RH (NYSE:RH) stock declined about 11% in the extended trading session yesterday. The fall came after the company reported a wider-than-expected loss for the first quarter and provided a Q2 revenue outlook, which came in below analysts’ expectations.
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RH, formerly known as Restoration Hardware, is a luxury home furnishings retailer offering high-end furniture, lighting, textiles, and decor.
RH: Q1 Earnings Snapshot
The company reported an adjusted loss of $0.40 per share, which compares unfavorably with adjusted earnings of $2.21 in the year-ago quarter. Also, the Q1 loss was significantly higher than analysts’ expectations of a loss of $0.13 per share. The weak performance was due to costs related to a one-time legal settlement and higher interest expenses.
Regarding top-line performance, RH’s quarterly sales were down about 2% year-over-year to $726.9 million but surpassed the Street’s estimates of $725.15 million. The decline in revenues is primarily attributed to weak demand for RH’s products due to headwinds in the housing sector.
Q2 and Fiscal 2024 Outlook
For Q2, the company projects that revenue will rise between 3% and 4%, versus analysts expectations of 7.5%. Additionally, RH expects demand to grow in the range of 9% to 10%.
For Fiscal 2024, RH expects that demand will increase by 12% to 14%, and revenue will grow by 8% to 10% on a year-over-year basis.
The company expects its near-term performance to remain impacted by challenging business conditions until interest rates ease and the housing market begins to rebound.
Is RH a Good Stock to Buy?
Overall, RH has a Moderate Buy consensus rating based on four Buy, five Hold, and one Sell recommendations. The analysts’ average price target on RH stock of $327.90 implies an upside potential of 18.35% from current levels. Shares of the company have declined by 12.6% in the past six months.
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