RH (RH) reported higher second-quarter earnings and sales late Wednesday. The upscale furniture chain formerly known as Restoration Hardware also raised guidance, but also noted supply-chain issues as Covid cases are high once again. RH stock rose modestly in overnight trade.
X
RH Earnings
Estimates: FactSet analysts saw RH earnings jumping 33% to $6.51 per share with sales up 37% to $973 million.
Results: RH earnings per share jumped 73% to $8.48. Sales climbed 39% to $989 million. That’s still a significant slowdown after RH earnings surged 285% in Q1 on a 78% sales gain. But year-over-year comparisons are getting tougher.
Outlook: RH now expects full-year revenue growth of 31% to 33% vs. a prior outlook of 25% to 30%. It sees adjusted operating margin in the range of 24.9% to 25.5%, vs. a prior outlook of 23.5% to 24.3%.
„Our demand growth has accelerated during the third quarter on a two-year basis and has continued to build momentum despite cycling the most difficult comparisons from a year ago and the continued supply chain challenges that have been amplified by the spread of the Delta variant,“ the company said in its Q2 press release.
RH Stock
Stock: Shares rose 2.3% in after hours trading on the stock market today, signaling a possible test of the 50-day line. RH stock closed up 1.3% to 672.65 after falling more than 2% intraday.
RH stock broke out of a cup-with-handle base with a 724.10 buy point in early August. But the breakout soon failed and RH stock is now below its key 50-day line. It is possible a new base will form with a 744.66 entry, but shares have work to do.
Among other housing-related stocks, Floor & Decor (FND) closed down 1.8%, but not far from a new flat base buy point following a modest prior run. Home Depot (HD) climbed 0.8% and Lovesac (LOVE) fell 7%. Lovesac reports earnings on Thursday.
RH Supply Chain Issues
The home-renovation boom during the pandemic has helped RH stock over the last year as wealthier customers looked to remodel their homes to include more home office space and amenities.
Even as it did well as customers stayed home, RH management was also bullish about increased consumer spending as more segments of the U.S. economy opened amid rising Covid-19 vaccination rates. Earlier this year, CEO Gary Friedman said that „the unmasking of the general public could lead to a Roaring Twenties type of consumer exuberance.“
But now U.S. coronavirus cases have surged again due to the more-infectious delta variant and supply chain issues remain in the forefront.
RH’s Vietnam factories were closed in late July due to government regulations and manufacturing isn’t expected to restart until October. Full capacity isn’t expected to be reached until the end of the year. RH also said that raw material sourcing issues as well as shipping delays and costs are additional headwinds. The company delayed the launch of RH Contemporary and its first RH Guesthouse in New York City until spring 2022.
It’ll also pushing back the mailing of its Fall Source catalog.
RH is the No. 2 stock in IBD’s Retail-Home Furnishings group.
It has a 94 Composite Rating out of 99 and a best-possible EPS Rating of 99. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity, and relative price performance.
Follow Gillian Rich on Twitter for investing news and more.
YOU MIGHT ALSO LIKE:
These Are The 5 Best Stocks To Buy And Watch Now
MarketSmith: Research, Charts, Data And Coaching All In One Place
Is Home Depot Stock A Buy Right Now After Earnings?
[ad_2]
Source