Restoration Hardware Holdings (RH) has reported a 59.62 percent jump in profit for the quarter ended Jan. 31, 2015. The company has earned $42.52 million, or $1.02 a share in the quarter, compared with $26.64 million, or $0.65 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $42.50 million, or $1.02 a share compared with $34.03 million or $0.83 a share, a year ago. Revenue during the quarter grew 23.54 percent to $582.73 million from $471.69 million in the previous year period. Gross margin for the quarter expanded 34 basis points over the previous year period to 37.43 percent. Total expenses were 87.07 percent of quarterly revenues, down from 87.65 percent for the same period last year. This has led to an improvement of 58 basis points in operating margin to 12.93 percent.
Operating income for the quarter was $75.32 million, compared with $58.26 million in the previous year period.
However, the adjusted operating income for the quarter stood at $73.82 million compared to $58.26 million in the prior year period. At the same time, adjusted operating margin improved 32 basis points in the quarter to 12.67 percent from 12.35 percent in the last year period.
Gary Friedman, chairman and chief executive officer, commented, "RH continues to outperform the home furnishings industry by a wide margin. Fiscal 2014 marks RH’s fifth consecutive year of net revenue growth in excess of 20% averaging approximately 25% net revenue growth during that period. After four years of at least 25% comparable brand revenue growth, RH achieved 20% comparable brand revenue growth in fiscal 2014, a milestone unseen amongst our home furnishings peers."
For the first-quarter, Restoration Hardware Holdings projects revenue to be in the range of $415 million to $420 million. Restoration Hardware Holdings projects revenue to be in the range of $2,130 million to $2,170 million for financial year 2015. For financial year 2015, the company forecasts diluted earnings per share to be in the range of $2.95 to $3.10 on adjusted basis.
Operating cash flow declines
Restoration Hardware Holdings has generated cash of $82.49 million from operating activities during the year, down 5.75 percent or $5.03 million, when compared with the last year. The company has spent $200.55 million cash to meet investing activities during the year as against cash outgo of $93.87 million in the last year.
Cash flow from financing activities was $253.80 million for the year, up 2,106 percent or $242.30 million, when compared with the last year. It has made net debt repayment of $262.42 million. It has raised net of $56.79 million by selling common stocks.
Cash and cash equivalents stood at $148.93 million as on Jan. 31, 2015, up 1,012.36 percent or $135.54 million from $13.39 million on Feb. 01, 2014.
Working capital increases sharply
Restoration Hardware Holdings has recorded an increase in the working capital over the last year. It stood at $567.82 million as at Jan. 31, 2015, up 91.59 percent or $271.45 million from $296.37 million on Feb. 01, 2014. Current ratio was at 2.65 as on Jan. 31, 2015, up from 1.93 on Feb. 01, 2014.
Days inventory outstanding was almost stable at 70 days for the quarter, when compared with the last year period.
Debt increases substantially
Restoration Hardware Holdings has witnessed an increase in long-term debt over the last one year. It stood at $284.39 million as on Jan. 31, 2015, up 232.91 percent or $198.96 million from $85.42 million on Feb. 01, 2014. Total debt was 18.64 percent of total assets as on Jan. 31, 2015, compared with 8.33 percent on Feb. 01, 2014. Debt to equity ratio was at 0.40 as on Jan. 31, 2015, up from 0.16 as on Feb. 01, 2014. Interest coverage ratio decreased to 12.68 for the quarter from 37.91 for the same period last year.
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