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Restoration Hardware shares fall 2% after mixed third quarter results

Published 12/10/2015, 06:09 PM
Updated 12/10/2015, 06:14 PM
Restoration Hardware failed to meet analysts' revenue forecasts in the 3Q

Investing.com -- Shares in Restoration Hardware Holdings Inc (N:RH) fell mildly in after-hours trading after the luxury home-furnishing company failed to meet analysts' expectations with its third quarter results.

During the company's third quarter, which ended in late-October, Restoration Hardware saw its revenues surge by 10% for the three-month period, building on last year's 22% gain. It marked Restoration Hardware's 23rd consecutive quarter of double-digit net sale gains. The company's revenues of $532.4 million, however, fell just below analysts' expectations of sales of $540 million, leading to the sell-off.

Still, Restoration Hardware reported a 37% increase in GAAP earnings to $27.7 million along with a 33% surge in non GAAP diluted earnings per share of 0.65. Analysts expected to see diluted per share earnings of 0.63 for the quarter.

"During the third quarter, we grew our adjusted operating margin by 180 basis points and adjusted net income by 37%, both ahead of our expectations, further demonstrating the disruptive nature of the RH brand and the power of our multi-channel platform," Restoration Hardware CEO Gary Friedman said in a statement.

Following Thursday's release, Friedman appeared optimistic on his company's short-term outlook thanks to the recent success of two new segments, RH Modern and RH Teen. Earlier this fall, the company launched the new RH Modern line in an effort to provide it customers with a "fresh and compelling aesthetic," in its modern furnishings. The company unveiled RH Teen in August in a bid to appeal to a younger demographic.

"When we step back and consider the positive response to our two new businesses – RH Modern and RH Teen, the outperformance in all of our next generation Design Galleries, and the exciting new real estate and businesses we have in the pipeline for 2016 and beyond, we could not be more confident in our long term goal of reaching $4 billion to $5 billion in North American revenues, mid-teens operating margins, significant free cash flow and industry-leading return on invested capital," Friedman added.

Restoration Hardware increased the low end of its full-year guidance from 3.06 to 3.11 per share. The company also raised its annual revenue projection to in between $2.17 and $2.18 billion.

Shares in Restoration Hardware fell 2.06 or 2.35% to 85.53 in after-hours trading.

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