LONDON, UK / ACCESSWIRE / September 13, 2016 / Active Wall St. announces its post-earnings coverage on Restoration Hardware Holdings, Inc. (NYSE: RH). The company reported financial results for the second quarter fiscal 2016 on September 08th, 2016. The luxury home goods retailer's company reported its first quarterly decline in a key sales figure since going public. It also delivers sharply lower profit as it continues to grapple with production issues; however the company was still able to outperform expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the quarter ended on July 30th, 2016, Restoration Hardware Holdings posted net income of $6.9 million, or $0.17 per share, down 77% from net income of $29.9 million in the year ago period. Excluding stock-based compensation and other items, the company reported earnings of $0.44 per share, yet exceeding analysts' estimate of $0.29 per share. The company's revenue rose 7% to $543.4 million, helped by the acquisition of luxury kitchen and bath fixtures company Waterworks; topping revenue forecast of $511.4 million forecasted by analysts. Restoration Hardware Holdings had projected adjusted earnings of $0.28 per share to $0.33 per share on $505 million to $520 million in sales. The home-furnishings chain was able to ship products earlier than expected; pulling revenue that would have come in the third quarter into the second, according to a statement released last Thursday. Early shipment of products helped sales and earnings beat analysts' estimates for the reported period.

Comps Story

Restoration Hardware Holdings noted that during Q2 FY16, comparable brand sales (sales at stores open for at least 14 months, excluding outlet stores), declined 3%. The company's stores revenues increased 15% to $309.8 million in Q2 FY16. However, direct revenues declined 2% to $233.6 million in Q2 FY16; direct revenues represented 43% of total net revenues.

CEO Gary Friedman was pleased with the results and the progress they reflect, stating:

"While the degree and pace of innovation at RH might seem ambitious comparatively, it is the result of years building a culture engineered to be, as Charles Darwin believed, the one most responsive to change."

By instilling a culture of innovation at Restoration Hardware Holdings, the company hopes to keep up with changing times to deliver what its customers want.

Galleries

As of July 30, 2016, Restoration Hardware Holdings operated a total of 84 retail galleries, consisting of 53 legacy Galleries, 6 larger format Design Galleries, 4 next generation Design Galleries, 1 RH Modern Gallery, and 5 RH Baby & Child Galleries throughout the United States and Canada, as well as 15 Waterworks showrooms in the United States and the UK. This compares to a total of 67 retail galleries, consisting of 57 legacy Galleries, 6 larger format Design Galleries, 1 next generation Design Gallery, and 3 RH Baby & Child Galleries throughout the United States and Canada, as of August 1, 2015.

Margin

For Q2 FY16, GAAP operating income was $22.0 million compared to $56.4 million for the same period last year, and GAAP operating margin was 4.1% compared to 11.1% for the same period last year. Adjusted operating margin in Q2 FY16 was 6.1% compared to 12.2% for the same period last year.

Balance sheet

As of July 30, 2016, the company had cash and cash equivalents of $37.67 million compared to cash of $349.89 million as of January 30, 2016. The company reported current liabilities of $405.25 million at the end of Q2 FY16 compared to current liabilities of $452.56 million as of January 30, 2016.

Outlook

For FY 2016, Restoration Hardware Holdings is forecasting adjusted earnings in the range of $1.60 per share to $1.80 per share, with sales growth of 1% to 3%. For Q3 FY16, the company is projecting revenue of $520 million to $530 million and earnings of $0.13 per share to $0.18 per share. Analysts expected earnings of $0.40 per share on $539.7 million in sales for the third quarter.

Stock Performance

On Monday, September 12, 2016, Restoration Hardware Holdings' shares are slightly down 0.55%, finishing the day at $36.18 with volume of 4.67 million shares exchanging hands by the close of the trading session. For the last one month and past three months, the stock has advanced 18.58% and 40.89%, respectively. Shares of the company have a PE ratio of 21.90.

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SOURCE: Active Wall Street