Oppenheimer Remains Sidelined on Restoration Hardware (RH) Following 1Q
Oppenheimer reiterated a Perform rating on Restoration Hardware (NYSE: RH) following the company's 1Q earnings report. Adjusted EPS at RH declined to a loss of $0.05 from a $0.23 profit in the prior year and was below management guidance for earnings of $0.04-$0.06 and a $0.05 Street consensus. Total sales growth at RH increased 8% to $455.5M from $422.4M last year and was in line with guidance for sales of $452M to $456M.
Analyst Brian Nagel commented, "In mid-Apr., we initiated coverage of Restoration Hardware (on 4/13/16 at $43.64) with a Perform rating, upon the view that growing pains at the chain are apt to persist and, while down, shares did not appear washed out. The much weaker than expected Q1 (Apr.) results and now significantly dampened FY16 (Jan. 2017) outlook that RH reported after the close last night, we believe, meaningfully support our cautious stance on shares. We continue to look opportunistically toward longer term prospects for RH. That said, the company and its senior management have a lot to juggle and are attempting to execute one of the most involved retail strategy shifts we have ever witnessed amid a weakened, if not deteriorating, spending backdrop. Clients are advised to remain on the sidelines."
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Shares of Restoration Hardware closed at $36.07 yesterday.