Gaining momentum from the better-than-expected results and an
upbeat outlook, shares of
Restoration Hardware Holdings, Inc
) jumped 16% to close at $68.47 on Friday. In fact, share price
of this luxury home furnishings retailer has been witnessing an
uptrend since the company went public for the second time in Nov
2012 and has more than doubled year to date.
Fabulous 1Q, Guidance Hiked
Restoration Hardware continued with its strong performance and
posted impressive first-quarter fiscal 2013 results on Jun 13.
The quarterly earnings of 6 cents a share surpassed the Zacks
Consensus Estimate by a couple of cents and improved
significantly from the adjusted loss of 4 cents per share
witnessed in the year-ago quarter. This provided impetus to the
stock that surged to create a new 52-week high of $70.48 the very
Increased product demand led to a 38% jump in total sales to
$301.3 million, while comparable-store-sales surged 41% during
the quarter. Adjusted EBITDA soared 82% to $11.2 million, whereas
adjusted operating income improved considerably to $4.6 million
compared with the year-ago loss of $0.6 million.
Encouraged by the strong quarterly results, Restoration
Hardware raised its fiscal-2013 guidance. The company now expects
top-line improvement in the range of 23% to 27%, up from its
earlier guidance range of 19% to 22%. Moreover, earnings are
forecasted in the range of $1.41 to $1.47 per share,
significantly rising from its previous guidance range of $1.29 to
Moreover, for the second quarter, total sales are expected in
the range of $375 million to $380 million, while earnings are
projected to range from 40 cents to 42 cents per share.
The Zacks Consensus Estimate currently stands at 38 cents and
$1.40 for the second quarter and fiscal 2013. However, given
management's upbeat guidance, the Zacks Consensus Estimate could
witness an upward revision in the coming days.
Looking Beyond Numbers
We are encouraged by the company's strong performance during
the last reported quarter, despite the challenging macroeconomic
environment. The company'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 and its planned foray in the Kitchen and Antiquities
segment with two new lines of business are expected to accelerate
sales growth in the long run.
Restoration Hardware's real estate transformation strategy
also comes 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 #1 (Strong 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.
) both of which hold a Zacks Rank #1 (Strong Buy) and are
expected to continue with their upbeat performance.
) carrying a Zacks Rank #2 (Buy) is also worth considering.
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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