Restoration Hardware: A Potential Turnaround Is Imminent

Barclays’ Matthew McClintock expects a potential turnaround imminent for Restoration Hardware Holdings Inc RH despite remaining on the sidelines with an Equal-Weight rating. The company’s weak fourth-quarter outlook outshined the third-quarter top- and bottom-line beat from the furniture retailer.

Restoration Hardware has pointed to the delayed arrival of source books pushing revenue into first quarter, disappointing Holiday Collection sales, and aggressive seasonal clearance as impacting third quarter.

McClintock also cut his FY 2016 EPS estimate to $1.30 from $1.60 and maintaining FY 2017 EPS estimate of $1.95.

Revenue increased 3.2 percent to $549.3 million, while comps and DTC sales falling (6) percent and (3.4) percent respectively. The company expects 2017 sales to benefit from the delayed arrival of source books.

McClintock has a price target of $50, while the shares of Restoration Hardware plunged 18.18 percent to $31.90.