RH Tops Profit Estimates; Sees More Home-Related Spending

Home furnishings retailer RH sees heightened levels of spending continuing even if coronavirus pandemic eases.
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RH  (RH) - Get Report topped analyst estimates for the third quarter, saying it saw strong core demand in the latest period and it expects heightened lspending for home furnishings continuing in 2021 even if the coronavirus pandemic eases.

The company, which changed its name from Restoration Hardware in 2017, reported third-quarter adjusted earnings per share of $6.20 on revenue of $844 million. In the year-earlier period, the company earned $2.79 a share on sales of $677.5 million.

Analysts had expected it to report adjusted net income of $141.4 million, or $5.29 a share, on sales of $836.3 million, based on a FactSet survey of 17 analysts.

“We believe it’s safe to assume that some level of elevated spending on the home will remain through 2021, and possibly beyond,” said Chairman and CEO Gary Friedman in a shareholder letter. 

“The booming real estate activity in second-home markets, an accelerated shift of families moving to larger suburban homes, the uptick in homebuilding, and a record equity market should drive increased spending for an extended period of time as the cycle for purchasing and furnishing a home is anything but quick.”

The stock has risen 47% since the company last reported earnings on Sept. 9.

RH said free cash flow for the quarter rose 94% to $186 million from $96 million a year earlier. The company ended the quarter with net debt of $536 million and $179 million in cash on its balance sheet.

Shares of RH at last check slipped 0.8% to $464.