RH Earnings Nearly Quadruple, Guidance Raised; RH Stock Flashes Buy Signal

Upscale furniture chain RH (RH) reports booming fiscal first-quarter earnings and revenue growth late Wednesday. RH stock jumped in late trade, flashing buy signals.


RH reports as analysts try to gauge the company’s expansion plans and ability to meet demand.

RH Earnings

Estimates: Wall Street expected RH earnings to jump 217% to $4.03 a share, according to FactSet. Revenue was seen climbing 56% to $752 million.

Results: RH earnings leapt 285% to $4.89 a share adjusted. Revenue shot up 78% to $860.79 million. Year-over-year comparisons were easy, with earnings and revenue falling at the start of the pandemic before roaring back almost immediately.

Outlook: RH now sees Q2 revenue up 35%-37% vs. analyst views for a 26% gain. Full-year sales should climb 25%-30% vs. its prior target for 15%-20%. The company also gave bullish operating margin guidance for Q2 and the year.

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RH Stock

RH stock jumped nearly 8% to 659 in extended trade. That signals a move back above its 50-day line, where RH has been hitting resistance, as well as crossing a downward-sloping trend line at about the same point. If that holds after Thursday’s open, RH stock would have an early entry. It could then build the right side of a base with a potential 733.15 entry.

Shares of the company formerly known as Restoration Hardware closed down 2.8% to 611.33 in the stock market today.

RH stock and its relative strength line are off highs reached in April. The RS line compares a stock’s performance to the S&P 500. The higher the line moves, the more it is beating the benchmark index.

RH stock has a strong 97 Composite Rating. Its EPS Rating is 95.

Upscale home furnishings and furniture retailer William-Sonoma (WSM) slid 1.8%. Online furniture site Wayfair (W) gave up 2.85%.

‘Incredibly Supportive’

In a research note on RH stock last month, Cowen analysts said the “higher-end housing backdrop remains incredibly supportive and read-throughs point to continued underlying momentum.” 

The analysts said that during the RH earnings call, they would be looking for more detail on the opening of a store in Dallas as well as timelines for three other openings this year. They also said they would be looking for updates on the buildout of stores in the U.K. and Paris.

RH refers to its stores as galleries, and they often display furniture that way. Those stores often have restaurants. The company also wants to take its luxury sensibilities beyond retail, with plans to move into the hotel and housing businesses.

Last year, more wealthier customers, less affected by the coronavirus pandemic but still stuck inside, turned to the furniture chain to refurbish their homes.

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‘Signs Of A Very Good Year’

RH CEO Gary Friedman, on the fiscal fourth-quarter 2021 earnings call, said fiscal 2022 “has all the signs of a very good year.” He cited a robust housing market and strong stock market, as well as low interest rates and a recovery in the economy.

However, he said he expected the company would face “continued difficulties” boosting production to meet demand. He also said port congestion, which has squeezed other retailers that source products from abroad, would likely continue.

Friedman said in March that RH had delayed the launch of its RH Contemporary product line and mailing of its Source Books — its large print catalogs — until the fall. He said doing so would allow its manufacturers to “catch up to the increasing demand trends.”

But he said that decision “should also support a strong second half as we have held back new collections for the past year, which will result in one of our largest new product launches in our history.”


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