Restoration Hardware Holdings (RH) Earnings Report: What Should Investors Expect? BBBY, PIR & WSM

The Q1 2014 earnings report for Restoration Hardware Holdings Inc (NYSE: RH), a potential peer of other furniture or home décor retailers like Williams-Sonoma, Inc (NYSE: WSM), Bed Bath & Beyond Inc (NASDAQ: BBBY) and Pier 1 Imports Inc (NYSE: PIR), is scheduled for after the market closes on Wednesday. Aside from the Restoration Hardware Holdings earnings report, it should be said that Bed Bath & Beyond Inc reported Q4 2013 earnings on April 9th (shares dropped after profit forecast trails estimates) and will report Q1 2014 June 23rd; Pier 1 Imports Inc will report Q1 2015 earnings on Monday, June 16th; and Williams-Sonoma, Inc reported Q1 2014 earnings on May 21st (comparable brand revenues grow 10%, operating income grows 17% and EPS increased 20% to $0.48). All of these stocks are a potential play on a housing recovery plus Restoration Hardware Holdings gave a strong guidance the last time it reported earnings.

What Should You Watch Out for With the Restoration Hardware Holdings Inc Earnings Report?

First, here is a quick recap of Restoration Hardware Holdings' recent earnings history from Yahoo! Finance:

Earnings HistoryApr 13Jul 13Oct 13Jan 14

EPS Est	0.04	0.43	0.28	0.83
EPS Actual	0.06	0.49	0.32	0.83
Difference	0.02	0.06	0.04	0.00
Surprise %	50.00%	14.00%	14.30%	0.00%

 

Back in late March, Restoration Hardware Holdings reported that on a comparable 13 week basis, fourth quarter net revenues increased 26% on top of a 23% increase for the same period last year GAAP net revenues increased 18%, adjusted net income increased 52% on a comparable week basis to $34.0 million and GAAP net income came in at $26.6 million verses a net loss of $28.4 million.  For the full year on a comparable 52 week basis, net revenues increased 33% on top of a 22% increase for the same period last year, GAAP net revenues increased 30%, adjusted net income increased 92% on a comparable week basis to $69.1 million and GAAP net income of $18.2 million compared to a net loss of $12.8 million. The Chairman/CEO commented:

"As we enter 2014, we remain focused on our two largest value driving strategies – the expansion of our offer and the transformation of our retail stores. The expansion of our offer will be highlighted across 3,200 pages in our Spring 2014 Source Books, positioning us for what we believe will be another year of industry leading results. In regards to the transformation of our retail stores, we believe we have a $4 to $5 billion Company trapped in billion dollar legacy real estate. Post the drop of our Spring 2014 Source Books, approximately 10% of our assortment will be displayed at retail. We believe the key to unlocking the value of the Company is to transform our real estate portfolio into our next generation Full Line Design Galleries."

And:

"Once our real estate transformation is complete in North America, we believe we will deliver $4 billion to $5 billion in annual sales, achieve mid-teens operating margins, and generate significant free cash flow."

This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenue of $348.49M and EPS of $0.11 - slightly higher than the EPS of $0.07 expected ninety days ago.

On the news front, Restoration Hardware Holdings has been raising eyebrows with a catalog that weighs 17-pounds and actually includes 13 different catalogs totaling about 3,300 pages. The company has declined to share the number of catalogs it mailed but its 2013 annual report states that advertising costs were $83 million, much of that spent on its catalogs.

What do the Restoration Hardware Holdings Inc Charts Say?

The latest technical chart for Restoration Hardware Holdings shows the stock to be stuck in a range:

Moreover, Restoration Hardware Holdings shares have actually bounced around in this range since last summer while Bed Bath & Beyond Inc, Pier 1 Imports Inc and Williams-Sonoma, Inc have performed well as housing has recovered:

However, Bed Bath & Beyond Inc has been heading downward since the start of this year with Pier 1 Imports Inc heading down for a longer period of time while Williams-Sonoma, Inc has been in an uptrend for awhile:

What Should Be Your Next Move?

The Restoration Hardware Holdings earnings report will be interesting to see whether it can trigger a breakout one way or the other. Otherwise, the eventual completion of the "real estate transformation" will be something to watch out and wait for.