RH (NYSE:RH) reported better-than-expected results for its third quarter on Wednesday.
Net revenues increased 25% to $844 million, with Q3 net income of $46 million, compared to last year’s $52.5 million.
“We achieved record adjusted operating margin of 26.7% in the third quarter, more than double last year’s previous record of 13.0%. Adjusted EBITDA reached $258 million in the third quarter, or an Adjusted EBITDA margin of 30.5%, up 122% over last year,” CEO Gary Friedman said in the letters to shareholders.
“The emergence of RH as a luxury brand generating luxury margins has arrived years sooner than expected and we now believe we will reach 21% adjusted operating margin in fiscal 2020 with revenue growth of approximately 7%. If revenues grow at a higher than forecasted rate in the fourth quarter, adjusted operating margins could expand beyond 21%, and we now see a clear path to an adjusted operating margin of 25% in the coming years.”
RH goes on to say its November core demand was +39% inclusive of the Thanksgiving Holiday selling period where demand decelerated from +42% in the first weeks of November, to +11% the day after Thanksgiving through Cyber Monday. Its business post Cyber Monday has reaccelerated with RH Core demand trending +39% over last year.
RH is a curator of design, taste and style in the luxury lifestyle market. The Company offers its collections through its retail galleries across North America, the Company’s multiple Source Books, and online at RH.com, RHModern.com, RHBabyandChild.com, RHTeen.com and Waterworks.com.
RH shares tanked $23.83, or 5.1%, to $444.00