When Restoration Hardware Holdings Inc. (NYSE: RH) reported its fiscal third-quarter results after the markets closed on Thursday, it said that it had $0.19 in earnings per share and $549.3 million in revenue. The consensus estimates had called for $0.16 in EPS and revenue of $532.5 million. In the same period of last year, the retailer posted EPS of had $0.65 and $532.41 million in revenue.

Comparable brand revenue, which includes direct revenue, declined 6% in the third quarter when compared to 7% growth for the same period last year.

In terms of the outlook for the fiscal fourth quarter, the company expects to see EPS in the range of $0.60 to $0.70 and revenues between $562 million and $592 million. However, consensus estimates so far see a little more: $1.08 in EPS and $637.62 million in revenue.

On the books, Restoration Hardware’s cash and cash equivalents totaled $55.23 million at the end of the quarter, compared with $349.97 at the end of the previous fiscal year and $226.98 million in the same period from last year.

Gary Friedman, chairman and CEO, commented:

Third quarter fiscal 2016 net revenues of $549 million and adjusted EPS of $0.20 were ahead of our guidance for the quarter. Net revenues were driven by a higher conversion of orders into sales than expected given our strong in stock levels and supply chain improvements. In addition, our margins continued to be negatively impacted by many of the temporal factors impacting our fiscal 2016 earnings in addition to one-time costs associated with the remodel and refresh of our legacy Galleries during the quarter.

Friedman added:

As previously communicated, we are making several strategic investments and changes to our business model in fiscal 2016 that are temporarily depressing financial results in the short term, that we believe will strengthen our brand and position the business for accelerated growth in 2017 and beyond. These temporal issues include the costs related to the launch of RH Modern; the timing of recognizing membership revenues related to the transition from a promotional to a membership model; efforts to reduce inventories and rationalize our SKU count; and the decision to push our 2016 Source Book mailing from the Spring to the Fall.

Shares of Restoration Hardware were traded down about 14% to $33.50 on Friday, with a consensus analyst price target of $41.31 and a 52-week trading range of $24.75 to $89.78.

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