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RH Beats on Q4 Earnings, Misses on Revenues, Withdraws '20 View
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RH (RH - Free Report) reported fourth-quarter fiscal 2019 results, wherein adjusted earnings beat the Zacks Consensus Estimate but revenues missed the same.
Earnings, Revenue & Margin Discussion
Adjusted earnings of $3.72 per share surpassed the consensus mark of $3.59 by 3.6%. Moreover, the reported figure surged 27% from the year-ago level.
Adjusted revenues (including recall accrual) of $665 million missed the consensus mark of $709.6 million by 6.3%. The figure also declined 1% from the year-ago $671.8 million.
While fourth-quarter adjusted revenues were lower than the company’s expectation, adjusted earnings topped the same for the 13th consecutive quarter as it continues to manage the business with a bias for earnings over revenue growth. The lower revenues were due to two main reasons. First, the elimination of its Holiday assortment created unforeseen collateral damage to its core business due to the lower customer traffic in both stores and online during the peak weeks. Second, the company experienced higher-than-expected backorders due to a 18% year-over-year drop in inventories.
Adjusted gross margin increased 390 basis points (bps) to 42.6% in the quarter. The company’s adjusted operating margin expanded 230 bps year over year to a record 17.4%, driven by higher product margins, accompanied with lower occupancy and shipping costs owing to the elimination of Holiday assortment and the continued efficiencies of a new operating platform. Adjusted EBITDA also grew 10.3% year over year to $145 million in the quarter.
As of Feb 1, 2020, RH operated 68 retail galleries. These include 40 Legacy Galleries, 22 Design Galleries, four Baby & Child Galleries, and two Modern Galleries throughout the United States and Canada. It also operated 15 Waterworks showrooms throughout the United States and in the U.K.
Balance Sheet
RH’s cash and cash equivalents were $47.7 million as of Feb 1, 2020, compared with $5.8 million as on Feb 2, 2019. The company ended fiscal 2019 with merchandise inventories worth $438.7 million compared with $531.9 million as of Feb 2, 2019. Net cash provided by operating activities was $339.2 million in fiscal 2019, reflecting an increase from $249.6 million in the year-ago period.
Fiscal 2019 Highlights
Adjusted earnings of $11.66 per share increased a notable 49.5% from $7.80 a year ago. Adjusted revenues grew 5.4% to $2,647 million from $2,510.4 million a year ago. Adjusted gross margin expanded 190 bps to 41.4%. Adjusted operating margin grew 290 bps to 14.3% in fiscal 2019.
Withdraws Guidance Amid Coronavirus Crisis
In view of the major disruption in financial markets and retail business operations due to the COVID-19 outbreak, RH withdrew all prior guidance pertaining to fiscal 2020. Additionally, the company will take more steps that comprise deferring new business introductions and capital spending, while reducing costs to navigate through the short-term challenges of this crisis.
Zacks Rank
RH — which shares space with Williams-Sonoma, Inc. (WSM - Free Report) in the Zacks Retail - Home Furnishings industry — currently carries a Zacks Rank #3 (Hold).
At Home’s earnings for fiscal 2022 are expected to grow 30.9%.
Insight Enterprises’ earnings are anticipated to rise 11.6% in 2020.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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RH Beats on Q4 Earnings, Misses on Revenues, Withdraws '20 View
RH (RH - Free Report) reported fourth-quarter fiscal 2019 results, wherein adjusted earnings beat the Zacks Consensus Estimate but revenues missed the same.
Earnings, Revenue & Margin Discussion
Adjusted earnings of $3.72 per share surpassed the consensus mark of $3.59 by 3.6%. Moreover, the reported figure surged 27% from the year-ago level.
Adjusted revenues (including recall accrual) of $665 million missed the consensus mark of $709.6 million by 6.3%. The figure also declined 1% from the year-ago $671.8 million.
While fourth-quarter adjusted revenues were lower than the company’s expectation, adjusted earnings topped the same for the 13th consecutive quarter as it continues to manage the business with a bias for earnings over revenue growth. The lower revenues were due to two main reasons. First, the elimination of its Holiday assortment created unforeseen collateral damage to its core business due to the lower customer traffic in both stores and online during the peak weeks. Second, the company experienced higher-than-expected backorders due to a 18% year-over-year drop in inventories.
Adjusted gross margin increased 390 basis points (bps) to 42.6% in the quarter. The company’s adjusted operating margin expanded 230 bps year over year to a record 17.4%, driven by higher product margins, accompanied with lower occupancy and shipping costs owing to the elimination of Holiday assortment and the continued efficiencies of a new operating platform. Adjusted EBITDA also grew 10.3% year over year to $145 million in the quarter.
RH Price, Consensus and EPS Surprise
RH price-consensus-eps-surprise-chart | RH Quote
Store Update
As of Feb 1, 2020, RH operated 68 retail galleries. These include 40 Legacy Galleries, 22 Design Galleries, four Baby & Child Galleries, and two Modern Galleries throughout the United States and Canada. It also operated 15 Waterworks showrooms throughout the United States and in the U.K.
Balance Sheet
RH’s cash and cash equivalents were $47.7 million as of Feb 1, 2020, compared with $5.8 million as on Feb 2, 2019. The company ended fiscal 2019 with merchandise inventories worth $438.7 million compared with $531.9 million as of Feb 2, 2019. Net cash provided by operating activities was $339.2 million in fiscal 2019, reflecting an increase from $249.6 million in the year-ago period.
Fiscal 2019 Highlights
Adjusted earnings of $11.66 per share increased a notable 49.5% from $7.80 a year ago. Adjusted revenues grew 5.4% to $2,647 million from $2,510.4 million a year ago. Adjusted gross margin expanded 190 bps to 41.4%. Adjusted operating margin grew 290 bps to 14.3% in fiscal 2019.
Withdraws Guidance Amid Coronavirus Crisis
In view of the major disruption in financial markets and retail business operations due to the COVID-19 outbreak, RH withdrew all prior guidance pertaining to fiscal 2020. Additionally, the company will take more steps that comprise deferring new business introductions and capital spending, while reducing costs to navigate through the short-term challenges of this crisis.
Zacks Rank
RH — which shares space with Williams-Sonoma, Inc. (WSM - Free Report) in the Zacks Retail - Home Furnishings industry — currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space include At Home Group Inc. and Insight Enterprises, Inc. (NSIT - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
At Home’s earnings for fiscal 2022 are expected to grow 30.9%.
Insight Enterprises’ earnings are anticipated to rise 11.6% in 2020.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>