For the second quarter ended August 1, Restoration Hardware (RH) posted net income of $29.9 million, or 71 cents per diluted share, versus $27.3 million, or 66 per diluted share, in the year-earlier period. Adjusted net income was $36 million, or 85 cents per diluted share, versus $27.7 million, or 67 cents per diluted share, in last year’s quarter, the company stated.
Earnings per diluted share beat a published FactSet analyst average estimate by two cents.
Net sales were $506.9 million versus $433.8 million in the 2014 quarter, the company reported, as comparable store sales gained 16% year over year.
Restoration Hardware noted that 53% of its revenues came from stores, up from 51% in last year’s quarter, and 47% came from direct sales, down from 49% in the 2014 period.
“RH continues to outperform the home furnishings industry by a wide margin,” said Gary Friedman, chairman and CEO. “Net revenues exceeded our outlook and increased 17% on top of a 14% increase last year. Comparable brand revenues increased 16% on top of 13% last year— representing a 29% increase over the two-year period. Additionally, we grew our adjusted operating margin by 90 basis points and adjusted net income by 30%, both ahead of our expectations, and further demonstrating the disruptive nature of the RH brand and the power of our multi-channel business model.”
He added, “We believe that the sheer scope of what we are about to unveil over the course of just three months, September through November, illustrates our execution capabilities, our unmatched level of innovation, and the power of our multi-channel platform. We will be launching two significant new businesses, RH Modern and RH Teen, each with their own source book, website, and a significant retail presence. Also during this period, we have four, revolutionary next generation design galleries opening in Chicago, Denver, Tampa and Austin, as well as a standalone RH Modern gallery in Los Angeles, and RH Baby & Child galleries in West Palm Beach and Greenwich. We believe that the launch of RH Modern and RH Teen late in the third quarter, coupled with the new next generation design galleries opening in October and November, puts us on a clear path to accelerate our growth in the fourth quarter and into fiscal 2016.”
As of August 1, RH operated a total of 67 retail galleries, including 57 legacy galleries, six larger format design galleries, one next generation design gallery, and three Baby & Child galleries, as well as 15 outlet stores, throughout the United States and Canada.