RH (NYSE:) posted exceptional profits for its first quarter, as revenue rose 11% and gross margins rose sharply.
The designer furniture retailer’s adjusted net income rose 59% to $7.78 per share, versus consensus of $5.38. was $957 million, versus the consensus of $924.81 million. That was up 11% from last year and 98% from 2020.
Gross margin increased by 480 basis points in the quarter to 52.1%. This was due to a 390 basis point increase in product margins and the company’s reluctance to promote the business as demand trends began to slow.
“While there has been a widespread return of discounts to our industry, as evidenced by the barrage of sales emails filling our inboxes, and there may be a short-term risk of loss of market share by choosing not to promote, we believe there is some long-term risk of brand erosion and model destruction once you go down this path,” the company said in a statement. letter to shareholders.
Although the first quarter was strong, the company is seeing a slowdown in demand trends and as a result is revising its guidance for the second quarter and fiscal year 2022.
RH expects net revenue for the second quarter to be between (1%) and (3%). They forecast net revenue growth for fiscal year 2022 in the range of 0% to 2%.
RH shares fell 2% after hours.