Restoration Hardware Holdings, Inc. RH has reported yet another strong quarter, beating the Zacks Consensus Estimate for both earnings and revenues for the fourth consecutive quarter. Following impressive quarterly performance, the company’s shares gained 2.1% in after-hours trading session yesterday.
The company’s adjusted earnings per share increased 26.9% year over year in second-quarter fiscal 2015 to 85 cents and also came ahead of the Zacks Consensus Estimate by a couple of cents. Earnings surpassed the guidance range of 80–84 cents a share earlier provided by the company. Better-than-expected earnings were primarily driven by 21% increase in store revenue in comparison to a 9% increase in the prior-year quarter.
Restoration Hardware Holdings Inc. - Earnings Surprise | FindTheBest
GAAP earnings for the reported quarter came in at 71 cents per share compared with 66 cents earned in the prior-year quarter.
Quarter in Detail
This home furnishing retailer generated net revenues of $506.9 million that surged 16.9% year over year and also came ahead of the Zacks Consensus Estimate of $503 million.
Restoration Hardware’s comparable brand revenue, including direct revenues, went up 16% year over year compared with 13% in the prior-year quarter. Further, the company’s direct and store revenues came in at $238.5 million and $268.5 million, advancing 13% and 21% year over year, respectively.
The company will launch two new businesses called RH Modern and RH Teen in the third quarter. RH Modern will focus on manufacturing luxury furniture with a modern twist to attract customers. On the other hand, RH Teen will focus on superior quality furniture, linens, lightning and decor for teens. Apart from this, the company is taking up initiatives like expanding its product categories, transforming its stores and enhancing its multi-channel platform and operating infrastructure to drive growth.
Adjusted operating income jumped 26% to $61.9 million from the year-ago period while adjusted operating margin expanded 90 basis points to 12.2%.
Store Update
As of the end of second-quarter fiscal 2015, Restoration Hardware operated 67 retail outlets, including 57 legacy Galleries, 6 large format Galleries, 1 next generation Design Gallery and 3 Baby & Child Galleries. The company also operates 15 outlet stores all over the U.S. and Canada.
Balance Sheet
Restoration Hardware, which shares the retail-home furnishing space with Mattress Firm Holding Corp. MFRM, ended the quarter with cash and cash equivalents of $304.9 million, merchandise inventories of $707.5 million, convertible senior notes (net) of $291.2 million due in 2019 and 214.1 million due in 2020 and total shareholders’ equity of $802.3 million.