Source: Company reports

1Q16 RESULTS

Restoration Hardware reported adjusted 1Q16 EPS of $(0.05), below the consensus estimate of $0.05. Total revenues were $455.5 million versus consensus of $452.3 million. Comps increased by 4% versus expectations of 6.1%. Management noted that the business is being affected by headwinds related to energy markets and currency effects as well as by a general slowdown in the luxury consumer market. Inventory was up 26.8% at the end of the quarter, versus 8% sales growth during the period.

2016 OUTLOOK

Management provided 2Q16 guidance for adjusted EPS of $0.28–$0.33 versus consensus of $0.79. Total revenue is expected to be $505–$520 million versus consensus of $531.8 million. Full-year guidance calls for EPS of $1.60–$1.80 versus consensus of $2.66. Revenues are expected to increase by 1%–3% versus prior guidance for an increase in the low- to mid-single-digit range. Full-year results will be impacted by costs associated with RH Modern production delays, investments aimed at elevating the customer experience, timing issues related to the transition from a promotional to a membership model, and a more aggressive approach to rationalizing SKU count and optimizing inventory. These factors will negatively impact the EPS outlook by approximately $0.90–$1.00.