RH shares surge 19% as Q2 earnings, revenue beat expectations

Investing.com -- RH (NYSE:RH ), formerly known as Restoration Hardware, saw its shares jump about 19% in pre-market Friday after reporting strong second quarter results that exceeded analyst expectations.

Q2 EPS of $1.69, $0.07 better than the analyst estimate of $1.62. Revenue for the quarter came in at $829.66 million versus the consensus estimate of $827.61 million.

The luxury home furnishings retailer released its financial results for the quarter ended August 3, 2024, in a shareholder letter from Chairman and CEO Gary Friedman.

"We're pleased with our second quarter performance, which demonstrates the strength of our luxury brand and unique business model," said Gary Friedman, Chairman and CEO of RH, in the shareholder letter.

RH anticipates that challenging industry conditions will persist until interest rates decrease and the housing market recovers. Despite this, the company expects an acceleration in demand trends throughout fiscal 2024 and into 2025. However, revenue is projected to trail behind demand by 4 to 8 percentage points due to the overhaul of their assortment and the need to adjust to new collections and reduce backorders.

The company also foresees ending the year with a backlog of $80 to $100 million, which will negatively impact adjusted operating and EBITDA margins by around 100 basis points. Additionally, international expansion investments are expected to reduce margins by about 230 basis points.

"We reiterate our Buy rating with the F2Q24 update better than feared while illuminating a consistent/robust demand acceleration that is a clear point of differentiation amid mixed premium furnishings trends and negative investor sentiment," Stifel analysts said in a note. 

The company, which operates high-end retail galleries and online stores, has been expanding its presence in the luxury lifestyle market. RH's product offerings include contemporary and modern furniture, lighting, textiles, and decor for various living spaces.

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Source: Investing.com