Restoration Hardware Holdings, Inc common stock (NYSE: RH) stock rose over 4.6% on 11th September, 2019 (as of 10:58 am GMT-4; Source: Google finance) after the company posted better than expected results for the second quarter of FY 19. RH has ended the second quarter with inventory of $481 million versus $551 million last year, down $70 million, or 13% versus a 10% revenue increase. Due to the efficiency of the supply chain network redesign and the simplification of the reverse logistics and outlet model we expect to end the year with inventories down $80 to $90 million versus 2018.
RH in the second quarter of FY 19 has reported the adjusted earnings per share of $3.20, beating the analysts’ estimates for the adjusted earnings per share of $2.70. The company had reported the adjusted revenue growth of 9.9 percent to $706.5 million in the second quarter of FY 19, beating the analysts’ estimates for revenue of $698 million. The revenue grew the strength of the core RH business, the performance of the new galleries, particularly RH New York, the continued expansion of RH Hospitality and planned accelerated outlet sales due to the closure of a 500,000 square foot distribution facility in the fourth quarter of fiscal 2018. Further, RH has experienced better than expected delivered sales in the last few weeks of the quarter as a result of shipping efficiencies and lower returns due to the recent redesign of the home delivery network.
For the current quarter ending in November, Restoration Hardware expects its per-share earnings to range from $2.08 to $2.18. Analysts surveyed by Zacks had forecast adjusted earnings per share of $1.83. The company expects revenue to be in the range of $672 million to $678 million for the fiscal third quarter. Analysts surveyed by Zacks had expected revenue of $669 million.
Restoration Hardware expects full-year earnings to be in the range of $10.53 to $10.76 per share, and revenue is expected to range from $2.68 billion to $2.69 billion. The company is now projecting to generate free cash flow in the range of $325 to $350 million and expect total net debt to trailing twelve month adjusted EBITDA of approximately 1.8x to 1.9x at year end. Meanwhile, RH’s largest and most important new Gallery, RH New York, continues to trend comfortably in excess of $100 million in annualized revenue for fiscal 2019 and will generate more than $30 million of cash contribution in its first full fiscal year.