- 28 марта 2018, 18:00
- Zacks Investment Research
RH RH posted strong fourth-quarter 2017 results, with shares gaining a solid 14.7% during after-hours trading. The new membership model — RH Members Program — is improving its brand image, streamlining operations and enhancing customer experience. The company’s efforts to redesign its supply chain network and rationalize product offerings bode well.
RH reported fourth-quarter fiscal 2017 earnings per share of $1.69, surging 149% from the prior-year quarter. Also, earnings surpassed the Zacks Consensus Estimate of $1.56 by 8.3%.
Revenues increased 14% to $670.3 million but missed the consensus mark of $671.5 million. RH’s comparable brand revenues inched up 2% year over year, against 18% decline in the prior-year quarter. The company’s direct revenues rose10%, while store revenues increased 18% from the year-earlier quarter.
Adjusted operating income of $75.1 million in the reported quarter improved from the prior-year quarter’s figure of $50.9 million. Adjusted operating margin expanded 26 basis points (bps) to 11.2%. Adjusted gross profit was $257.5 million, up 25.9% year over year. Adjusted gross margin improved 390 bps to 38.5%.
As of Feb 3, 2018, RH operated 84 retail galleries, slightly lower than 85 in the prior-year quarter. These include 47 legacy galleries, six large format galleries, 10 next generation design galleries, one RH Modern Gallery and four Baby & Child galleries in the United States and Canada, respectively, along with 15 Waterworks showrooms in the United States and the U.K.
Restoration Hardware Holdings Inc. Price, Consensus and EPS Surprise
Fiscal 2017 Highlights
Revenues increased 14% to $2.44 billion and adjusted diluted earnings per share of $3.05 surged 140% year over year.
RH had cash and cash equivalents of $17.9 million as on Feb 3, 2018, compared with $87 million as on Jan 28, 2017. The company ended the quarter with merchandise inventories worth $527 million, compared with $752.3 million as on Jan 28, 2017.
Revenues are projected in the range of $555-$565 million.
Adjusted gross margin is projected in the band of 36.4-36.8%. Adjusted operating margin is expected in the range of 7.6-8.1%.
Adjusted SG&A, as a percentage of revenues, is expected in the 28.7-28.8% range.
Adjusted earnings per share are projected between 95 cents to $1.05.
Fiscal 2018 Outlook
Net revenues are expected in the $2.53-$2.57 billion range, representing growth of 5-7%.
Adjusted gross margin is projected in the 37.7-38.5% range, while adjusted operating margin is expected in the 9.2-10.2% band, up from the previous estimate of 9-10%.
Adjusted SG&A, as a percentage of revenues, is expected in the 28.3-28.5% range.
Adjusted earnings per share are expected in the $5.45-$6.20 range.
Free cash flow is projected in excess of $250 million, up from the previous estimate of $240 million.
Zacks Rank & Other Key Picks
RH carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the Zacks Retail-Wholesale sector include The Gap, Inc. GPS, Nordstrom, Inc. JWN and Boot Barn Holdings, Inc. BOOT.
All the companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Gap is likely to witness 23.5% earnings growth in fiscal 2018.
Fiscal 2018 earnings for Nordstrom are expected to increase 15.5%.
Boot Barn Holdings is expected to see 27.3% growth in fiscal 2018 earnings.
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