Restoration Hardware Earnings Hit Hard By Logistics Troubles

Another rough earnings run for another name brand retailer, this time with shipping logistics named as the culprit in lower than expected results.

Restoration Hardware Holdings Inc. has officially lowered its earnings forecast for the current quarter, with shipping costs and various cost troubles issuing from the launch of its RH Modern line last fall. RH Modern was designed to appeal to millennial consumers and urbanites in general — and it might have been roaring success had it gotten stocked and shipped on time, but that didn’t so much happen which hurt results in the quarter that ended almost exactly three months ago.

And it looks like they may have a little more time to go still on this particular set of logistics issues.

“We are, however, experiencing higher cancel rates and one-time costs due to shipping delays, which will put pressure on both revenue and earnings in the first half,” CEO Gary Friedman said Tuesday. “While expensive in the short term, we believe it is the right thing to do for our customers.”

The retailer forecast adjusted per-share earnings of 4 cents to 6 cents in the first quarter, compared with Wall Street’s expectation of 17 cents.

All in, RH saw its profit down 22 percent in 33.3 million in Q4 – though revenue was up $647.2 million from $582.7 million. Comparable brand revenue was up 9 percent, which sounds good until you stack it up against the same time last year when that growth was at 24 percent.

On a conference call, Friedman said he expects to be operating at normal inventory levels by the end of the second quarter.

“There’s a finite number of customers at the high end of the market and they are very important to our business and to our model and it’s unfortunate that we’ve disappointed so many of them, but we’re making the investments to try to maintain and enhance that relationship,” Friedman said.

Following the news, shares of Restoration Hardware took a hit in after hours trading, down about 4 percent.