RH Boost Q1 Sales Projection, Tweaks Earnings Forecast

May 12, 2017  by Larry Thomas in Economic News, Industry   

Sales are now projected at $558 million to $562 million for the quarter ended April 29, an increase of about 23% from the same quarter last year. The previous estimate was $530 million to $545 million.

The retailer said the top line was aided by higher sales at its outlet stores due to planned inventory reductions, but said those sales, as well as other inventory markdowns, squeezed margins.

As a result, the company also tweaked its earnings projection for the quarter, issuing a new estimate of adjusted earnings per share of 3 cents to 5 cents. That compares with an estimate of 2 cents to 6 cents issued earlier this year.

“We expect first quarter fiscal 2017 net revenues to increase approximately 23%, of which 6 points of growth is due to the acquisition of Waterworks and 6 points is related to higher outlet and warehouse sales from planned inventory optimization efforts,” said Gary Friedman, chairman and CEO. “Excluding these factors, we are expecting growth of approximately 11% augmented by accelerated SKU rationalization during the quarter and the mailing of our Fall 2016 RH Interiors Source Book.”

Friedman continued, "As we look forward to fiscal 2017, we expect sales growth to continue, operating margins to expand, and to generate significant free cash flow. We remain confident in our ability to drive long-term sustainable growth, improved returns on capital, and tremendous value for our shareholders.”

RH completed its $300 million share repurchase program during the first quarter by buying back 7.85 million shares. The company ended the first quarter of fiscal 2017 with approximately $80 million in cash and cash equivalents and no outstanding borrowings on its $600 million line of credit.

The company did not announce a date for the release of complete first quarter financial results.