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Sept. 8, 2022, 8:21 p.m. EDT

RH beats on earnings, but retailer trims outlook amid housing slowdown

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By Bill Peters

Shares of RH inched 0.1% higher in the extended session Thursday after the furniture and home-goods retailer reported second-quarter earnings that beat Wall Street expectations but trimmed its sales outlook for the year, saying it expects demand to continue to ease amid a slowdown in the housing market.

RH /zigman2/quotes/200286355/composite RH +0.28% said it earned $122 million, or $5.37 a share, in the quarter, compared to $227 million, or $7.09 a share, in the year-earlier period.

Adjusted earnings per share came in at $8.08. Sales rose to $992 million from $989 million a year ago.

Analysts polled by FactSet expected adjusted earnings of $6.71 a share on sales of $969 million.

The company, known for its palatial store settings and avant-garde furniture and decor offerings, said it expected fiscal 2022 sales to decline between 3.5% and 5.5%. That forecast is a bit weaker than expectations in late June for a 2% to 5% decrease.

“Our expectation is for continued softening in our business trends during the remainder of fiscal 2022 as a result of ongoing weakness in the housing market over the next several quarters and possibly longer due to the Federal Reserve’s anticipated interest-rate increases and the cycling of record COVID-driven sales levels in 2021,” Chief Executive Gary Friedman said in a letter to investors.

The retailer said it expected third-quarter net sales to fall between 15% and 18%.

The company’s fortunes are typically tied to the housing market, which boomed earlier on during the pandemic, and the sentiment of wealthier customers exposed to the stock market.

Friedman, echoing remarks made in June, said in the letter that “there continues to be widespread discounting across our industry.”

He said RH risked losing market share in the short-term by not discounting in response. Pursuing that route, however, would present longer-term risks to the company’s reputation, Friedman said.  

RH stock is down 52% so far this year, compared with losses of around 16% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.03% .

/zigman2/quotes/200286355/composite
RH
US : U.S.: NYSE
$ 277.22
+0.77 +0.28%
Volume: 209,574
Nov. 25, 2022 1:10p
P/E Ratio
12.41
Dividend Yield
N/A
Market Cap
$6.58 billion
Rev. per Employee
$593,551
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/zigman2/quotes/210599714/realtime
US : S&P US
4,026.12
-1.14 -0.03%
Volume: 0.00
Nov. 25, 2022 2:32p
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