Ahead of the Bell: Restoration Hardware

Restoration Hardware falls in premarket as company posts 2Q loss on some charges

Associated Press

NEW YORK (AP) -- Shares of Restoration Hardware declined in premarket trading on Wednesday as the company reported a second-quarter loss due to charges linked to stock awards given to Chairman and co-CEO Gary Friedman.

Late Tuesday the furniture and housewares company said that it lost $17.8 million, or 46 cents per share, for the three months that ended on Aug. 3, compared with a profit of $17.6 million, or 48 cents per share, a year earlier. Excluding one-time items, Restoration Hardware Holdings Inc. would have earned 49 cents per share, up from 33 cents per share a year ago. Revenue grew to $382.1 million from $292.9 million.

The results beat analysts' average forecast for earnings of 42 cents per share on $376.6 million in revenue, according to FactSet.

Restoration Hardware is several years into a turnaround: it was losing money when it was bought by a private equity firm in in 2008. Since then the company has redesigned stores, revamped its product line and focused on a higher-end market.

Jefferies' John Marrin said in a client note that he thinks Restoration Hardware is likely set to take market share for years to come, as its home goods are an affordable luxury for consumers. The analyst also believes that the company's expansion of its product assortment and real estate efforts should help to increase its sales opportunities over the next several years.

Marrin reaffirmed a "Buy" rating and boosted the company's price target to $88 from $68.

David Strasser of Janney Capital Markets said that Restoration Hardware's second-quarter sales were not as strong as the first quarter, which may have disappointed investors a little bit. But the analyst pointed out that third quarter-to-date sales have picked up and are running ahead of the company's outlook.

Strasser believes Restoration Hardware's growth story remains on track. He kept a "Buy" rating and $82 price target.

A representative for Restoration Hardware did not immediately respond to an email seeking comment.

Shares of Restoration Hardware fell $2.66, or 3.5 percent, to $73.40 in premarket trading about 45 minutes ahead of the market opening.

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