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What Analysts Expect from RH’s Revenue Going Forward

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Sep. 6 2018, Updated 12:05 p.m. ET

Analysts’ estimates

For the next four quarters, analysts expect RH (RH) to post revenue of $2.62 billion, which represents a 6.3% increase from the $2.46 billion in the corresponding four quarters of the previous year.

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Management’s guidance

After posting its second-quarter earnings, RH’s management has lowered its revenue guidance for 2018 to be in the range of $2.49 billion to $2.52 billion, which represents growth of 4% to 5% from 2017 on a comparable 52-week basis. Management also expects the company’s revenue to rise 5% to 7% in the third quarter and 6% to 9% in the fourth quarter.

RH’s revenue is expected to be driven by its SSSG, the addition of new galleries, and growth in direct sales. The company has planned to open four new galleries in 2018:

  • Portland gallery opened on April 9.
  • Nashville gallery opened on July 2.
  • Yountville (California) gallery is slated to open later this year.
  • New York gallery is slated to open later this year.

Also, to reduce returns and damages, the company is focusing on redesigning its distribution center network in an attempt to increase the time products stay in their original packaging. Along with these initiatives, the launch of its 2018 RH Outdoor Source Book in March and 2018 RH Interiors and RH Modern Source Books in July are expected to drive the company’s revenue.

Peer comparisons

During the next four quarters, peer Williams-Sonoma (WSM) is expected to post revenue of $5.73 billion, which represents growth of 5.1% from $5.45 billion in the corresponding four quarters of the previous year.

Next, we’ll look at RH’s margins during its second quarter.

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