Restoration Hardware Holdings, Inc. (NYSE: RH)
Restoration Hardware Holdings, Inc. (RH), a retail home furnishings company yesterday reported their first quarter fiscal year 2016 financial results. Restoration Hardware reported first quarter earnings of a loss of $0.05 per share which fell short of analyst expectations of a gain of $0.05 per share. Restoration Hardware reported first quarter revenues increased 7.8% year over year to $455.5 million which beat analyst expectations of $452.27 million. Restoration Hardware projected second quarter earnings to be in between $0.28 and $0.33 per share which fell short of analyst projections of $0.80 per share. Restoration Hardware projected second quarter revenues to be in between $505 and $520 million which fell short of analyst projections of $531.78 million.
Restoration Hardware Holdings, Inc. CEO’s Comments
Gary Friedman, Chairman and Chief Executive Officer, commented, “Our near term business performance is being pressured by the continued headwinds in the markets impacted by energy and currency, as well as a general slowdown in the luxury consumer market. In addition, the costs associated with RH Modern production delays and investments to elevate the customer experience, the timing of recognizing membership revenues related to the transition from a promotional to a membership model, and a more aggressive approach to rationalizing our SKU count to optimize inventory, are expected to negatively impact our fiscal 2016 adjusted diluted EPS outlook by approximately $0.90 to $1.00. While there is uncertainty regarding the headwinds impacting revenues, we expect many of the cost and margin related issues to be short term in nature. This Fall, we plan to expand the mailing of our Source Books, introduce new collections across RH Interiors and RH Modern, launch RH Modern across our entire retail fleet, and remodel our existing legacy Galleries – including the installation of Design Ateliers, and the most significant product refresh in the Company’s history. Accordingly, we expect our performance to improve in the fourth quarter and accelerate as we enter fiscal 2017. Additionally, we have taken steps to streamline our organization resulting in expected cost savings of approximately $20 million on an annual basis.”
Mr. Friedman concluded, “Despite our recent difficulties, we remain the leading luxury home brand in the world, with a clear path to $4 billion to $5 billion in North American revenues with mid-teens operating margins. The two fundamental strategies that get us there – the expansion of our product offer and the transformation of our real estate – remain well on track. The strong response to RH Modern, both in retail and direct, indicates this can quickly become a billion dollar plus brand. All of our new next generation Design Galleries are exceeding expectations and we continue to demonstrate that our strategy to transform our 7,500 square foot legacy stores into 45,000 to 60,000 square foot next generation Design Galleries will drive meaningful growth over time.”
RH Technical Analysis
RH opened trading yesterday at $35.59 which was uP from the previous days trading of $35.38. RH closed trading yesterday at $36.07 and crashed down after market to $29.25, equivalent to a 19% decrease from the closing price. Taking a look at the daily chart we can see that we are in unchartered territory as RH is currently trading at all time lows . Taking a closer look at the daily chart we can see that RH has been on a steep downward trend dating back to November 2nd when it traded at $102.77. RH has a float of 38.23 million shares and traded 3.18 times the normal daily trading volume on Wednesday. For trading purposes, I would like to see RH open trading on Thursday below $31.50 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.25 from my entry position fearing anything more than that and the stock would start to fill in the gap down.
Restoration Hardware Holdings, Inc., together with its subsidiaries, engages in the retail of home furnishings. It offers products in various categories, such as furniture, lighting, textiles, bathware, décor, outdoor and garden, tableware, and child and teen furnishings. The company sells products through its stores and catalogs, as well as through its Websites, such as restorationhardware.com, rh.com, rhbabyandchild.com, rhteen.com, and rhmodern.com. As of January 30, 2016, it operated 69 retail galleries that include 53 legacy galleries, 6 larger format design galleries, 4 next generation design galleries, 1 RH modern gallery, and 5 RH baby & child galleries, as well as 17 outlet stores throughout the United States and Canada. Restoration Hardware Holdings, Inc. was founded in 1979 and is headquartered in Corte Madera, California. Yahoo Finance