As the company pursues a business strategy transition, Restoration Hardware posted fourth quarter net income of $9.4 million, or 23 cents per diluted share, versus $33.3 million, or 79 cents per diluted share, in the comparable quarter the prior year, while adjusted net income came in at $27.9 million, or 68 cents per share, versus $41.2 million, or 98 cents per share, in the 2015 period.
RH adjusted earnings per share beat a Zacks Investment Research analyst average estimate of 65 cents for the quarter.
Comparable revenues slid 18% in the quarter versus the previous fiscal year period, RH reported. Net revenues were $586.7 million as compared to $647.2 million in the year-earlier quarter. Stores generated 52% of revenues versus 49% in the period a year before, the company pointed out, while direct sales made up the rest.
For the full fiscal year, Restoration Hardware posted net income of $5.4 million, or 13 cents per diluted share, versus $91.1 million, or $2.16 per diluted share, in the fiscal year prior, according to the company, while adjusted net income came in at $51.8 million, $1.27 per share, versus $114.8 million, or $2.72 per share in fiscal 2015.
Comparable revenues slipped 7% versus the fiscal year previous, RH indicated. Net revenues were $2.13 billion as compared to $2.11 billion in the fiscal year earlier. Stores generated 55% of revenues versus 51% in the fiscal year before, the company noted.
“Exiting fiscal 2016, we are now through the most uncertain stages of our transformation,” Gary Friedman, RH chairman and CEO, said in announcing the financial results. “We made several strategic investments and changes to our business last year, which temporarily depressed financial results in the short term, that we believe will strengthen our brand and position the business for accelerated growth in fiscal 2017 and beyond. These temporal issues included the costs related to the launch of RH Modern, the timing of recognizing membership revenues related to the transition from a promotional to a membership model, efforts to rationalize our SKU count, and the decision to push our 2016 RH Interiors Source Book mailing from spring to fall.”
Friedman added that Restoration Hardware’s business model transformation “will enhance our brand, streamline our operations, and vastly improve the customer experience. We also began the redesign of our supply chain network, transitioning inventory into fewer facilities, which enabled us to forgo building a planned distribution center scheduled to open in 2017.”
He noted that 2016 was also the first full year of many new business initiatives such as RH Modern, RH Teen, RH Hospitality, the redesign of our RH Interiors Source Book, the roll out of Design Ateliers in its retail Galleries, and the addition of Waterworks to the company’s platform.
“All of these new initiatives are expected to contribute to growth in 2017 and beyond,” Friedman said.
