Restoration Hardware Holdings Inc (RH): This Home Furnishing Company is Too Hot to Touch

Restoration Hardware Holdings Inc (NYSE:RH) has advanced significantly since the middle of April, from around $33 per share to nearly $72 per share, a whopping gain of early 120% within just two months. Does Restoration Hardware have more room to run upward? Should we buy the company at its current trading price? Let’s take a closer look and find out.

Recent significant growth

Restoration Hardware is a home furnishing seller that offers various types of merchandise including furniture, bath ware, décor, garden, etc. As of Feb 2013, the company operated around 71 retail stores and 13 outlet stores in the U.S. and Canada. Restoration Hardware Holdings Inc (NYSE:RH) derived most of its revenue from the furniture category, $628 million, accounting for 52.6% of the total 2012 revenue. It has quite a diverse customer base, as no single customer has represented more than 10% of its total revenue in the past three years.

In the first quarter 2013, Restoration Hardware Holdings Inc (NYSE:RH) reported an impressive quarterly operating performance. While its revenue jumped more than 38% to $301.3 million, its net loss has been narrowed down, from a loss of $3.7 million in the first quarter last year to a loss of only $161,000 this year. The market might be impressed with its huge increase in its comparable store sales, of as high as 41%. Carlos Alberni, the company’s CEO, felt excited about the company’s first quarter performance. He said

We are extremely pleased with our first quarter performance and financial results. During the period, we delivered an increase in net revenues of 38%, comp store sales growth of 41%, and a significant improvement in profitability as we continued to invest in our infrastructure and new businesses to support our growth.

Looking forward, the company is excited for the launch of its two new businesses, RH Kitchen and Tableware and RH Antiquities. While the RH Kitchen and Tableware business could allow the company to offer a curated collection of kitchen, lighting and cookware for its customers, the RH Antiquities could get the company to tap into a $25 billion, highly-fragmented antiques collection market. Restoration Hardware Holdings Inc (NYSE:RH) expected to grow its revenue by 23%-27%, and the adjusted EPS might come in at $1.41 to $1.47.