RH (NYSE:RH) delivered weaker-than-expected results for the fourth quarter of Fiscal Year 2023. However, the company’s shares gained 8.5% in after-hours trading yesterday, fueled by higher-than-expected revenue guidance for Fiscal 2024 and expectations of improved demand as the year progresses.
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RH, formerly known as Restoration Hardware, is a luxury home furnishings retailer offering high-end furniture, lighting, textiles, and decor.
Q4 Earnings Snapshot
The company reported adjusted earnings of $0.72 per share, which missed the consensus estimate of $1.67 per share. In the year-ago period, RH had reported earnings of $2.88 per share. The significant decline in earnings reflects lower revenues, higher discounts to support product transformation, and investments in international expansion.
Meanwhile, RH’s quarterly sales declined about 4% year-over-year to $738.3 million and came below the Street’s estimates of $777.5 million. The decline in revenues is primarily attributed to shipping disruptions caused by the ongoing conflict in the Red Sea and adverse weather conditions.
Q1 and Fiscal 2024 Outlook
The company projects that revenue will decline by the low single digits for the first quarter as its product transformation efforts are likely to adversely impact near-term sales. Nevertheless, RH expects demand to grow by the mid-single digits in Q1, implying better days ahead.
Additionally, the company expects its top line to witness solid growth in Fiscal 2024. RH forecasts that demand will increase by 12% to 14%, and revenue will grow by 8% to 10%. Analysts expected RH to deliver revenue growth of about 7.6% in Fiscal 2024.
It is worth mentioning that the company expects its new collection of interior designs, scheduled for launch from late April through early August, to help boost demand in the second quarter and throughout the second half of 2024.
Should You Buy RH Stock?
Wall Street remains optimistic about RH. On TipRanks, it has a Strong Buy consensus rating based on four unanimous Buy ratings. The analysts’ average price target on RH stock of $346.25 implies a 16.6% upside potential. Shares of the company have gained about 15% in the past six months.
