Following a strong second quarter when RH reported double-digit sales increases, the home specialty retailer has raised its sales forecast for the remainder of the year.
For the quarter ended August 3, total revenue was $706.5 million, an increase of 10.3% over the comparable quarter the previous year. Net income was $63.7 million, or $2.86 per diluted share, compared with net income of $62.9 million, or $2.29 per diluted share, in the third quarter of 2018.
“Our focus on elevating the brand, architecting an integrated operating platform, and pivoting the company back to growth has resulted in RH standing out as one of the few brands that are growing revenues, expanding operating margins, and driving significantly higher returns on invested capital and free cash flow,” said Gary Friedman, RH’s chairman and CEO. “Despite achieving industry-leading operating margins, we continue to demonstrate our ability to grow earnings significantly faster than revenues, illustrating the desirability of our differentiated product offering, and the emergence of RH as a luxury brand generating luxury margins.”
Following the release of the company’s second quarter results, RH is raising its guidance for the rest of the year. Net revenues for the remainder of the year are now expected to fall between $2.68 billion and $2.69 billion, up from the previous forecast of between $2.66 billion and $2.67 billion.
Adjusted net income is expected to fall between $246.9 million and $252.3 million, up from the previous forecast of $213.3 billion and $223.8 billion.
Friedman said the company does not expect the current issue with tariffs to impact RH’s ability to achieve its financial goals.
“We continue to receive pricing accommodations from vendors and have implemented price increases where necessary with little to no impact on our business,” he said.