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RH's Q1 Earnings & Revenues Beat, Shares Tank on Views
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RH (RH - Free Report) reported results for first-quarter fiscal 2022 (ended Apr 30, 2022), wherein adjusted earnings and revenues beat the Zacks Consensus Estimate. Notably, this marks the company’s 18th consecutive quarter of earnings beat. Earnings and revenues grew on a year-over-year basis.
It is to be noted that shares of this leading luxury retailer in the home furnishing space lost 1.3% in the after-hours trading session on Jun 2, post the earnings release. Management has cautioned about softening demand trends, which started during the Russian invasion of Ukraine and have further slowed during the market disruption over the past few months.
Earnings, Revenues & Margin Discussion
Adjusted earnings of $7.78 per share surpassed the consensus mark of $5.46 by 42.5% and increased 59.1% from the year-ago figure of $4.89.
Adjusted net revenues of $957.3 million improved 11.2% year over year and surpassed the consensus mark of $925 million by 3.5%.
Adjusted gross margin expanded 480 bps to 52.1% for the quarter. The upside was driven by increase in product margins.
Adjusted selling, general & administrative expenses improved 30 bps to 27.4%.
Adjusted operating margin expanded a notable 210 bps year over year to 24.7%. Adjusted EBITDA spiked 18.1% year over year to $269.6 million for the quarter. Adjusted EBITDA margin also expanded 170 bps year over year to 28.2%.
As of Apr 30, there were 67 RH Galleries, 39 outlet stores and 14 Waterworks showrooms operational.
RH’s cash and cash equivalents were $2,243.3 million at fiscal first-quarter end compared with $2,177.9 million at fiscal 2021 end (ended Jan 29, 2022). The company ended the fiscal first quarter with merchandise inventories worth $817.3 million compared with $734.3 million at fiscal 2021 end. RH ended the quarter with net debt of $166 million.
Net cash provided by operating activities was $135.9 million for fiscal first quarter compared with $190.9 million in the comparable year-ago period.
Free cash flow totaled $106.6 million at fiscal first-quarter end versus $140.6 million a year ago.
Fiscal 2022 View
Depending on the current demand trends, which has slowed down post the Russian invasion of Ukraine, RH now expects net revenue to decline 1-3% for the fiscal second quarter. This is in comparison to 39% growth in the year-ago period.
For fiscal 2022, RH expects net revenue growth in the range of 0-2% compared with 5-7% growth expected earlier. The latest projected figure indicates a decline from 32% growth reported in fiscal 2021.
The company expects operating margin in the range of 23% to 23.5% for the fiscal second quarter compared with 26.6% a year ago. For the entire year, RH expects adjusted operating margin within 23% to 24% (compared with 25-26% of earlier projection). In the year-ago period, the metric was 25.6%.
Williams-Sonoma Inc. (WSM - Free Report) reported impressive earnings for first-quarter fiscal 2022 (ended May 1, 2022). The company’s earnings and revenues beat the Zacks Consensus Estimate and improved on a year-over-year basis, courtesy of strength across all brands along with accelerated e-commerce growth.
Defying supply chain woes, material and labor shortages, and capacity limitations, WSM’s quarterly revenues improved from the year-ago period on strong demand.
Builders FirstSource (BLDR - Free Report) reported solid first-quarter 2022 results, wherein it reported core organic sales growth of 15%.
BLDR’s earnings and net sales surpassed the Zacks Consensus Estimate and increased significantly year over year. The results were driven by an increase in net sales and gross margin amid continuous raw material supply woes.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported results for the first quarter of 2022. Earnings and revenues handily surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis.
BECN’s solid results were mainly backed by strong net sales, gross margin expansion and operational improvement.
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RH's Q1 Earnings & Revenues Beat, Shares Tank on Views
RH (RH - Free Report) reported results for first-quarter fiscal 2022 (ended Apr 30, 2022), wherein adjusted earnings and revenues beat the Zacks Consensus Estimate. Notably, this marks the company’s 18th consecutive quarter of earnings beat. Earnings and revenues grew on a year-over-year basis.
It is to be noted that shares of this leading luxury retailer in the home furnishing space lost 1.3% in the after-hours trading session on Jun 2, post the earnings release. Management has cautioned about softening demand trends, which started during the Russian invasion of Ukraine and have further slowed during the market disruption over the past few months.
Earnings, Revenues & Margin Discussion
Adjusted earnings of $7.78 per share surpassed the consensus mark of $5.46 by 42.5% and increased 59.1% from the year-ago figure of $4.89.
Adjusted net revenues of $957.3 million improved 11.2% year over year and surpassed the consensus mark of $925 million by 3.5%.
Adjusted gross margin expanded 480 bps to 52.1% for the quarter. The upside was driven by increase in product margins.
Adjusted selling, general & administrative expenses improved 30 bps to 27.4%.
Adjusted operating margin expanded a notable 210 bps year over year to 24.7%. Adjusted EBITDA spiked 18.1% year over year to $269.6 million for the quarter. Adjusted EBITDA margin also expanded 170 bps year over year to 28.2%.
RH Price, Consensus and EPS Surprise
RH price-consensus-eps-surprise-chart | RH Quote
Store Update & Balance Sheet
As of Apr 30, there were 67 RH Galleries, 39 outlet stores and 14 Waterworks showrooms operational.
RH’s cash and cash equivalents were $2,243.3 million at fiscal first-quarter end compared with $2,177.9 million at fiscal 2021 end (ended Jan 29, 2022). The company ended the fiscal first quarter with merchandise inventories worth $817.3 million compared with $734.3 million at fiscal 2021 end. RH ended the quarter with net debt of $166 million.
Net cash provided by operating activities was $135.9 million for fiscal first quarter compared with $190.9 million in the comparable year-ago period.
Free cash flow totaled $106.6 million at fiscal first-quarter end versus $140.6 million a year ago.
Fiscal 2022 View
Depending on the current demand trends, which has slowed down post the Russian invasion of Ukraine, RH now expects net revenue to decline 1-3% for the fiscal second quarter. This is in comparison to 39% growth in the year-ago period.
For fiscal 2022, RH expects net revenue growth in the range of 0-2% compared with 5-7% growth expected earlier. The latest projected figure indicates a decline from 32% growth reported in fiscal 2021.
The company expects operating margin in the range of 23% to 23.5% for the fiscal second quarter compared with 26.6% a year ago. For the entire year, RH expects adjusted operating margin within 23% to 24% (compared with 25-26% of earlier projection). In the year-ago period, the metric was 25.6%.
Zacks Rank
RH currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Williams-Sonoma Inc. (WSM - Free Report) reported impressive earnings for first-quarter fiscal 2022 (ended May 1, 2022). The company’s earnings and revenues beat the Zacks Consensus Estimate and improved on a year-over-year basis, courtesy of strength across all brands along with accelerated e-commerce growth.
Defying supply chain woes, material and labor shortages, and capacity limitations, WSM’s quarterly revenues improved from the year-ago period on strong demand.
Builders FirstSource (BLDR - Free Report) reported solid first-quarter 2022 results, wherein it reported core organic sales growth of 15%.
BLDR’s earnings and net sales surpassed the Zacks Consensus Estimate and increased significantly year over year. The results were driven by an increase in net sales and gross margin amid continuous raw material supply woes.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported results for the first quarter of 2022. Earnings and revenues handily surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis.
BECN’s solid results were mainly backed by strong net sales, gross margin expansion and operational improvement.