Luxury home furnishings retailer,
Restoration Hardware Holdings, Inc
), continued with its strong performance and posted impressive
second-quarter fiscal 2013 results. The company's adjusted
quarterly earnings of 49 cents a share handily surpassed the
Zacks Consensus Estimate of 42 cents and jumped 48% year over
However, including one-time items, Restoration Hardware
reported a loss of 46 cents per share.
Increased product demand led to a 30% jump in total sales to
$382.1 million that surpassed the Zacks Consensus Estimate of
$375 million. Comparable-store-sales surged 26%, while Direct
revenues increased 33% during the quarter.
Gross profit rose 22% to $139.2 million, while gross margin
contracted 260 basis points to 36.4%. Adjusted EBITDA soared 42%
to $40.8 million, whereas adjusted operating income jumped 56% to
Encouraged by the strong quarterly results, Restoration
Hardware raised its fiscal-2013 guidance for the second time. The
company now expects top-line improvement in the range of 31% to
32% to $1.56 billion - $1.58 billion, up from its earlier
guidance range of a 23% to 27% increase. Moreover, earnings are
forecast in the range of $1.65 to $1.70 per share, significantly
rising from its previous guidance range of $1.41 to $1.47.
For the third quarter, total sales are expected in the range
of $385 million to $395 million, while earnings are projected to
range from 27 cents to 29 cents per share. Moreover, for the
fourth quarter, the top line is expected to be in the range of
$490 million to $500 million, while earnings are expected in the
range of 81 cents to 84 cents.
The Zacks Consensus Estimate currently stands at 16 cents and
$1.48 for the third quarter and fiscal 2013, respectively.
However, given management's upbeat guidance, the Zacks Consensus
Estimate could witness an upward revision in the coming days.
Restoration Hardware ended the quarter with cash and cash
equivalents of $15 million. Inventories totaled $406.7 million,
up 48% year over year. Stockholders' equity was $499.4 million.
Restoration Hardware incurred capital expenditures of $20.9
million during the quarter and expects capital expenditures in
the range of $95 million to $100 million in fiscal 2013.
We remain upbeat on the company's strong performance during
the reported quarter, despite the challenging macroeconomic
environment. Restoration Hardware's focus on strategic
initiatives to drive growth and profitability in the luxury home
furnishings market is quite encouraging.
Several initiatives on the company's part like product
expansion, innovation, enhancement of customers' shopping
experience and its planned foray in the Kitchen and Antiquities
segment are expected to accelerate sales growth in the long
Restoration Hardware's real estate transformation strategy
also counts as a positive. The company is receiving favorable
lease offers from landlords to become an anchor tenant at high
end malls. The move promises long-term growth opportunities for
the company to increase sales, lower costs and expand
Considering the strengths of the stock, Restoration Hardware
carries a favorable Zacks Rank #2 (Buy).
Other Stocks to Consider
Besides Restoration Hardware, other stocks worth considering
in the home furnishings & fixtures sector include
Fortune Brands Home & Security, Inc
Haverty Furniture Companies Inc.
), all of which hold a Zacks Rank #1 (Strong Buy) and are
expected to continue with their upbeat performance.
FORTUNE BRD H&S (FBHS): Free Stock Analysis
HAVERTY FURNIT (HVT): Free Stock Analysis
KIRKLANDS INC (KIRK): Free Stock Analysis
RESTORATION HDW (RH): Free Stock Analysis
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