RH (NYSE:RH), formerly known as Restoration Hardware, shares surged almost 16% after the luxury home goods retailer raised its full-year guidance and swung to a profit in Q3.
The company now expects revenue growth in the range of 6.8% to 7.2% for 2024, up from its earlier guidance of 5% to 7%.
For Q3, RH posted $811.7 million in revenue, up from $751.3 million in the year-ago quarter and in line with Wall Street estimates.
Earnings per share improved to $1.66 from a loss of $0.12 in Q3 2023.
Analysts at Jefferies highlighted that RH is generating demand well above its industry peers despite a weak luxury housing market, among other headwinds.
“The brand remains in 'attack mode' seeking to 'take oxygen out of the room', which should yield tailwinds as housing turnover sees life,” they wrote in a note to clients.
They noted that demand during the third quarter was stronger than their alternative data would have suggested.
“Entering this print, we saw risk to the 12% to 14% demand guide, yet Q3 came in squarely at the midpoint, and even more impressive, RH brand demand has accelerated to 24% in November and 30% for December month-to-date,” they wrote.
“The inventory ramp is noteworthy and introduces near-term risk, though if the brand is truly in the 4th or 5th inning of its product newness cycle and consumer resonance continues, healthy sell-through should limit excessive markdowns.”
Analysts repeated their ‘Hold’ rating on RH, citing concerns that a chunk of recent demand is sustainable and that its pace of gross margin expansion could underwhelm with a price ceiling.
They awarded the stock a price target of $358, up from their earlier price target of $289.
RH shares added 15.8% at about $442 in early trade on Friday.