Restoration Hardware soars on earnings jump

The stock rises by more than 13% after the company nails its quarter.

By MSN Money Partner Jun 12, 2014 12:48PM
Image: Arrow Up (© Photodisc/Photolibrary)By Samantha Sharf, Forbes

Shares of Restoration Hardware (RH) popped more than 13 percent Thursday to around $80 after the high-class home-goods retailer reported tremendous earnings growth following the closing bell Wednesday.


The company reported $366.3 million in first-quarter revenue, up 22 percent from the same period last year. Adjusted net income came in at $7.2 million, up 217 percent  from last year and far ahead of Wall Street analysts' $4.1 million consensus estimate. 


On a GAAP -- generally accepted accounting principles -- basis, net income came in at $1.8 million compared to a $200,000 loss in the prior year. Adjusted earnings per share were up 200 percent  to 18 cents. GAAP earnings per share came in at 4 cents, after breaking even last year.


In a statement, CEO Gary Friedman explained that Restoration Hardware is in the process of transforming its 69-store chain by expanding locations and adding more than 30 new stores. Friedman noted, "Once our real estate transformation is complete in North America, we believe we will deliver $4 billion to $5 billion in annual sales, achieve mid-teens operating margins, and generate significant free cash flow."


In the shorter term, the company expects full-year revenue to come in between $1.86 billion and $1.89 billion, with the second quarter contributing between $443 million and $453 million. Adjusted net income is forecast in the range of $91.9 million and $94.3 million and adjusted earning per share from $2.24 and $2.30.


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