Restoration Hardware Q3 Earnings Beat Estimates, Shares Up – Analyst Blog

Impressive third-quarter fiscal 2014 performance provided much impetus to the shares of Restoration Hardware Holdings, Inc. ( RH ) that jumped roughly 7% during aftermarket trading hours yesterday. This Zacks Rank #2 (Buy) stock delivered earnings of 49 cents a share that beat the Zacks Consensus Estimate by a couple of cents, while rising 53% year over year on the back of higher revenue.

This home furnishing retailer generated net revenue of $484.7 million that surged 22% year over year and also came ahead of the Zacks Consensus Estimate of $482 million.

Restoration Hardware's comparable brand revenue, including direct revenues, went up 22% year over year. Further, the company's direct revenues came in at $241.2 million, advancing 31%.

Operating income increased 54% to $36.7 million from the year-ago period, whereas operating margin expanded 150 basis points to 7.6%.

Store Update

At the end of the third quarter, Restoration Hardware operated 68 retail outlets, including 59 Galleries, 6 Full-Line Design Galleries and 3 Baby & Child Galleries. The company also operates 18 outlet stores all over the U.S. and Canada.

Balance Sheet

Restoration Hardware, which competes with Mattress Firm Holding Corp. ( MFRM ), ended the quarter with cash and cash equivalents of $157.1 million, merchandise inventories of $610.5 million, convertible senior notes (net) of $281 million and total shareholders' equity of $638.4 million.

Going forward, capex is expected to hover around $115-$125 million for fiscal 2014. The company plans to continue focusing on transforming its retail outlets, adopting multi-channel platforms and expanding its product portfolio.

Outlook

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Restoration Hardware Q3 Earnings Beat Estimates, Shares Up - Analyst Blog