RH’s First-Quarter Beat Brings Raised Full-Year Guidance

RH (RH) posted revenue for the first quarter that was ahead of expectations as sales trends in March and April improved and the company’s moves to boost its brand with new products and locations shows success, according to Wedbush Securities.

Revenue rose 7.4% to $598 million, or $599 million on an adjusted basis, the interior design company that was previously known as Restoration Hardware said in a statement late Wednesday. Adjusted earnings jumped to $1.85 a share from $1.21 a year earlier. The results topped the Capital IQ consensus for EPS of $1.53 and revenue of $583.7 million. Shares surged more than 21% in early trading on Thursday.

“Our focus on elevating the brand and architecting an integrated operating platform continues to result in our profit model leapfrogging past the home furnishings industry and RH becoming one of the few retailers that is growing revenues, expanding margins, increasing operating earnings, and driving significantly higher returns on invested capital,” said Gary Friedman, the company’s chief executive.

Corte Madera, Calif.-based RH has been opening and renovating locations and launching new products, including its RH Beach House brand. Confidence in underlying trends and the beach product line led RH to raise full-year guidance by more than the first-quarter beat, Wedbush Securities said in a note.

The company sees full-year guidance for adjusted revenue of $2.64 billion to $2.66 billion from a previous range of about $2.59 billion to $2.64 billion. The outlook for EPS is pegged now at $8.76 to $9.27 from a prior projection of $8.05 to $8.69 a share.

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