RH(RH) ZACKS·2025-03-28 15:45Core Viewpoint - RH is set to report its fourth-quarter fiscal 2024 results on April 2, following a mixed performance in the third quarter where earnings missed estimates but revenues slightly exceeded expectations, indicating resilience in demand despite economic challenges [1][2]. Financial Performance - In the third quarter of fiscal 2024, RH's earnings missed the Zacks Consensus Estimate by 7.1%, while revenues surpassed expectations by 0.1%, reflecting a year-over-year increase in both metrics [2]. - Total demand growth in the third quarter increased by 13%, with November showing an acceleration to 18% [2]. Earnings Estimates - The Zacks Consensus Estimate for RH's earnings per share (EPS) has risen to 0.72 [3]. - Revenue estimates are pegged at $827.3 million, reflecting a 12.1% increase from the prior year [3]. Market Dynamics - Despite sluggish demand in the luxury home furnishings sector, RH is optimistic about sustaining revenue growth through strategic initiatives, including new product launches and enhanced marketing efforts [4]. - RH estimates capturing 15-25 points of market share in the third quarter and anticipates gaining an additional 25-45 points in the fourth quarter, primarily from premium and mid-tier competitors [6]. Guidance and Expectations - The company expects demand to increase by 20-22% year-over-year in the fourth quarter, leading to revenue growth of 18% to 20%, a significant rise from the 8.1% growth in the third quarter [7]. - RH anticipates gross margins to be impacted by economic pressures, but strategic cost-saving measures are expected to partially offset these challenges [8][9]. Margin Outlook - The adjusted operating margin is projected to be between 12.2% and 13.2%, an increase from 9.1% in the previous year, while the adjusted EBITDA margin is forecasted at 17.2% to 17.4%, up from 15.3% [9]. Earnings Prediction - The model predicts an earnings beat for RH, supported by a positive Earnings ESP of +0.94% and a Zacks Rank of 3 [10][11].