Restoration Hardware Q3 tops Street; gives holiday warning

Restoration Hardware reported better-than-expected earnings and sales for the third quarter, but the upscale home furnishings retailer cut its full-year outlook amid slow sales of its holiday collection.



The company also said that its name will change in January to RH, which is the same as its stock ticker.



Restoration Hardware reported net income of $2.5 million. Earnings, adjusted for non-recurring costs, were 19 cents per share.



The results surpassed Wall Street expectations.



Net revenue rose 3% to $549.3 million in the period, also better than expected. Comparable brand revenue, which includes direct, declined 6%.



The retailer said it addressing several issues, including the costs related to the launch of its RH Modern collection and concept, and its transition from a promotional to a membership model.



"While we are clearly disappointed in our fourth quarter outlook, we believe we are making the necessary investments and changes to position our business for the long-term," CEO Gary Friedman



Restoration Hardware said it now sees full-year adjusted EPS in a range of $1.19-$1.29, down from $1.60-$1.80. It forecast net revenues in the range of $562 million to $592 million.



"We are lowering our outlook for fiscal 2016 net revenues and adjusted EPS based on trends to-date during the fourth quarter,” Friedman said. "First, our business in November was below our expectations, which we largely attribute to consumer softness related to the U.S. election and our Fall 2016 Source Books getting in homes later than planned. While our Fall 2016 Source Books (catalogs) began mailing in mid-September, the vast majority of the circulation is just getting in homes over the last few weeks versus our original expectations for the Books to be building earlier in the mailing cycle. This is resulting in a shift of sales that would have been booked in the fourth quarter into the first quarter of next year. In addition, sales of our Holiday Collection are trending lower than our expectations."