RH Misses Q1 2024 EPS, Beats Revenue; Stock Drops 11% After Hours

RH, formerly known as Restoration Hardware, reported its Q1 2024 earnings on June 13, 2024. The company missed earnings per share (EPS) estimates, reporting -$0.40 against an expected -$0.12. However, RH slightly exceeded revenue expectations with $727 million compared to the estimated $725.15 million. Despite the revenue beat, RH's stock dropped 11% after hours. The company reaffirmed its FY25 revenue guidance but provided a lower-than-expected outlook for Q2, with revenue growth projected at 3-4% versus an estimated 7.5%. CEO Gary Friedman stated that aggressive investments during a downturn have pressured short-term results but positioned the company for long-term opportunities. The company's operating margin for Q1 stood at 6.5%, in line with guidance but down from 15% last year. Inventory levels increased by 5% year-over-year, which is higher than expected Q2 revenue growth. RH also reported demand growth of 12%-14%, an adjusted operating margin of 13%-14%, and an increased backlog of $110 million to $130 million.