Executive Summary

• Restoration Hardware reported adjusted 1Q16 EPS of $(0.05), below the consensus estimate of $0.05.
• Total revenues were $455.5 million versus consensus of $452.3 million. Comps increased by 4% versus expectations of 6.1%.
• Full-year guidance calls for EPS of $1.60–$1.80 versus consensus of $2.66. Revenues are expected to increase by 1%–3% versus prior guidance for an increase in the low- to mid-single-digit range. Full-year results will be impacted by costs associated with RH Modern production delays, investments aimed at elevating the customer experience, timing issues related to the transition from a promotional to a membership model, and a more aggressive approach to rationalizing SKU count and optimizing inventory.