Restoration Hardware Holdings, Inc. (NYSE:RH) Q2 2019 Earnings Conference Call Transcript

Sep 10, 2019 • 05:00 pm ET

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Restoration Hardware Holdings, Inc. (NYSE:RH) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from Tami Zakaria with JP Morgan. Your line is open.

Analyst
Tami Zakaria

Hi. Thanks for taking my questions. So could you comment on the 3Q revenue guide and why revenue growth would step down to 5% to 6% after over 8% in the first half? Was there any revenue pull forward into 2Q? That's part of the expected sequential deceleration.

Executive
Jack Preston

Hey Tami, it's Jack. So you may recall that we have the sort of self-inflicted drags, in a sense, the decisions we made to exit certain revenue items. And so, that -- those are 2%, 4% to the quarter. And so there's -- the impact of the drag being different. I think one of the other things you're saying is, we saw an outlet -- you see the outlet sales in our press release and so there we've talked about the closure of the 5,000 square foot distribution center last quarter and so we've cycled most of that inventory out, and so you're not going to see that benefit and that benefit was worth about two points in Q3. And it was also a big drag on gross margins.

Analyst
Tami Zakaria

Got it. So my follow-up question is, earlier this year, you guided to $15 million to $20 million additional savings on the Home Delivery initiative. Does that still hold or are you seeing incremental savings that could come from this initiative?

Executive
Jack Preston

Sure, Tami, I think at this time what we guided was $15 million to $20 million with a third of the benefit in this year and then two-thirds next year. At this time, we're holding to that. I mean, we're optimistic and looking forward to even better benefits there. But for the moment, we are holding to that and that is the timing.

Analyst
Tami Zakaria

Got it. Thank you so much.

Operator
Operator

Your next question comes from Steve Forbes with Guggenheim Securities. Your line is open.

Analyst
Steven Forbes

Good afternoon. Maybe another question on the 3Q guide, but this one really on sort of the gross margin outlook. The third quarter, sort of, I guess, looks little weaker than we were modeling and the fourth quarter looks a little stronger. So I don't know if there's sort of any shift in both margin and expenses, because you sort of seen the same dynamic as you move down the P&L. Can you just talk about, if there's anything to call out, sort of, idiosyncratic that's sort of impacting the model?

Executive
Jack Preston

Yeah, nothing idiosyncratic, Steve. It's -- I think we don't -- we didn't provide you quarterly flow and I think a lot of times what happens is, unfortunately, the House committee doesn't always get it right if we don't give you sort of the guideposts to where to go. And so when I look at it on the half, we're guiding 40.5%, 40.8%, it is a -- up 140 basis points versus last year versus what we did in the first half of 100 basis points. So I think that's one way to