RH - Class A
Q3 2024 Earnings
Non-GAAP adjustments include $19.5 million of long-lived asset impairment for two German Design Galleries, $0.9 million non-cash compensation, and equity method investment losses of $1.4 million, partially offset by tax adjustments
Market Reaction
S&P 500 over the same 30 days: −1.10%.
Did RH Beat Earnings? Q3 2024 Results
RH posted a mixed fiscal third quarter, falling just short of Wall Street's targets as surging demand momentum failed to fully translate into the profit investors had penciled in. The luxury home furnishings retailer reported adjusted diluted EPS of $2.48, missing the $2.64 consensus by 6.21%, while revenue of $811.73 million grew 8.1% year over year but landed essentially in line with estimates, missing by a negligible 0.01%. The earnings shortfall was partly attributable to $19.5 million in long-lived asset impairment charges tied to two German Design Galleries, among other non-GAAP adjustments. Still, the underlying demand picture brightened considerably, with total Q3 demand growing 13% and the core RH brand accelerating to 14%, a trajectory that continued into November at 18% and 24%, respectively. Management responded by raising guidance, projecting Q4 revenue growth of 18% to 20% and full-year revenue growth of 6.8% to 7.2%, with plans for new gallery openings in Paris and London in 2025 supporting the company's international expansion push.
- Q3 total demand growth of 13%, RH brand demand growth of 14%
- November total demand accelerated to 18%, RH brand demand up 24%
- December month-to-date RH brand demand up 30%
- Market share gains of 15-25 points in Q3, accelerating to 25-45 points in Q4
- Adjusted operating margin expanded to 15.0% from 7.3% year over year
- Adjusted EBITDA margin expanded to 20.8% from 12.4% year over year
- RH Modern Sourcebook driving demand acceleration
“The positive inflection of our business continued to gain momentum with third quarter demand increasing 13% despite operating in the worst housing market in 30 years.”
RH CEO, on the earnings call
Forward Guidance & Outlook
RH raised its Q4 and full-year fiscal 2024 guidance. Q4 outlook: total demand growth of 20%–22%, revenue growth of 18%–20%, adjusted operating margin of 12.2%–13.2%, adjusted EBITDA margin of 18.0%–19.0%. Full-year outlook: total demand growth of 9.9%–10.4%, revenue growth of 6.8%–7.2%, adjusted operating margin of 11.5%–11.7%, adjusted EBITDA margin of 17.2%–17.4%. Demand and revenue growth are on a 52 vs. 52 week basis; the 53rd week of fiscal 2023 contributed approximately $50 million in revenues. The company expects no negative margin impact from potential increased tariffs in 2025, plans to fully exit China sourcing by end of Q2 2025, and is also transitioning products manufactured in Mexico. Contract, Outlet, Baby & Child, and Teen businesses expected to benefit from product transformation in 2025. New RH Interiors Sourcebook planned for early February 2025 with 89 new collections. Seven North American galleries and two international galleries (Paris, London) planned for 2025.
RH YoY Financials
Figures from SEC filings and company reports. Not investment advice.