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RH Tops Analysts’ Revenue and EPS Expectations in Q3 2018

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Third-quarter performance

RH (RH) posted its third-quarter earnings results after the market closed on December 3. For the quarter that ended on November 3, the company posted adjusted EPS of $1.73 on revenue of $638.5 million.

Year-over-year, the company’s revenue rose 7.8%, while its adjusted EPS rose 66.3%.

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Stock performance

During the quarter, RH beat analysts’ EPS estimate of $1.27 by 36.2% and outperformed analysts’ revenue expectation of $632.2 million by 1.0%. The company’s comparable brand revenue growth stood at 4.0% in the quarter. Also, its management claimed that tariff-related shipping congestion in China had resulted in the slower shipment of special orders, negatively affecting the company’s revenue and comparable brand revenue growth by 1.0%.

However, RH’s management expects the delayed receipts to positively affect its fourth-quarter revenue, and the company has raised its revenue and EPS expectations for the quarter. The company’s strong third-quarter results and its raising of its fourth-quarter earnings guidance appear to have led to a rise in its stock price. RH was trading 19.3% higher in after-market trading hours on December 3.

Year-to-date performance

At the end of the day on December 3, RH was trading at $123.65, a rise of 43.5% YTD (year-to-date). Its peers Williams-Sonoma (WSM) and Bed Bath & Beyond (BBBY) have returned 13.6% and -40%, respectively, YTD. The broader comparative index, the SPDR S&P Homebuilders ETF (XHB), which invests ~9.5% of its holdings in home furnishing and furniture companies, has fallen 18.5% YTD. Next, we’ll look at RH’s revenue in the third quarter.

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