RH Reports First Quarter Fiscal 2017 Financial Results
First Quarter Highlights
- Net revenues increased 23% on top of an 8% increase last year
- Comparable brand revenues increased 9% compared to a 4% increase last year
-
GAAP net loss of
$3.4 million compared to net loss of$13.5 million last year -
Adjusted net income of
$1.8 million compared to net loss of$2.1 million last year -
GAAP diluted loss per share of
$0.09 compared to loss of$0.33 last year -
Adjusted diluted earnings per share of
$0.05 compared to loss of$0.05 last year
To Our People, Partners, and Shareholders:
I'm pleased to report that our first quarter results reflect a return to growth as we are now past the most uncertain stages of our transformation. In 2016, we transformed our business from a promotional to a membership model that we believe will enhance our brand, streamline our operations, and vastly improve the customer experience. We also began the redesign of our supply chain network, rationalizing our product offer, and transitioning inventory into fewer facilities, which enabled us to forgo building a planned distribution center scheduled to open this year. 2016 was also the first full year of many new business initiatives such as RH Modern, RH Teen, RH Hospitality, the redesign of our RH Interiors Source Book, the roll out of Design Ateliers across our retail Galleries, and the addition of Waterworks to our platform. All of these new initiatives are expected to contribute to growth in 2017 and beyond.
While 2016 was a year of transformation and transition, 2017 will be a year of execution, architecture, and cash. Our efforts will be focused on executing our new business model, architecting a new operating platform, and maximizing cash flow by increasing revenues and earnings, and reducing inventory and capital investments. Our priorities include: the transformation of our real estate; the expansion of our product offer; and the design of our new operating platform, inclusive of the distribution center network, the in-home delivery experience, plus decision data and analytics to support long-term growth. Our goal is to break down the silos that exist in most businesses of scale, and cross functionally design a fully integrated operating platform that simplifies our business, enhances the customer experience, and amplifies decision quality and speed.
In 2017, we plan to invest in RH Hospitality, where we will incur
substantial start-up costs to support the roll out of an integrated food
and beverage experience similar to our successful Gallery at the
Historic 3Arts Club in
Our business is off to a strong start to the year with first quarter net revenues increasing 23%, of which approximately 6 points of growth was due to the acquisition of Waterworks and 6 points was related to higher outlet and warehouse sales stemming from accelerated inventory optimization efforts during the quarter. Excluding these factors, our business grew by approximately 11%, with comparable brand revenues increasing 9% as we cycled the launch of the RH Members Program, and benefited from the mailing of our Fall 2016 RH Interiors Source Book and the Spring 2017 mailing of RH Outdoor.
While our higher outlet sales and inventory optimization efforts had a
positive impact on revenues in the first quarter, these sales, plus
related mark-downs and inventory reserves, had a negative impact on
margins and earnings. As such, adjusted net income for the quarter was
We recently completed the mailing of our second edition of RH Modern in
May. The new Source Book is filled with 480 pages of inspired design
with new collections by world renowned designers and exclusive reissues
of iconic pieces from the past. We expect this new business to grow and
gain share in the emerging market for modern furniture, and believe
While still in the early innings of our move from a promotional to a membership model, we are encouraged by the early data in regards to new membership growth and renewals as we anniversary last year’s launch of the RH Members Program. We believe the benefits of eliminating the operational chaos and costs that are a result of constant promotions, and positioning our brand around product versus price, will drive high quality growth for years to come.
While we expect revenue growth to accelerate, operating margins to
expand, and to generate significant free cash flow in fiscal 2017, we
are taking a cautiously optimistic approach to our outlook given the
uncertain macro environment in addition to the many initiatives and
investments we are undertaking. Additionally, given our focus on the
architecture of a new operating platform and maximizing cash flow, we
may, as we are doing in our second quarter and fiscal year outlook,
accelerate the rationalization of our product offer to enable us to more
quickly optimize our network design, and turn unproductive inventory
into cash. Accordingly, we are guiding revenue for the second quarter to
a range of
For fiscal 2017, we are increasing our revenue guidance to a range of
As previously discussed, we believe there is an opportunity to improve
returns by having a more disciplined approach to capital allocation.
Accordingly, we plan to reduce our new Gallery opening cadence to a
range of 3 to 5 per year, which is expected to drive high-quality
sustainable growth, while lowering capital requirements and execution
risk over the course of our real estate transformation. In fiscal 2017,
we expect to open 3 next generation Design Galleries, all with
integrated food and beverage. We remain confident in reaching our
long-term goal of
We understand that many of the strategies we are pursuing - opening the largest specialty retail experiences in our industry while most are shrinking the size of their retail footprint and closing stores; expanding our Source Book mailings while many are eliminating catalogs; moving from a promotional to a membership model, while others are increasing promotions, positioning their brands around price versus product; and refusing to follow the herd in self-promotion on social media platforms, instead allowing our brand to be defined by the taste, style, design and quality of the products and experiences we are creating - are all in direct conflict with conventional wisdom and the strategies being pursued by many in our industry.
We believe when you step back and consider we are - one, building a brand with no peer; two, creating a customer experience that cannot be replicated online; and three, have total control of our content from concept to customer - you realize what we are building is extremely rare in contrast to today's retail landscape. Yet, our most valuable asset is not what we've done, but rather who we've become. We've become a team of people who don't know what can't be done. A team that is driven by our values and beliefs. A team that is willing to march into hell, as we did last year, for a heavenly cause. A team that has a bold vision for the future, and an organization that is demonstrating it can bring that vision to life.
Gary
Chairman and Chief Executive Officer
Q&A Conference Call Information
Accompanying this release,
About
Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are
prepared and presented in accordance with Generally Accepted Accounting
Principles (“GAAP”), the Company uses the following non-GAAP financial
measures: adjusted operating income, adjusted operating margin, adjusted
net income, adjusted gross profit, adjusted gross margin and adjusted
diluted earnings per share (collectively, “non-GAAP financial
measures”). We compute these measures by adjusting the applicable GAAP
measures to remove the impact of certain recurring and non-recurring
charges and gains and the tax effect of these adjustments. The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with GAAP.
For more information on the non-GAAP financial measures, please see the Reconciliation of GAAP to non-GAAP Financial Measures tables in this press release. These accompanying tables include details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
the federal securities laws including statements related to: our future
financial outlook and guidance, including for the second quarter of
fiscal 2017, for fiscal year 2017 and over the longer term, including
net revenues, net income, operating margins, cash flow, costs and
expenses and EPS which in turn is derived based upon certain assumed
share counts; our primary areas of focus for 2017 including executing
our new business model, architecting a new operating platform,
maximizing cash flow, transformation of our real estate and expansion of
our product offer; the anticipated benefits of our business investments
and strategies including (i) efforts to optimize inventories and
rationalize our product offer, (ii) efforts to implement a more
disciplined approach to capital allocation, (iii) the mailing of Source
Books, (iv) opening of new Gallery locations and the cadence of such
openings, (v) the membership program and (vi) the redesign of our supply
chain network; our plans and expectations related to new business
investments and in particular with respect to RH Hospitality; our
expectations concerning the potential of the RH Modern product offering;
our expectations concerning the strength of the RH brand; our
expectations concerning the Company’s confidence in the long-term
opportunity to reach
RH |
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REVENUE METRICS |
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(Unaudited) |
|||||||
Three Months Ended | |||||||
April 29, |
April 30, |
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Stores as a percentage of net revenues | 56 | % | 56 | % | |||
Direct as a percentage of net revenues | 44 | % | 44 | % | |||
Growth in net revenues: | |||||||
Stores | 24 | % | 19 | % | |||
Direct | 23 | % | -4 | % | |||
Total | 23 | % | 8 | % | |||
Comparable brand revenue growth (1)(2) | 9 | % | 4 | % | |||
See the Company’s most recent Form 10-K and Form 10-Q filings for the definitions of stores, direct, and comparable brand revenue. | |||||||
(1) Waterworks is excluded from comparable brand revenue growth and will be added in the first full month following the anniversary of the acquisition. | |||||||
(2) Membership revenue is included in comparable brand revenue growth beginning April 2017, which is the first full month following the anniversary of the program launch. | |||||||
RETAIL GALLERY METRICS
(Unaudited)
As of
In addition, as of
Three Months Ended | |||||||||||||||
April 29, |
April 30, |
||||||||||||||
Store Count |
Total Leased Selling |
Store Count |
Total Leased Selling |
||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Beginning of period | 85 | 912 | 69 | 725 | |||||||||||
End of period | 85 | 912 | 69 | 725 | |||||||||||
% Growth | 26 | % | 20 | % | |||||||||||
Weighted-average leased selling
square footage |
912 | 725 | |||||||||||||
% Growth | 26 | % | 20 | % | |||||||||||
See the Company’s most recent Form 10-K and Form 10-Q filings for square footage definitions. | |||||||||||||||
Total leased square footage as of April 29, 2017 and April 30, 2016 was 1,242,000 and 1,011,000, respectively. | |||||||||||||||
Weighted-average leased square footage for the three months ended April 29, 2017 and April 30, 2016 was 1,242,000 and 1,011,000, respectively. | |||||||||||||||
Retail sales per leased selling square foot for the three months ended April 29, 2017 and April 30, 2016 was $284 and $313, respectively. | |||||||||||||||
RH |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except share and per share amounts) |
||||||||||||||||
(Unaudited) |
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|
Three Months Ended | |||||||||||||||
April 29, |
% of Net |
April 30, |
% of Net |
|||||||||||||
Net revenues | $ | 562,080 | 100.0 | % | $ | 455,456 | 100.0 | % | ||||||||
Cost of goods sold | 391,824 | 69.7 | % | 327,981 | 72.0 | % | ||||||||||
Gross profit | 170,256 | 30.3 | % | 127,475 | 28.0 | % | ||||||||||
Selling, general and administrative
expenses |
163,360 | 29.1 | % | 138,950 | 30.5 | % | ||||||||||
Income (loss) from operations | 6,896 | 1.2 | % | (11,475 | ) | -2.5 | % | |||||||||
Interest expense—net | 12,179 | 2.1 | % | 10,528 | 2.3 | % | ||||||||||
Loss before income taxes | (5,283 | ) | -0.9 | % | (22,003 | ) | -4.8 | % | ||||||||
Income tax benefit | (1,913 | ) | -0.3 | % | (8,533 | ) | -1.8 | % | ||||||||
Net loss | $ | (3,370 | ) | -0.6 | % | $ | (13,470 | ) | -3.0 | % | ||||||
Weighted-average shares used in
computing basic net loss per share |
37,609,516 | 40,588,081 | ||||||||||||||
Basic net loss per share | $ | (0.09 | ) | $ | (0.33 | ) | ||||||||||
Weighted-average shares used in
computing diluted net loss per share |
37,609,516 | 40,588,081 | ||||||||||||||
Diluted net loss per share | $ | (0.09 | ) | $ | (0.33 | ) | ||||||||||
RH |
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RECONCILIATION OF GAAP NET LOSS TO ADJUSTED NET INCOME (LOSS) |
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(In thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended | ||||||||
April 29, |
April 30, |
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GAAP net loss | $ | (3,370 | ) | $ | (13,470 | ) | ||
Adjustments (pre-tax): | ||||||||
Cost of goods sold: | ||||||||
Impact of inventory step-up [a] | 1,380 | — | ||||||
Legal claim [b] | — | 7,729 | ||||||
Selling, general and administrative expenses: | ||||||||
Acquisition related costs [c] | — | 2,069 | ||||||
Reorganization related costs [d] | — | 1,415 | ||||||
Legal claim [b] | — | 972 | ||||||
Interest expense—net: | ||||||||
Amortization of debt discount [e] | 6,715 | 6,442 | ||||||
Subtotal adjusted items | 8,095 | 18,627 | ||||||
Impact of income tax on adjusted items [f] | (2,931 | ) | (7,223 | ) | ||||
Adjusted net income (loss) [g] | $ | 1,794 | $ | (2,066 | ) | |||
[a] | Represents the non-cash amortization of the inventory fair value adjustment recorded in connection with our acquisition of Waterworks. | |
[b] | Represents the estimated cumulative impact of coupons redeemed in connection with a legal claim alleging that the Company violated California’s Song-Beverly Credit Card Act of 1971 by requesting and recording ZIP codes from customers paying with credit cards. | |
[c] | Represents costs incurred in connection with our acquisition of Waterworks including professional fees. | |
[d] | Represents costs associated with a reorganization, which include severance costs and related taxes, partially offset by a reversal of stock-based compensation expense related to unvested equity awards. | |
[e] | Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for GAAP purposes for the $350 million aggregate principal amount of convertible senior notes that were issued in June 2014 (the “2019 Notes”) and for the $300 million aggregate principal amount of convertible senior notes that were issued in June and July 2015 (the “2020 Notes”), we separated the 2019 Notes and 2020 Notes into liability (debt) and equity (conversion option) components and we are amortizing as debt discount an amount equal to the fair value of the equity components as interest expense on the 2019 Notes and 2020 Notes over their expected lives. The equity components represent the difference between the proceeds from the issuance of the 2019 Notes and 2020 Notes and the fair value of the liability components of the 2019 Notes and 2020 Notes, respectively. Amounts are presented net of interest capitalized for capital projects of $0.7 million and $0.6 million during the three months ended April 29, 2017 and April 30, 2016, respectively. | |
[f] | The adjustments for the three months ended April 29, 2017 and April 30, 2016 represent the tax effect of the adjusted items based on our effective tax rates of 36.2% and 38.8%, respectively. | |
[g] | Adjusted net income (loss) is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted net income (loss) as net loss, adjusted for the impact of certain non-recurring and other items that we do not consider representative of our ongoing operating performance. Adjusted net income (loss) is included in this press release because management believes that adjusted net income (loss) provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of operating results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. | |
RH |
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RECONCILIATION OF DILUTED NET LOSS PER SHARE TO |
||||||||
ADJUSTED DILUTED NET INCOME (LOSS) PER SHARE |
||||||||
(Unaudited) |
||||||||
Three Months Ended | ||||||||
April 29, |
April 30, |
|||||||
Diluted net loss per share | $ | (0.09 | ) | $ | (0.33 | ) | ||
Pro forma diluted net loss per share [a] |
$ | (0.09 | ) | $ | (0.33 | ) | ||
EPS impact of adjustments (pre-tax) [b]: | ||||||||
Amortization of debt discount | $ | 0.18 | $ | 0.16 | ||||
Impact of inventory step-up | 0.04 | — | ||||||
Legal claim | — | 0.21 | ||||||
Acquisition related costs | — | 0.05 | ||||||
Reorganization related costs | — | 0.04 | ||||||
Subtotal adjusted items | 0.22 | 0.46 | ||||||
Impact of income tax on adjusted items [b] | (0.08 | ) | (0.18 | ) | ||||
Adjusted diluted net income (loss) per share [c] |
$ | 0.05 | $ | (0.05 | ) | |||
[a] | Pro forma diluted net loss per share for the three months ended April 29, 2017 is calculated based on GAAP net loss and diluted weighted-average shares of 37,879,107. | |
[b] | Refer to table titled “Reconciliation of GAAP Net Loss to Adjusted Net Income (Loss)” and the related footnotes for additional information. | |
[c] | Adjusted diluted net income (loss) per share is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted diluted net income (loss) per share as net loss, adjusted for the impact of certain non-recurring and other items that we do not consider representative of our underlying operating performance divided by the Company’s share count. Adjusted diluted net income (loss) per share is included in this press release because management believes that adjusted diluted net income (loss) per share provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of operating results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. | |
RH |
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RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT |
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(In thousands) |
||||||||
(Unaudited) |
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Three Months Ended | ||||||||
April 29, |
April 30, |
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Gross profit | $ | 170,256 | $ | 127,475 | ||||
Impact of inventory step-up [a] | 1,380 | — | ||||||
Legal claim [a] | — | 7,729 | ||||||
Adjusted gross profit [b] | $ | 171,636 | $ | 135,204 | ||||
Net revenues | $ | 562,080 | $ | 455,456 | ||||
Gross margin [c] | 30.3 | % | 28.0 | % | ||||
Adjusted gross margin [c] | 30.5 | % | 29.7 | % | ||||
[a] | Refer to table titled “Reconciliation of GAAP Net Loss to Adjusted Net Income (Loss)” and the related footnotes for additional information. | |
[b] | Adjusted gross profit is a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP. We define adjusted gross profit as gross profit, adjusted for the impact of certain non-recurring and other items that we do not consider representative of our underlying operating performance. Adjusted gross profit is included in this press release because management believes that adjusted gross profit provides meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful evaluation of operating results on a comparable basis with historical results. Our management uses this non-GAAP financial measure in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. | |
[c] | Gross margin is defined as gross profit divided by net revenues. Adjusted gross margin is defined as adjusted gross profit divided by net revenues. | |
RH |
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RECONCILIATION OF NET LOSS TO OPERATING |
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INCOME (LOSS) AND ADJUSTED OPERATING INCOME |
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(In thousands) |
||||||||
(Unaudited) |
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Three Months Ended | ||||||||
April 29, |
April 30, |
|||||||
Net loss | $ | (3,370 | ) | $ | (13,470 | ) | ||
Interest expense—net | 12,179 | 10,528 | ||||||
Income tax benefit | (1,913 | ) | (8,533 | ) | ||||
Operating income (loss) | 6,896 | (11,475 | ) | |||||
Impact of inventory step-up [a] | 1,380 | — | ||||||
Legal claim [a] | — | 8,701 | ||||||
Acquisition related costs [a] | — | 2,069 | ||||||
Reorganization related costs [a] | — | 1,415 | ||||||
Adjusted operating income | $ | 8,276 | $ | 710 | ||||
Net revenues | $ | 562,080 | $ | 455,456 | ||||
Operating margin [b] | 1.2 | % | -2.5 | % | ||||
Adjusted operating margin [b] | 1.5 | % | 0.2 | % | ||||
[a] | Refer to table titled “Reconciliation of GAAP Net Loss to Adjusted Net Income (Loss)” and the related footnotes for additional information. | |
[b] |
Operating margin is defined as operating income (loss) divided by net revenues. Adjusted operating margin is defined as adjusted operating income divided by net revenues. |
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RH |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
|||||||||||
(Unaudited) |
|||||||||||
April 29, |
January 28, |
April 30, |
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As Revised [a] | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 80,150 | $ | 87,023 | $ | 234,668 | |||||
Short-term investments | — | 142,677 | 100,095 | ||||||||
Merchandise inventories | 683,984 | 752,304 | 763,055 | ||||||||
Asset held for sale | 8,179 | 4,900 | — | ||||||||
Other current assets | 142,357 | 151,353 | 144,129 | ||||||||
Total current assets | 914,670 | 1,138,257 | 1,241,947 | ||||||||
Long-term investments | — | 33,212 | 10,859 | ||||||||
Property and equipment—net | 702,741 | 682,056 | 558,431 | ||||||||
Goodwill and intangible assets | 274,892 | 274,360 | 173,005 | ||||||||
Other non-current assets | 56,083 | 64,635 | 64,278 | ||||||||
Total assets | $ | 1,948,386 | $ | 2,192,520 | $ | 2,048,520 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Liabilities | |||||||||||
Accounts payable and accrued expenses | $ | 233,395 | $ | 226,980 | $ | 246,483 | |||||
Deferred revenue, customer deposits and other current liabilities | 210,526 | 189,189 | 157,966 | ||||||||
Total current liabilities | 443,921 | 416,169 | 404,449 | ||||||||
Convertible senior notes due 2019—net | 316,153 | 312,379 | 301,311 | ||||||||
Convertible senior notes due 2020—net | 240,120 | 235,965 | 223,895 | ||||||||
Financing obligations under build-to-suit lease transactions | 220,019 | 203,015 | 154,953 | ||||||||
Other non-current obligations | 105,395 | 105,123 | 84,384 | ||||||||
Total liabilities | 1,325,608 | 1,272,651 | 1,168,992 | ||||||||
Stockholders’ equity | 622,778 | 919,869 | 879,528 | ||||||||
Total liabilities and stockholders’ equity | $ | 1,948,386 | $ | 2,192,520 | $ | 2,048,520 | |||||
[a] |
During the fourth quarter of fiscal 2016 management determined that we had incorrectly reported negative cash balances due to outstanding checks in the accounts payable and accrued expenses financial statement line item in our consolidated balance sheets without properly applying the limited right of offset against cash and cash equivalents. The revision decreased cash and cash equivalents and accounts payable and accrued expenses by $2.5 million as of April 30, 2016. |
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RH |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In thousands) |
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(Unaudited) |
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Three Months Ended | ||||||||
April 29, |
April 30, |
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As Revised [a] | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (3,370 | ) | $ | (13,470 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in)
operating
activities: |
||||||||
Depreciation and amortization | 16,020 | 12,554 | ||||||
Other non-cash items | 15,011 | 12,257 | ||||||
Change in assets and liabilities—net of acquisition: | ||||||||
Merchandise inventories | 66,067 | (37,228 | ) | |||||
Accounts payable, accrued expenses and other | 31,327 | (64,463 | ) | |||||
Net cash provided by (used in) operating activities | 125,055 | (90,350 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Capital expenditures—including construction related deposits and purchase of trademarks and domain names |
(13,456 | ) | (48,991 | ) | ||||
Proceeds from sale of asset held for sale—net | 4,900 | — | ||||||
Net proceeds of investments | 175,801 | 41,660 | ||||||
Net cash provided by (used in) investing activities | 167,245 | (7,331 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Repurchases of common stock | (300,140 | ) | — | |||||
Net equity related transactions | 2,418 | 79 | ||||||
Other financing activities | (1,365 | ) | (85 | ) | ||||
Net cash used in financing activities | (299,087 | ) | (6 | ) | ||||
Effects of foreign currency exchange rate translation | (86 | ) | 888 | |||||
Net decrease in cash and cash equivalents | (6,873 | ) | (96,799 | ) | ||||
Cash and cash equivalents | ||||||||
Beginning of period | 87,023 | 331,467 | ||||||
End of period | $ | 80,150 | $ | 234,668 | ||||
[a] | During the fourth quarter of fiscal 2016 management determined that we had incorrectly reported negative cash balances due to outstanding checks in the accounts payable and accrued expenses financial statement line item in our consolidated balance sheets without properly applying the limited right of offset against cash and cash equivalents. The revision decreased net cash provided by operating activities by $15.9 million for the three months ended April 30, 2016. | |
RH |
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CALCULATION OF FREE CASH FLOW |
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(In thousands) |
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(Unaudited) |
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Three Months Ended | ||||||||
April 29, |
April 30, |
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As Revised [a] | ||||||||
Net cash provided by (used in) operating activities | $ | 125,055 | $ | (90,350 | ) | |||
Capital expenditures—including construction related deposits | (13,456 | ) | (48,827 | ) | ||||
Payments on build-to-suit lease transactions | (1,289 | ) | — | |||||
Purchase of trademarks and domain names | — | (164 | ) | |||||
Payments on capital leases | (76 | ) | (85 | ) | ||||
Proceeds from sale of asset held for sale—net | 4,900 | — | ||||||
Free cash flow [b] | $ | 115,134 | $ | (139,426 | ) | |||
[a] | During the fourth quarter of fiscal 2016 management determined that we had incorrectly reported negative cash balances due to outstanding checks in the accounts payable and accrued expenses financial statement line item in our consolidated balance sheets without properly applying the limited right of offset against cash and cash equivalents. The revision decreased net cash provided by operating activities by $15.9 million for the three months ended April 30, 2016. | |
[b] | Free cash flow is calculated as net cash provided by (used in) operating activities and net proceeds from sale of asset held for sale, less capital expenditures, construction related deposits, payments on build-to-suit lease transactions, purchase of trademarks and domain names and payments on capital leases. Free cash flow excludes all non-cash items, such as the non-cash additions of property and equipment due to build-to-suit lease transactions. | |
SECOND QUARTER AND FISCAL 2017 OUTLOOK
(In
millions, except per share data)
RH’s fiscal 2017 will include 53 weeks compared to the prior fiscal year which included 52 weeks. The Company is providing the following outlook for the second quarter and fiscal 2017:
Second Quarter |
Fiscal Year |
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Net revenues | $595—$610 | $2,400—$2,450 | ||
% growth vs. prior year | 9%—12% | 12%—15% | ||
Adjusted net income | $13—$15 | $60—$70 | ||
% growth vs. prior year | nm | 16%—35% | ||
Adjusted diluted EPS inclusive of 7.85 million shares repurchased to date | $0.38—$0.43 | $1.67—$1.94 | ||
Weighted-average diluted shares outstanding inclusive of 7.85 million shares repurchased to date | 34.5 | 36.0 | ||
Capital expenditures | $120—$140 | |||
Planned asset sales | $15—$25 | |||
Note: The Company’s adjusted diluted earnings per share outlook excludes
the potential benefit of any additional stock repurchases beyond those
already completed to date and a one-time non-cash stock compensation
charge of approximately
View source version on businesswire.com: http://www.businesswire.com/news/home/20170601006483/en/
Source:
RH
Cammeron McLaughlin, 415-945-4998
SVP, Investor Relations
and Strategy
cmclaughlin@rh.com