RH to Report Q4 Earnings: What's Awaits This Home Furnishing Player?

RH RH, formerly Restoration Hardware, is scheduled to report fourth-quarter fiscal 2024 (ended Feb. 1) results on April 2, after market close.

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In the third quarter of fiscal 2024 (ended Nov. 2, 2024), RH’s earnings missed the Zacks Consensus Estimate by 7.1%. However, the luxury home furnishings retailer surpassed expectations for revenues by 0.1%, driven by resilient demand despite a tough housing market. Both metrics increased on a year-over-year basis. The fiscal third quarter presented a mixed financial performance, reflecting both external economic pressures and internal strategic shifts. In the fiscal third quarter, total demand growth increased 13%, with November showing an acceleration to 18%.

RH Price and EPS Surprise

RH price-eps-surprise | RH Quote

How are Estimates Placed for RH Stock?

The Zacks Consensus Estimate for RH’s earnings per share (EPS) has increased to $1.91 from $1.90 over the past seven days. The estimated figure indicates solid 165.3% growth from the year-ago profit level of 72 cents per share.

The consensus estimate for revenues is pegged at $827.3 million, implying a 12.1% increase from the year-earlier level.

Factors That May Influence RH’s Quarterly Results

Although the company has been grappling with sluggish demand in the luxury home furnishings sector — which is closely tied to consumer sentiment and housing market trends — RH remains confident in its ability to sustain revenue growth, aided by ongoing strategic initiatives. New product launches and better execution of marketing initiatives and the B2B segment might have also helped mitigate the headwinds, contributing to overall results. Waterworks, RH Couture Upholstery, and new brand extensions will contribute to revenue growth.

RH’s top line is expected to have witnessed gains in market share in the fiscal fourth quarter due to newer and more competitively priced product collections, expanded sourcebook mailings, optimized assortment and improved in-stock levels.

RH estimates that it captured 15-25 points of market share in the fiscal third quarter and expects to gain an additional 25-45 points in the fiscal fourth quarter. These gains are coming from both premium and mid-tier competitors, as its luxury branding and exclusive designs differentiate RH in a crowded market.

The company’s fiscal fourth-quarter guidance, provided during the last-reported quarter earnings call, indicates that demand will increase 20-22% year over year (resulting in the revenue growth of 18% to 20% for the quarter), up from 8.1% in the fiscal third quarter, supported by gains in market share.

From the margin perspective, RH anticipates gross margins in the fiscal fourth quarter to be impacted by ongoing economic pressures, including higher costs associated with logistics, raw materials and promotional activities. RH acknowledges that maintaining margins in this environment requires careful cost management. Pricing adjustments and supply-chain efficiencies will play a crucial role in sustaining profitability.

Management expects that strategic cost-saving measures, such as optimizing sourcing and improving operational efficiencies, will partially offset these pressures. The adjusted operating margin is expected in the range of 12.2%-13.2%, up from 9.1% in the year-ago period. The adjusted EBITDA margin is forecasted at 17.2% to 17.4%, up from 15.3% in the year-ago quarter, reflecting improved operational efficiency.

What Our Quantitative Model Predicts for RH Stock

Our proven model predicts an earnings beat for RH this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here, as you will see below.

Earnings ESP: The company has an Earnings ESP of +0.94%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: RH currently carries a Zacks Rank #3.

Peer Releases of RH

Williams-Sonoma Inc. WSM delivered impressive fourth-quarter fiscal 2024 results (ended Feb. 2, 2025), surpassing the Zacks Consensus Estimate for both earnings and net revenues. Year over year, both figures showed solid growth.

Williams-Sonoma’s strong performance in the quarter was driven by revenue gains, record-high operating margins and robust earnings. Its strategic focus on cost management and investments in digital and retail channels has positioned it well for sustained growth, even amid potential economic headwinds.

Additionally, Williams-Sonoma announced a 16% increase in its quarterly dividend, raising it to 66 cents per share.

The Home Depot Inc. HD has reported fourth-quarter fiscal 2024 results, wherein earnings and sales surpassed the Zacks Consensus Estimate and improved year over year. Home Depot's adjusted earnings of $3.13 per share increased 9.4% from $2.82 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.04 per share.

Home Depot anticipates that fiscal 2025 sales will increase 2.8% year over year. Home Depot expects comparable sales to rise 1% for the 52 weeks.

Ethan Allen Interiors Inc.’s ETD reported second-quarter fiscal 2025 consolidated net sales of $157.3 million, which represents a 6% decline from the $167.3 million reported a year ago. Ethan Allen reported an EPS of 59 cents compared with 68 cents in the prior year. The decline in profitability was attributed to softer sales, increased operational expenses and restructuring charges.

Ethan Allen’s gross margin remained stable at 60.3%, a slight improvement over the 60.2% a year ago. However, the operating margin dipped to 11.5% from the previous year's 13%, mainly due to higher advertising expenses, which increased to 2.5% of net sales from 2%.

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This article originally published on Zacks Investment Research (zacks.com).

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