- RH, the company formerly known as Restoration Hardware, topped Wall Street estimates when it reported first-quarter earnings after Wednesday’s closing bell.
- The company posted strong earnings growth, beating analysts estimates for earnings per share and revenue.
- Gary Friedman, the chief executive officer of RH, said the company won’t be heavily impacted by the US’s trade war with China.
- Shares leaped 23.72% early Thursday.
- Watch RH trade live.
RH, the company formerly know as Restoration Hardware, has erased all of its losses for the year after reporting earnings and revenue growth that outperformed Wall Street expectations on Wednesday.
The home furnishings company reported a 7.4% increase in revenue to $US598 million, which was ahead of the $US583 million that was expected. Profits rose 40% from the same period last year to $US35.7 million, good for earnings per share of $US1.85, which was ahead of the $US1.53 that analysts were hoping for. RH shares shot up 23.72% following the report.
“Our focus on elevating brand and architecting an integrated operating platform continues to result in our profit model leapfrogging past the home furnishings industry,” RH CEO Gary Friedman said in a press release.
Before the post-earnings rally, RH’s stock was down more than 20% on the year. The company, like many others with supply-chain operations in China, has been forced to manoeuvre around the trade war between the world’s two-largest economies.
“We have renegotiated costs and selectively raised prices to mitigate the impact of the increase from 10 to 25 per cent.” Friedman said. “We are also moving certain production and new product development out of China, plus exploring new partnerships and expanding our own manufacturing facilities in the United States.”
President Donald Trump has turned up the pressure on China by threatening to increase tariffs to 25% on almost all Chinese goods. China said it would “fight to the end” if the US continues with the trade war.
“Long term, we do not believe the current trade climate will impair our ability to achieve our stated financial goals and the expected impact from the increased tariffs is embedded in guidance for the year,” Friedman said.
After this quarter’s strong performance, Restoration Hardware raised its fiscal 2019 revenue guidance to $US2.42 billion to $US2.66 billion, up from $US2.58 billion to $US2.63 billion.
Restoration Hardware is little changed for the year.
Business Insider Emails & Alerts
Site highlights each day to your inbox.