HR Queuing for Q4 Revenue: Key Factors to Consider – March 28, 2022
HR (HR – Free Report) is expected to release results for the fourth quarter of fiscal 2021 (ended January 29, 2022) on March 29, after market close.
In the most recently reported quarter, revenue for this major luxury home furnishings retailer exceeded Zacks’ consensus estimate by 5.2%. Markedly, the company has exceeded earnings expectations in each of the past four quarters, averaging 14.2%. The reported figure was also up 13.4% from the level a year ago. Additionally, its net revenue beat expectations by 2.1% and grew 19.1% year-over-year.
Trend of estimate revisions
For the quarter to report, the Zacks consensus estimate for earnings per share fell from $5.62 in the past 30 days to $5.63. The estimated figure indicates an increase of 11.1% from the $5.07 per share reported in the prior year quarter. The revenue consensus mark is pegged at $928.8 million, suggesting growth of 14.3% from the $812.6 million figure recorded a year ago.
Factors to note
Strong demand supported by good housing market momentum, given the migration of consumers to larger suburbs and second homes, should be reflected in RH’s earnings and revenue for the fourth fiscal quarter. This will likely lead to growth in square footage, leading to an acceleration in demand for furniture and furnishings. Additionally, the reopening of several large parts of the economy and increased domestic spending may have added to the tailwinds.
The company has worked on various strategies to elevate and improve the HR brand image. Additionally, he transformed the entire company into a digital hub through The World of HR – a portal showcasing the company’s products, locations, services and spaces. Her digital background – including RH Interiors, Modern, Outdoor, Baby & Child plus Teen – has significantly strengthened the company as she generates strong online revenue, with Source Books driving traffic to galleries and websites.
During this time, HR worked on cost reduction initiatives such as redesigning the supply chain, reducing inventory, improving product margins, and more. Management expects these initiatives to be reflected in fiscal third quarter earnings and margin expansion. Additionally, greater pricing power should have boosted gross margins, while SG&A spending is likely to have remained in check as the company limited advertising due to supply chain constraints.
Although the economy has rebounded from the impacts of COVID-19, retailers are still grappling with the effects of the same. The disruption to the global supply chain due to the pandemic should have been cause for concern. In addition, rising raw material costs may have been a risk.
What the Zacks Model Reveals
Our proven model predicts a beat in earnings for RH this time around. This is because a stock must have both a positive earnings ESP and a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold) for this to happen. This is the case here, as you will see below.
ESP Earnings: The company has an ESP on earnings of +0.91%. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.
Zacks Rank: RH currently carries a Zacks Rank #3. You can see the full list of today’s Zacks #1 Rank stocks here.
Peer publications
Williams-Sonoma Inc. (WSM – Free Report) – which currently carries a Zacks Rank #1 – reported impressive revenue for the fourth quarter of fiscal 2021 (ended Jan. 30, 2022). The company’s earnings beat the Zacks consensus estimate and improved year-over-year, thanks to the strength of all brands and accelerated growth in e-commerce.
Williams-Sonoma remains optimistic about the strength of the business, the continued success of new initiatives and the competitive advantages that are rooted in key differentiators such as internal design, digital channel strategy and values.
FirstSource Builders (BLDR – Free Report) – which currently carries a Zacks Rank #1 – ended 2021 on a strong note. The company reported strong results for the fourth quarter of 2021, where earnings and net sales exceeded Zacks’ consensus estimate and increased significantly year-over-year.
Builders FirstSource results were driven by an increase in net sales and gross margin amid ongoing raw material supply issues.
Beacon Roofing Supply, Inc. (BECN – Free Report) – a Zacks Rank No. 3 stock – reported strong results for the fourth calendar quarter of 2021 or the transition period (October 1 through December 31, 2021).
Beacon Roofing’s fourth-quarter revenue and net income exceeded their respective Zacks consensus estimate and improved significantly year-over-year. The strong results were mainly supported by strong net sales, gross margin expansion and operational improvement.
