Market Updates
High-priced Furniture Retailer RH Guides Larger Sales Decline
Scott Peters
09 Sep, 2022
New York City
RH Inc added 4.3% to $273.35 after the high-priced furniture retailer said third quarter sales are expected to decline more-than-expected.
Revenue in the fiscal second quarter edged up to $992 million from $989 million a year ago and rose 40% on a two-year basis from $709 million.
The launch of RH Contemporary, the openings of RH San Francisco and RH Guesthouse, the development of RH International, and the rollout of RH In-Your-Home which led to approximately 400 of the 530 basis points increase in SG&A expense in the quarter.
Selling and General Administration expense rose to 29% from 24% a year ago.
The retailer is pivoting to a portfolio of high-price hotels like the one recently opened in New York City with room rates starting at $3,500 a night.
Net income in the quarter fell to $122 million from $227 million a year ago and diluted earnings per share declined to $5.37 from $7.09.
Outlook
The furniture retailer guided third quarter revenue to decline in the range of 15% to 18% and adjusted operating margin between 18.5% and 19.0%.
For the full-year revenue is expected to fall between 3.5% and 5.5% with adjusted operating margin between 21.0% and 21.5%.
Buybacks
RH repurchased one million shares of its common stock in the second quarter at an average price of $255 a share.
The company also spent $82 million in cash to repurchase $18 million and $39 million of the 2023 and 2024 outstanding convertible notes in privately negotiated transactions.
Following these transactions, $44 million of convertible notes are outstanding as of July 30, 2022.
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