Why RH Stock broke this week


What happened

Actions of HR (DR 5.47% ) were up this week after the high-end home furnishings retailer formerly known as Restoration Hardware released another solid earnings report.

At market close on Thursday, the stock was up 13.3% for the week, according to data from S&P Global Market Intelligence.

Image source: Getty Images.

So what

Announcing its profits on Wednesday after the bell, RH said revenue rose 19% to $ 1.01 billion, ahead of estimates to $ 983.9 million, or up 49% from the third quarter of 2019, its fastest two-year growth rate on record.

This impressive performance comes despite supply chain challenges that have led the company to postpone the launch of its RH Contemporary collection, the opening of the first RH Guesthouse and several galleries, as well as the dispatch of its books. fall springs next spring.

Profits continued to advance as adjusted operating margin increased from 26.7% to 27.7% and adjusted earnings per share increased 13% to $ 7.03, beating expectations to $ 6.63 .

The company also raised its outlook for the full year, forecasting revenue growth of 32% to 33%, from a previous range of 31% to 33%, and an adjusted operating margin of 25.3. % to 25.5%, compared to an earlier forecast of 24.9% -25.5%.

Stocks gained 5.5% on Thursday even as growth stocks fell, adding to gains earlier in the week.

Now what

With little fanfare, RH has been one of the top performing consumer stocks on the market in recent years. Stock has grown nearly 1,500% over the past five years thanks to the popularity of its niche products, a boom in the luxury sector, a successful pivot to a membership model and a unique approach to selling retail through a handful of experiential galleries that showcase his wares.

With retail spending on the rise and consumers full of cash after several rounds of government aid during the pandemic, RH appears well positioned to continue to outperform.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Margaret L. Portillo

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