RH Q4 profits top Street forecasts

While RH continued to make investments to transform its business model, these efforts impacted the company’s preliminary fourth quarter earnings.



The furniture and housewares company, which officially changed its name from Restoration Hardware to RH last month, posted net income of $8.75 million, or 21 cents per share, for the quarter ended January 28, 2017. This was a drop from $33.3 million in fourth quarter 2015. Earnings, adjusted for non-recurring costs, came to 68 cents per share, beating analyst estimates of 65 cents per share.



The company’s net revenues fell 9.3% to $586.7 million, which did fall short of analysts’ expectations of $589.3 million.



For the year, RH reported a profit of $4.7 million, or 12 cents per share. Revenue was reported as $2.13 billion, which fell within the retailer’s guidance range of $2.11 billion to $2.14 billion.



"As we exit fiscal 2016, we are now through the most uncertain stage of our transformation,” said Gary Friedman, the company’s chairman and CEO. “As previously communicated, we have made several strategic in-vestments and changes to our business model in fiscal 2016 that tempo-rarily depressed financial results in the short-term, and that we believe will strengthen our brand and position the business for accelerated growth in 2017 and beyond.”



These investments include the costs related to the launch of RH Modern; the timing of recognizing membership revenues related to the transition from a promotional to a membership mode; efforts to reduce inventories and rationalize SKU count; and the decision to push its 2016 Source Book mailing from the spring 2016 to the fall 2016, he added.



The company did not share a timeframe for when it would release its complete financial results for the fourth quarter or fiscal year.