-=RH (RH) reported earnings on Thur 28 March 19 (a/h)

RH beats by $0.14, misses on revs; lowers FY20 below consensus; reaffirms long-term targets

• Reports Q4 (Jan) earnings of $3.00 per share, excluding non-recurring items, $0.14 better than the S&P Capital IQ Consensus of $2.86; revenues rose 0.1% year/year to $671 mln vs the $686.44 mln S&P Capital IQ Consensus. 
• "Our core RH business, which has historically tracked to stock market fluctuations, experienced a sales decline of approximately 10 points beginning the third week of December which persisted through the remainder of the fourth quarter leading to a $13 million shortfall to the mid-point of our revised revenue guidance in December."
• Co issues downside guidance for FY20, lowers EPS to $8.41-9.08, excluding non-recurring items, from $9.30-10.70 vs. $9.98 S&P Capital IQ Consensus; revs to $2.585-2.635 bln from $2.72-2.82 vs. $2.75 bln S&P Capital IQ Consensus due to the continued weakness in our core business post the fourth quarter market volatility, the negative trends in the high end housing market, and continued efforts to edit unprofitable and non-strategic businesses
• "We remain confident in our long-term targets as the earnings power and capital efficiency of our new model continues to evolve and we return to our product and brand expansion strategy. In addition, we have made improvements to our real estate development model, and continue to reduce capital requirements for future Galleries by improving deal economics and lowering construction costs. While all of our new Galleries scheduled to open in fiscal 2019 are under construction, we were able to lower capital requirements for three of the five new Galleries planned for next year, and the vast majority of future projects. As a reminder, our long-term targets are as follows: Net revenue growth of 8% to 12% annually Adjusted operating margins in the mid-to-high teens Adjusted earnings growth of 15% to 20% annually Return on invested capital (ROIC) in excess of 50%. We continue to see a clear path to $4 to $5 billion in North American revenues, and an international opportunity that could lead to RH becoming a $7 to $10 billion dollar global brand. We are currently exploring opportunities for Bespoke Design Galleries in London, Paris, and other parts of Europe, and believe there is tremendous opportunity for the RH brand to expand globally.