Restoration Hardware Swings To Profit - Update

(RTTNews) - Home furnishings retailer Restoration Hardware Holdings Inc (RH), Wednesday reported a swing to profit in the second quarter, due largely to an increase in revenue and lower expenses. Earnings for the quarter came in ahead of Wall Street expectations, but revenues fell short dragging Restoration Hardware shares down 5 percent in after-hours trade on the New York Stock Exchange.

Corte Madera, California-based Restoration Hardware reported a second-quarter profit of $27.3 million or $0.66 per share, compared to a loss of $17.8 million or $0.46 per share for the same quarter last year.

Excluding items, adjusted earnings for the quarter rose to $27.7 million or $0.67 per share from $19.8 million or $0.49 per share last year. Analysts polled by Thomson Reuters expected earnings of $0.64 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the second quarter grew 14 percent to $433.8 million from $382.1 million a year ago. Analysts had a consensus revenue estimate of $454.38 million for the quarter.

Comparable brand revenue growth, which includes direct, increased 13 percent in the second quarter. Gross margins improved to 38.7 percent from 36.4 percent last year. Selling, general and administrative expenses dropped to $119.0 million from $167.1 million last year.

Looking forward to the third quarter, the company expects adjusted earnings of $0.46 to $0.48 per share and revenues of $475 million to $485 million. Analysts currently estimate earnings of $0.43 per share on revenues of $478.96 million for the third quarter.

For the fiscal year 2014, the company now expect adjusted earnings of $2.29 to $2.33 per share, compared to its prior outlook of $2.24 to $2.30 per share. Restoration Hardware now expect revenues of $1.85 billion to $1.87 billion, down from prior estimate of $1.86 billion to $1.89 billion. Analysts currently estimate earnings of $2.31 per share on revenues of $1.88 billion for the full year.

RH closed Wednesday's trading at $82.05, up $0.04 or 0.05%. The stock, however, dropped $4.30 or 5.24%, in after-hours trade.