Restoration Hardware Jumps After Sales Windfall Raises Optimism
(Bloomberg) -- Restoration Hardware Holdings Inc. rose as much as 14 percent in early trading after the struggling company got an unexpected bump in second-quarter revenue and expressed optimism about its comeback effort.
The home-furnishings chain was able to ship products earlier than expected, pulling revenue that would have come in the third quarter into the second, according to a statement Thursday. That helped sales and earnings beat analysts’ estimates in the period.
Though Cowen & Co. analyst Oliver Chen described the results as a “low-quality beat,” investors saw enough positive signals to drive up the stock. Restoration Hardware Chief Executive Officer Gary Friedman said that the company’s turnaround plan will begin to pay off next year. The overhaul has included rolling out the RH Modern brand, reducing inventory and shifting consumers to a membership model.
“In a world moving exponentially faster, we are building one of the only true sustainable competitive advantages -- a culture of imagination and innovation,” Friedman said. “A culture that is proving itself capable of imagining the future, and an organization that is demonstrating it can build it.”
The shares rose as high as $40.15 in premarket trading. They had been down 56 percent this year after sales and profit declines torpedoed the stock.
Revenue rose to $543.4 million in the second quarter, topping the $511.4 million predicted by analysts. Earnings amounted to 44 cents a share. Analysts had estimated 29 cents. The company maintained its sales and profit forecasts for the year.