Why Home-Furnishing Retailer RH Shares Are Gaining Today

RH RH shares are trading higher in the premarket session on Thursday.

Yesterday, the company reported fourth-quarter results, where revenues of $738.26 million missed the consensus estimate of $777.48 million.

Revenue was negatively impacted by $40 million in the fourth quarter due to the severe January weather and shipping delays related to the ongoing conflict in the Red Sea. 

Read More: RH Q4 Earnings: Revenue Miss, EPS Miss, Upbeat Guidance On Accelerating Demand Trends And More

Despite the revenue miss, RH disclosed solid expansion plans for 2024, with focus on advertising.

The company expects to open five North American Design Galleries, including Cleveland, which opened last week, Palo Alto, Raleigh, Newport Beach, and Montecito, all with RH Interior Design Offices, restaurants, and wine bars. 

RH said it will also be opening two international galleries, one in Brussels, which opened last week, and one in Madrid, which will open this summer. 

RH plans to increase print and digital advertising across major home design publications in 2024. 

The company’s ads will be seen in Architectural Digest, Elle Decor, Veranda, Gallerie, World of Interiors, Luxe Interiors and Design, Business of Home, The Financial Times, The Wall Street Journal, and T Magazine design issues. 

“We do expect the majority of the deferred revenue will be realized in 2024 when transit times normalize,” RH said in a press release.  

Overall, the company expects demand trends to accelerate throughout fiscal 2024. 

However, RH expects business conditions to remain challenging until interest rates ease and the housing market begins to rebound. 

RH said it is forecasting first-quarter demand growth to be in the mid-single digit range, while revenues are expected to be down in the low-single digits. Adjusted operating margin is expected to be in the range of 6% to 7%, and adjusted EBITDA margin is expected to be in the range of 12% to 13%. 

RH sees full-year 2024 demand growth of 12% to 14% and revenue growth of 8% to 10% on a year-over-year basis. 

Full year adjusted operating margin is expected to be in the range of 13% to 14% and adjusted EBITDA margin is expected to be in the range of 18% to 19%. 

According to Benzinga Pro, RH stock has gained over 23% in the past year. Investors can gain exposure to the stock via Tidal ETF Trust II The Meet Kevin Pricing Power ETF PP.

Price Action: RH shares are trading higher by 9.43% to $325.00 premarket on the last check Thursday. 

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