Home furnishings retailer earnings increase in Q3, updates outlook
Despite a tough hurricane season, Restoration Hardware (RH) reported a strong third quarter — and is entering its fourth quarter on a high note.
For the third quarter, revenues increased 8%. This is an additional 3% increase from last year despite an approximate 1% negative impact from Hurricanes Harvey and Irma. Meanwhile, brand revenues increased 6% compared to a 6% decrease last year.
The company reported Q3 EPS of $1.04, which was in-line with the analyst estimate of $1.04. This is despite a negative impact of approximately $0.05 from Hurricanes Harvey and Irma, and includes a positive impact of approximately $0.11 related to a lower effective tax rate. This compares to adjusted diluted earnings per share of $0.20 last year, according to Street Insider.
Revenue for the quarter came in at $592.5 million versus the consensus estimate of $591 million, according to the report.
“In the second quarter, we completed our share buyback program resulting in 20.2 million shares of RH stock repurchased in the first half of fiscal 2017, or 49.5% of the shares outstanding at the beginning of the year,” said Gary Friedman, chairman and CEO.
“We believe that our aggregate $1 billion of share repurchases will continue to be an excellent allocation of capital for the long term benefit of our shareholders,” he added. “We retired the $100 million second lien term loan in the third quarter, and have approximately $480 million of aggregate debt, outside of our convertible notes that are due June 2019 and June 2020.”
Looking ahead to the fourth quarter, RH anticipates an adjusted net income in the range of $37 million to $41 million. This is despite an approximate $1.5 million negative impact as a result of the company’s decision to delay the opening of its New York Design Gallery to spring-summer 2018. This outlook assumes an approximate $2 million tax benefit which corresponds to an expected 35% tax rate.
Net revenues are expected to be in the range of $655 million to $680 million, again, despite a $9 million negative impact due to the Company’s delayed New York Design Gallery opening.
For fiscal 2017, adjusted net income will be in the range of $125 million to $145 million. Net capital expenditures in the range of $65 million to $75 million, and free cash flow in excess of $240 million.
Fiscal 2017 adjusted net income is expected to be in the range of $83 million to $87 million despite the Company’s decision to delay the opening of its New York Design Gallery. Fiscal 2017 net capital expenditures in the range of $120 million to $130 million, and free cash flow will span between $420 million and $440 million.
Based on these expectations, analysts predict a Q4 EPS of $1.56 on revenue of $673.5 million and fiscal year EPS of $2.93 on revenue of $2.45 billion, according to Street Insider.
For fiscal 2018, RH is forecasting net revenues in the range of $2.58 billion to $2.62 billion, growth of 6% to 7% on a 52-week vs 53-week basis. On a comparable 52-week vs 52-week basis, net revenue growth is expected to be in the range of 8% to 9%.
Adjusted net income is expected to be in the range of $125 million to $145 million. Net capital expenditures is forecasted in the range of $65 million to $75 million, and free cash flow in excess of $240 million, according to the company.
For the third quarter, revenues increased 8%. This is an additional 3% increase from last year despite an approximate 1% negative impact from Hurricanes Harvey and Irma. Meanwhile, brand revenues increased 6% compared to a 6% decrease last year.
The company reported Q3 EPS of $1.04, which was in-line with the analyst estimate of $1.04. This is despite a negative impact of approximately $0.05 from Hurricanes Harvey and Irma, and includes a positive impact of approximately $0.11 related to a lower effective tax rate. This compares to adjusted diluted earnings per share of $0.20 last year, according to Street Insider.
Revenue for the quarter came in at $592.5 million versus the consensus estimate of $591 million, according to the report.
“In the second quarter, we completed our share buyback program resulting in 20.2 million shares of RH stock repurchased in the first half of fiscal 2017, or 49.5% of the shares outstanding at the beginning of the year,” said Gary Friedman, chairman and CEO.
“We believe that our aggregate $1 billion of share repurchases will continue to be an excellent allocation of capital for the long term benefit of our shareholders,” he added. “We retired the $100 million second lien term loan in the third quarter, and have approximately $480 million of aggregate debt, outside of our convertible notes that are due June 2019 and June 2020.”
Looking ahead to the fourth quarter, RH anticipates an adjusted net income in the range of $37 million to $41 million. This is despite an approximate $1.5 million negative impact as a result of the company’s decision to delay the opening of its New York Design Gallery to spring-summer 2018. This outlook assumes an approximate $2 million tax benefit which corresponds to an expected 35% tax rate.
Net revenues are expected to be in the range of $655 million to $680 million, again, despite a $9 million negative impact due to the Company’s delayed New York Design Gallery opening.
For fiscal 2017, adjusted net income will be in the range of $125 million to $145 million. Net capital expenditures in the range of $65 million to $75 million, and free cash flow in excess of $240 million.
Fiscal 2017 adjusted net income is expected to be in the range of $83 million to $87 million despite the Company’s decision to delay the opening of its New York Design Gallery. Fiscal 2017 net capital expenditures in the range of $120 million to $130 million, and free cash flow will span between $420 million and $440 million.
Based on these expectations, analysts predict a Q4 EPS of $1.56 on revenue of $673.5 million and fiscal year EPS of $2.93 on revenue of $2.45 billion, according to Street Insider.
For fiscal 2018, RH is forecasting net revenues in the range of $2.58 billion to $2.62 billion, growth of 6% to 7% on a 52-week vs 53-week basis. On a comparable 52-week vs 52-week basis, net revenue growth is expected to be in the range of 8% to 9%.
Adjusted net income is expected to be in the range of $125 million to $145 million. Net capital expenditures is forecasted in the range of $65 million to $75 million, and free cash flow in excess of $240 million, according to the company.