Restoration Hardware Builds Strong Fiscal Year, Q4

Restoration Hardware Holdings has posted net income of $91 million for the fiscal year ended January 31, or $2.20 per diluted share, versus $18.2 million, or 45 cents per diluted share, for the year prior. The company stated that adjusted net income increased 41% to $97.6 million and adjusted diluted EPS gained 38% to $2.36.

Net revenues were $1.87 billion versus $1.55 billion in the 2013 quarter, and comparable brand revenues, which includes store and direct to consumer sales, increased 20% year over year. Operating income was $165.7 million versus $54.9 million in fiscal 2013, Restoration Hardware noted, while adjusted operating income advanced to $173.4 million from $120.9 million in the year earlier.

For the fourth quarter, Restoration Hardware posted net income of $42.5 million, or $1.02 per diluted share, versus $26.6 million, or 65 cents per diluted share, for the year-prior period. The company maintained that adjusted net income increased 25% to $42.5 million and adjusted diluted EPS increased 23% to $1.02.

Diluted earnings per share beat a Zacks Investment Research average analayst estimate by a penny.

Net revenues were $582.7 million versus $471.7 million in the 2013 quarter, and comps increased 24% in the period year over year. Operating income was $75.3 million versus $58.3 million in the fiscal 2013 period, Restoration Hardware pointed out, while adjusted operating income advanced to $73.8 million from $58.3 million in the year-earlier period.

“Fiscal 2014 marks RH’s fifth consecutive year of net revenue growth in excess of 20%, averaging approximately 25% net revenue growth during that period,” said Gary Friedman, Restoration Hardware chairman and CEO. “After four years of at least 25% comparable brand revenue growth, RH achieved 20% comparable brand revenue growth in fiscal 2014, a milestone unseen amongst our home furnishings peers. Fiscal 2014 adjusted operating margins increased to 9.3% from 7.8%, and adjusted net income increased 41%, reflecting quality earnings growth that was primarily driven by a 110 basis point expansion in gross margin and further demonstrating the power of our multi-channel business model. We are very pleased with the initial trends and performance of our first next generation Design Gallery, RH Atlanta- the Gallery at the Estate in Buckhead. RH Atlanta is the first Gallery that showcases all of our current concepts, RH Interiors, RH Small Spaces, RH Baby & Child, and RH Outdoor. Early indications are strong, and we expect Atlanta’s performance to accelerate further as we continue to add future new businesses, such as RH Kitchen, and two new yet to be disclosed concepts that we will announce later this year.”

Friedman added, “While we have been negatively impacted by the West Coast port disruption in the first quarter of this year, we believe at this point, most of the revenue and earnings not recorded in the first quarter of fiscal 2015 should shift forward and have a positive effect on the second quarter. Fiscal 2015 is a bridge year for RH, with revenue growth targeted in the mid-teens, and then reaccelerating to our long-term goal of 20% as our real estate transformation steps up in fiscal 2016.”