Restoration Hardware Cuts Forecast

Restoration Hardware Holdings Inc. made a deep cut to its annual guidance as it swung to a loss in the latest quarter, hurt by a slowdown in luxury shopping.

Shares of Restoration Hardware, which had already fallen 62% in the past year, dropped 14% in after-hours trading to $31.

The company said it now expects full-year earnings on a per-share basis between $1.60 and $1.80, down from a previous estimate of $2.69 to $2.72.

And it expects revenue to increase by 1% to 3%, slightly under its previous projection of sales between $2.15 billion and $2.21 billion and under the 5% rise to $2.21 billion predicted by analysts.

Restoration Hardware also offered a dour outlook for the current quarter, saying it expects adjusted earnings between 28 cents and 33 cents on revenue in the range of $505 million to $520 million. Analysts expected earnings of 80 cents on revenue of $532 million.

"Our near-term business performance is being pressured by the continued headwinds in the markets impacted by energy and currency, as well as a general slowdown in the luxury consumer market," said Gary Friedman, CEO of the company.

Mr. Friedman said that he expects the company's fortunes to turn around in the final quarter of the year, helped in part by a cost-cutting effort that aimed to save $20 million annually. No further details on the cost-cutting push were given.

The high-end retailer, which launched RH Modern last fall to target millennial and city dwellers, has struggled to stock and ship the merchandise. In March, the company said the problems would linger into the latest quarter.

The company had said it expects investments related to "customer accommodations due to RH Modern production delays" to reduce first-quarter adjusted earnings by 12 cents to 15 cents a share.

For the first quarter, Restoration Hardware reported a loss of $13.5 million, or 33 cents a share, compared with a profit of $7.2 million, or 17 cents a share, a year earlier. On an adjusted basis, the loss was 5 cents a share, down from a profit of 23 cents a share.

Sales rose 7.8% to $455.5 million.

The company had forecast a profit of 4 cents to 6 cents for the quarter, with sales between $452 million and $456 million.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

June 08, 2016 17:55 ET (21:55 GMT)

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