3.10 per share, on revenue of $2.13 billion to $2.17 billion. For the current quarter, Restoration Hardware expects earnings of $0.80 to $0.84 per share, on revenue of $495 million to $505 million. Analysts had projected earnings of $0.86 per share on revenue of $509.81 million. The Corte Madera, California-based company reported a quarterly profit of $7.2 million, or $0.17 per share, versus a year-ago profit of $1.8 million, or $0.04 per share. Excluding items, the company's earnings increased to $0.23 from $0.18 per share. Its revenue rose 15 percent to $422.4 million. However, analysts were expecting a profit of $0.20 per share on revenue of $418.97 million. The average estimate among 20 Estimize users was for earnings of $0.25 per share and revenue of $427.33 million. Its comparable brand revenue surged 15 percent in the quarter. Direct revenue gained 18 percent to $207.7 million in the first quarter. Its GAAP operating margin widened to 4.0 percent from 1.3 percent, while adjusted operating margin rose 60 basis points to 4.4 percent in the quarter. As of May 2, 2015, the company operated a total of 67 retail galleries, versus a total of 69 retail galleries, as of May 3, 2014. Gary Friedman, Chairman and Chief Executive Officer, commented, "RH continues to outperform the home furnishings industry by a wide margin. Net revenues exceeded our outlook and increased 15% on top of a 22% increase last year. Comparable brand revenues increased 15% on top of 18% last year – representing a 33% increase over the two year period. Additionally, we grew our adjusted operating margin by 60 basis points and adjusted net income by 38%, both ahead of our expectations, and further demonstrating the disruptive nature of the RH brand and the power of our multi-channel business model." Restoration Hardware shares fell 0.15 percent to $94.75 in the after-hours trading session.