We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the last reported quarter, this leading luxury home furnishings retailer’s earnings and revenues topped the Zacks Consensus Estimate by 6.3% and 1.9%, respectively. The company beat earnings expectations in three of the last four quarters and missed on one occasion, with the average being 7.8%.
Earnings and revenues in the last reported quarter, however, decreased 66.7% and 22.8% from the year-ago level, respectively.
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share moved upward to $2.63 from $2.52 over the last seven days. The estimated figure indicates a decrease of 67.5% from $8.08 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $770.1 million, suggesting a 22.3% decline from the year-ago reported figure of $991.6 million.
Factors to Note
High mortgage rates, the Fed’s back-to-back interest rate hikes to curb inflation, the recent regional banking crisis and the cycling of record pandemic-driven sales are likely to have affected RH’s fiscal second-quarter results. RH's home furnishing business has faced challenges due to the sluggish housing market trends attributed to increased mortgage rates. The weakening macroeconomic conditions, characterized by rising interest rates and a slowdown in the luxury housing sector, are anticipated to have a negative impact on the upcoming quarterly results. Furthermore, the company is grappling with supply-chain difficulties, causing both short-term and long-term delays. These issues have resulted in additional expenses related to distribution centers and elevated product and freight costs, potentially affecting overall profitability.
RH expects the above-mentioned headwinds to persist over the next few quarters. This apart, RH has been witnessing fixed occupancy deleverage over the past several quarters and this is expected to have weighed on second-quarter fiscal 2023 results.
Nonetheless, the company has been working on various strategies to elevate and enhance the RH brand image, which is expected to have contributed to the quarterly performance. Also, the transformation of the entire business into a digital platform via The World of RH — a portal presenting the company’s products, places, services and spaces — is commendable.
Overall, for the second quarter of fiscal 2023, RH expects revenues of $765-$775 million and an adjusted operating margin in the range of 14-14.5%. In the year-ago period, revenues were $992 million, and an adjusted operating margin was 24.7%.
Our model predicts adjusted net revenues to decline 22.3% year over year to $770 million in the fiscal second quarter. We expect adjusted operating margin to be 14% in the quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for RH this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.
Earnings ESP: The company has an Earnings ESP of +13.78%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Williams-Sonoma Inc. (WSM - Free Report) reported mixed results in second-quarter fiscal 2023 (ended Jul 30, 2023). Earnings beat the Zacks Consensus Estimate, but revenues missed the same. The metrics declined year over year. The downside was primarily due to the increasing promotional environment and softening industry metrics.
WSM anticipates fiscal 2023 net revenues to decline between 5% and 10%. The company now expects its operating margin of 15-16% versus earlier expectations of 14-15%.
LOVE currently expects a delay in completing its customary quarterly review and reporting process and the filing of its Form 10-Q for the second quarter of fiscal 2024.
Builders FirstSource (BLDR - Free Report) reported second-quarter 2023 results wherein earnings and net sales surpassed the Zacks Consensus Estimate. The company has exceeded expectations, thanks to a more stable housing environment, a strong value-added product portfolio and the positive impact of operational initiatives implemented in recent years.
However, on a year-over-year basis, BLDR’s results were hampered by declining single-family starts and commodity deflation.
Image: Shutterstock
RH Queued for Q2 Earnings: Key Factors to Take Into Account
RH (RH - Free Report) is scheduled to report second-quarter fiscal 2023 (ended Jul 29, 2023) results on Sep 7, after market close.
In the last reported quarter, this leading luxury home furnishings retailer’s earnings and revenues topped the Zacks Consensus Estimate by 6.3% and 1.9%, respectively. The company beat earnings expectations in three of the last four quarters and missed on one occasion, with the average being 7.8%.
Earnings and revenues in the last reported quarter, however, decreased 66.7% and 22.8% from the year-ago level, respectively.
RH Price and EPS Surprise
RH price-eps-surprise | RH Quote
Trend in Estimate Revisions
For the quarter to be reported, the Zacks Consensus Estimate for earnings per share moved upward to $2.63 from $2.52 over the last seven days. The estimated figure indicates a decrease of 67.5% from $8.08 per share reported in the year-ago quarter. The consensus mark for revenues is pegged at $770.1 million, suggesting a 22.3% decline from the year-ago reported figure of $991.6 million.
Factors to Note
High mortgage rates, the Fed’s back-to-back interest rate hikes to curb inflation, the recent regional banking crisis and the cycling of record pandemic-driven sales are likely to have affected RH’s fiscal second-quarter results. RH's home furnishing business has faced challenges due to the sluggish housing market trends attributed to increased mortgage rates. The weakening macroeconomic conditions, characterized by rising interest rates and a slowdown in the luxury housing sector, are anticipated to have a negative impact on the upcoming quarterly results. Furthermore, the company is grappling with supply-chain difficulties, causing both short-term and long-term delays. These issues have resulted in additional expenses related to distribution centers and elevated product and freight costs, potentially affecting overall profitability.
RH expects the above-mentioned headwinds to persist over the next few quarters. This apart, RH has been witnessing fixed occupancy deleverage over the past several quarters and this is expected to have weighed on second-quarter fiscal 2023 results.
Nonetheless, the company has been working on various strategies to elevate and enhance the RH brand image, which is expected to have contributed to the quarterly performance. Also, the transformation of the entire business into a digital platform via The World of RH — a portal presenting the company’s products, places, services and spaces — is commendable.
Overall, for the second quarter of fiscal 2023, RH expects revenues of $765-$775 million and an adjusted operating margin in the range of 14-14.5%. In the year-ago period, revenues were $992 million, and an adjusted operating margin was 24.7%.
Our model predicts adjusted net revenues to decline 22.3% year over year to $770 million in the fiscal second quarter. We expect adjusted operating margin to be 14% in the quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for RH this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.
Earnings ESP: The company has an Earnings ESP of +13.78%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: RH currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
Williams-Sonoma Inc. (WSM - Free Report) reported mixed results in second-quarter fiscal 2023 (ended Jul 30, 2023). Earnings beat the Zacks Consensus Estimate, but revenues missed the same. The metrics declined year over year. The downside was primarily due to the increasing promotional environment and softening industry metrics.
WSM anticipates fiscal 2023 net revenues to decline between 5% and 10%. The company now expects its operating margin of 15-16% versus earlier expectations of 14-15%.
The Lovesac Company (LOVE - Free Report) recently announced some preliminary unaudited and unreviewed financial results for the second quarter of fiscal 2024 (ended Jul 30, 2023). Impressively, it exceeded the previously provided guidance range for net sales and earnings.
LOVE currently expects a delay in completing its customary quarterly review and reporting process and the filing of its Form 10-Q for the second quarter of fiscal 2024.
Builders FirstSource (BLDR - Free Report) reported second-quarter 2023 results wherein earnings and net sales surpassed the Zacks Consensus Estimate. The company has exceeded expectations, thanks to a more stable housing environment, a strong value-added product portfolio and the positive impact of operational initiatives implemented in recent years.
However, on a year-over-year basis, BLDR’s results were hampered by declining single-family starts and commodity deflation.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.