Restoration Hardware Profit Soars; But Stock Down On Weak Q4 Outlook - Update

(RTTNews) - Home furnishings retailer Restoration Hardware Holdings Inc. (RH), Thursday reported a better-than-expected increase in third-quarter profit, on a near forty percent jump in sales and better operating margins.

Nonetheless, the company provided a soft outlook for the crucial fourth quarter, while raising its expectations for fiscal year 2013.

Restoration Hardware also announced the exit of its Co-CEO Carlos Alberini, effective January 31, 2014. Alberini has accepted the top post at Lucky Brand, in Los Angeles. Alberini plans to continue to serve as a member of the Board of Restoration Hardware and remain a major stakeholder.

Restoration Hardware shares dropped 13 percent in after-hours trade on the New York Stock Exchange.

For the third quarter, the Corte Madera, California-based company posted net earnings of $9.5 million or $0.23 per share, up from $1.7 million last year.

Excluding items, adjusted earnings for the quarter were $13 million or $0.32 per share. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.28 per share. Analysts' estimates typically exclude special items.

Sales for the third quarter jumped to $395.8 million from $284 million a year ago, and topped analysts' expectations of $390.76 million.

On a same-store basis, sales were up 29 percent.

Operating margin for the quarter surged to 6 percent from 0.7 percent.

For the fourth quarter, Restoration Hardware expects adjusted earnings of $0.82 to $0.85 per share and sales of $490 million to $500 million. Analysts currently expect earnings of $0.85 per share on sales of of $497 million.

For fiscal 2013, the company expects adjusted earnings of $1.71 to $1.74 per share and sales of $1.57 billion to $1.58 billion. Restoration Hardware earlier anticipated earnings of $1.65 to $1.70 per share and sales of $1.56 billion to $1.58 billion. Analysts currently expect earnings of $1.71 per share on sales of $1.57 billion for the year.

As of November 2, 2013, Restoration Hardware operated 70 retail stores.

The company's stock closed Thursday at $65.27, down $0.77 or 1.17%, on a volume of about 3 million shares. In after hours, the stock further dropped $8.57 or 13.13% at $56.70.