Restoration Hardware Tumbles After Slashing Profit Forecastby
Restoration Hardware Holdings Inc. plunged as much as 20 percent after the upscale furniture chain posted a surprise loss and cut its annual forecast.
The company reported a first-quarter loss of 5 cents a share, excluding some items, well below the 5-cent profit analysts had estimated. Restoration Hardware now expects full-year earnings of $1.60 to $1.80 a share. That compares with an average analyst projection of $2.66, according to data compiled by Bloomberg.
Chief Executive Officer Gary Friedman blamed the shortfall on the strong U.S. dollar and a spending slowdown in energy-industry hotbeds, as well as a broader shift away from luxury purchases. Restoration Hardware also has suffered from internal turmoil: Friedman sent a scathing memo to employees earlier this year saying they were neglecting customer service. He compared the situation to a burning building.
“While there is uncertainty regarding the headwinds impacting revenues, we expect many of the cost and margin related issues to be short term in nature,” he said in the statement announcing results. “Despite our recent difficulties, we remain the leading luxury home brand in the world.”
Restoration Hardware’s flagging performance has rattled investors, sending the stock down 55 percent this year through Wednesday’s close. The shares declined as low as $28.81 on Thursday, the biggest intraday drop since Feb. 25.