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For 4Q17, $RH expects revenue to be $655-680MM despite a $9MM negative impact due to the delay in opening of New York Design Gallery. Adjusted net income is estimated to be $37-41MM for 4Q17 and $83-87MM for FY17. Revenue is targeted to grow 6-7% to $2.58-2.62Bil and adjusted net income is estimated to be $125-145MM for FY18.
Home furnishing company $RH's profit more than quadrupled in 3Q17, helped by the lower tax rate and higher revenues. Net income jumped to $13.2MM or $0.56 per share from $2.5MM or $0.06 per share a year ago. Revenue climbed 8% to $592.5MM and on an adjusted basis, RH earned $1.04 per share.
$RH announced the repayment of its $100MM second lien term loan. The annualized cash interest rate was approx. 9.5%. $RH funded the repayment with borrowings on its asset backed credit facility, which bears current annualized interest of approx. 2.75%, as well as existing cash. $RH expects a $0.05 benefit to its FY17 adjusted diluted EPS.
$RH repaid its $100MM second lien term loan. The annualized cash interest rate was about 9.5% as of the date of retirement. The company funded the repayment with borrowings on its asset backed credit facility, as well as existing cash on its balance sheet. $RH expects an incremental $0.05 benefit to its FY17 adjusted EPS.
$RH lost roughly a week of business and a pretty significant high volume store to Hurricane Harvey and this impact is factored into its guidance. The business is slowly recovering but the company does not have much information currently on the impact in its Florida market.
$RH is in the early stages of evaluating and redesigning the right supply chain for the business long-term. From an inventory perspective, the company believes there is opportunity to turn the business faster to have a greater return on invested capital. $RH is optimizing inventory as part of its efforts to build an efficient capital model.
$RH reported a net loss of $7.9MM or $0.28 per share in 2Q17 compared to a net income of $6.9MM or $0.17 per share in 2Q16. Adjusted net income was $19.7MM or $0.65 per share in 2Q17. Net revenues increased 13% to $615MM versus last year. Comparable brand revenues increased 7% during 2Q17.
$RH has completed its $700MM share repurchase program, purchasing 12.37MM shares during 2Q17. The company is also confirming its previous 2Q17 guidance of revenue of $595-610MM and adjusted net income of $13-15MM. Adjusted diluted EPS is expected to be $0.43-0.50, assuming a weighted avg. diluted share count of approx. 30MM.
$RH said the biggest change to its guidance is around margins and inventory. The company’s decision to move faster on the inventory optimization is putting pressure on margins and earnings but this also leads to higher sales and will have a good impact on cash flow.
$RH said 2Q17 will have a lower margin profile than what was previously expected. The company believes that operating at fewer facilities is prudent for the business. $RH plans to accelerate some of its outlet inventory optimization further. The SKU rationalization effort will continue through 2Q17 and into 3Q17. These efforts will impact margins.
$RH raised its 1Q17 revenue outlook to $558-562MM, compared its its previous guidance of $530-545MM. It now expects net income in the range of $1.1-1.9MM, compared to the previous guidance of $0.8-2.4MM. Adjusted EPS is expected between 3 cents and 5 cents, narrower than the previous expectation of between 2 cents and 6 cents.
$RH board authorized a common share repurchase program of up to $700MM. RH anticipates that the repurchase of shares under this program could be funded with a combination of existing cash, cash flow, borrowings under existing credit facilities, and proceeds from incremental borrowing arrangements.