Restoration Hardware Swings To Profit, Lifts FY Outlook; Shares Up 12%

(RTTNews) - Home furnishings retailer Restoration Hardware Holdings Inc (RH), Wednesday reported a swing to profit in the first quarter, due mainly to a 22 percent surge in revenues, with both earnings and revenues ahead of Wall Street expectations. Restoration Hardware shares rallied 12 percent in after-hours trade on the New York Stock Exchange after having lifted its full-year outlook.

Corte Madera, California-based Restoration Hardware reported a first-quarter profit of $1.8 million or $0.04 per share, compared to a loss of $0.2 million or break-even per share last year.

Excluding items, adjusted earnings rose to $0.18 per share from $0.06 per share. Analysts polled by Thomson Reuters expected earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the first quarter grew 22 percent to $366.25 million from $301.34 million a year ago. Analysts estimated revenues of of $347.73 million for the quarter.

Comparable brand revenue growth, which includes direct, increased 18 percent in the first quarter. Gross margins improved to 34.0 percent from 33.8 percent last year.

Chief Executive Gary Friedman said, "RH continued to outperform the home furnishings industry by a wide margin in the first quarter of 2014."

Looking forward to the second quarter, the company expects adjusted earnings of $0.62 to $0.64 per share and revenues of $443 million to $453 million. Analysts currently expect earnings of $0.61 per share on revenues of $452.11 million for the second quarter.

For the full year 2014, the company now expects adjusted earnings of $2.24 to $2.30 per share and revenues of $1.86 billion to $1.89 billion. Analysts currently estimate earnings of $2.20 per share on revenues of $1.85 billion for 2014.

Initially, the company had forecast adjusted earnings in the range of $2.14 to $2.22 per share and revenues of $1.83 billion to $1.86 billion.

"The business momentum and strong trends we are seeing thus far in 2014 give us further confidence in our financial outlook for the year," Friedman added.

RH closed Wednesday's trading at $71.35, up $1.96 or 2.82%. The stock further gained $8.45 or 11.84%, in the after-hours trade.