RH Beats Expectations for Q4

RH (NYSE:RH), formerly known as Restoration Hardware, was founded by Stephen Gordon in 1979. Back then, Gordon was restoring a house and couldn’t find affordable and quality hardware products, so he went on to open his own hardware store in 1980. The company had 47 stores when it filed for IPO in 1998. Today, RH is a well-known luxury home furnishing retailer, offering upscale home furnishings through its retail galleries, sourcebooks, and official website.

The home-furnishings company, backed by billionaire investor Warren Buffet, performed exceptionally well over the last year. RH stock has skyrocketed more than 400 percent during the past 12 months. Much of that growth was driven by elevated demand for its products during the Covid-19 pandemic. An increasing number of people spent money on renovating their houses during the lockdowns, and RH benefitted from that trend.

The strong demand helped the company to announce better-than-expected financial results for the fourth quarter. RH recently reported earnings of $271.8 million, or $4.31 per share for the three months ended January 30, significantly higher than $220.4 million, or $2.66 per share in the comparable period of 2020. On an adjusted basis, earnings increased to $5.07 per share, easily beating the consensus forecast of $4.75 per share.

Revenue rose 22 percent on a year-over-year basis to $812.4 million, above analysts’ average forecast of $797.4 million. Looking forward, RH projected revenue growth of at least 50 percent for the first quarter and between 15 to 20 percent for the full year.

Addressing shareholders, CEO Gary Friedman stated in a letter, “We are building the most comprehensive and compelling collection of luxury home furnishings in the world. The desirability and exclusivity of our product amplified in our inspiring spaces has enabled us to gain significant market share with RH Core demand up 36% in the fourth quarter. Our demand has accelerated sharply with February up 73%, and the first two weeks of March up 96%, prior to cycling the closing of our Galleries, Restaurants and Outlets a year ago.”

See also 10 Best Furniture Companies in the World.