RH Posts Better-Than-Expected Q4 Earnings & Offers Optimistic Outlook For 2017
Written by StockNews.com
RH (NYSE: RH) late Tuesday posted better than expected fourth quarter earnings results and offered an optimistic outlook for 2017, sending its shares rocketing 11% higher in after-hours trading.
The luxury home furnishings retailer, which was formerly known as Restoration Hardware, reported Q4 earnings per share (EPS) of $0.68, which was $0.03 better than the Wall Street consensus estimate of $0.65.
Revenues fell 9.3% from last year to $586.7 million, also topping analysts’ view for $585 million.
Notable, the company have preannounced earnings back on Feb. 23 of $0.68 per share on $590 million in revenue.
On a sour note, comparable brand revenue plunged -18% in the latest period, compared to +9% growth in the year-ago quarter. Store revenues fell 4% in the period.
Looking ahead, RH forecast Q1 EPS of $0.02 to $0.06, which straddles Wall Street’s $0.05 view. Q1 revenues are seen gaining 16-20% to about $530 to $545 million, well ahead of analysts’ $485.04 million estimate.
For the full year 2017, RH expects EPS of $1.78 to $2.19, a wide range that compares with analysts’ $1.94 estimate. Revenues are seen rising 8-12% for the year to about $2.3-2.4 billion, in-line with Wall Street’s $2.33 billion view.
The company commented on its growth plans via press release:
“While 2016 was a year of transformation and transition, 2017 will be a year of execution, architecture, and cash flow at RH.
Our focus will be on executing our new business model, architecting a new back-end operating platform, and maximizing cash flow.
While our investment strategy will always maintain a long-term view, we believe we can improve working capital and returns by having a more disciplined approach to capital allocation. Accordingly, we plan to reduce our new Gallery opening cadence to a range of 3 to 5 per year, which is expected to drive high-quality sustainable growth, while lowering capital requirements and execution risk over the course of our real estate transformation.
We remain confident in reaching our long term goal of $4 to $5 billion in North American revenues, mid-teens operating margins, significant free cash flow, and industry-leading returns on invested capital.”
Investors were extremely pleased with RH’s latest results, sending its shares up $4.20 (+11.05%) to $42.20 in after-hours trading. Year-to-date, RH had already gained 23.78% prior to today’s report, versus a 5.27% rise in the benchmark S&P 500 index during the same period.
RH currently has a StockNews.com POWR Rating of B (Buy), and is ranked #30 of 62 stocks in the Home Improvement & Goods category.
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