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From Home Furnishing Business

Restoration Hardware’s Shares Tumble After Slashed Profit Projections for the Year

Shares of Restoration Hardware Holdings Inc. tumbled in after-hours trading Wednesday after the home furnishings retailer reported worse-than-expected quarterly results and slashed its profit projections for the year.

The Corte Madera, California-based company swung to a fiscal first-quarter loss of $13.5 million, or 33 cents per share, after reporting a profit in the same period a year earlier. Losses, adjusted for one-time gains and costs, came to 5 cents per share.

The results fell short of Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of 5 cents per share.

The furniture and housewares company posted revenue of $455.5 million in the period, which also missed Street forecasts. Seven analysts surveyed by Zacks expected $458.9 million. A year ago Restoration Hardware posted revenue of $422.4 million.

In a statement, the retailer blamed its results on energy- and currency-related headwinds and a "general slowdown in the luxury consumer market."

Restoration Hardware, which is moving to a membership model from a promotional one, said that the selling cycle with members is longer and that will pressure margins in the short term. But it added it was "pleased" with the early adoption rate and growth in average order size.

For the current quarter ending in August, Restoration Hardware expects its per-share earnings to range from 28 cents to 33 cents. Analysts surveyed by FactSet expect earnings per share of 79 cents, on average.

The company said it expects revenue in the range of $505 million to $520 million for the fiscal second quarter. Analysts surveyed by Zacks had expected revenue of $544.7 million.

Restoration Hardware expects full-year earnings in the range of $1.60 to $1.80 per share. Previously the company said it expected income to be flat to slightly down versus last year's adjusted income of $2.72 per share. That compares with the average analyst estimate of $2.66 per share, according to FactSet.

Through the close of regular-session trading Wednesday, Restoration Hardware shares had fallen 55 percent since the beginning of the year.

In after-hours trading following the release of the earnings report, the stock slid 19 percent, or $7, to $29.07.

Elements of this story were generated by Automated Insights ( using data from Zacks Investment Research.

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