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RH's Challenging Luxury Market

RH's Challenging Luxury Market

And, Smith & Wesson's strong financials.

September 08, 2023

Photo by Jared Rice on Unsplash

Today is Friday, September 8, 2023.

The Early Bird Index today is 56.87.

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RH's Challenging Luxury Market

RH (NYSE: RH) tumbled 7.82% in after-hours trading on Thursday after the home-furnishings company posted weaker guidance with its financial results.

Financials: RH reported earnings of $3.93 per share in the past quarter and revenue of $800 million; both were better than expected.

Details: The company achieved an operating margin of 20.2% in the past quarter, which was better than expected.

Yes, But: RH is projecting an operating margin in the range of 8% to 10% for the current quarter, which is way lower than estimates.

Quote: “We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs and the current outlook is for rates to remain unchanged until the second quarter of 2024.” - Chairman and CEO Gary Friedman.

Stock Price: RH is up 45% this year, but down 7% in the last 30 days.

Final Thoughts: It’s obvious that the economy is tough for luxury goods companies, including RH. There’s clearly a reason why Warren Buffett sold his stake in the company a few months ago.

Notables

Notable Earnings Today: Kroger (NYSE: KR), Rent the Runway (Nasdaq: RENT).

Notable IPOs Today: Courtside Group, Inc. Common Stock (Nasdaq: PODC).

Notable Equity Crowdfunding Campaigns Ending Today: Glow Worm Play Cafe (Mainvest), Uncommon Path Brewing (Mainvest), SunDrift (Mainvest).

Notable Economic Events Today: N/A.

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Smith & Wesson's Strong Financials

Photo by Velizar Ivanov on Unsplash

Smith & Wesson (Nasdaq: SWBI) jumped 12.75% in after-hours trading on Thursday after the firearm manufacturer posted strong financial results.

Financials: Smith & Wesson reported earnings of 13 cents per share in the past quarter and revenue of $114.2 million; both were better than expected.

Details: Revenue increased by $29.8 million, up 35.4% from the same period last year.

Yes, But: The gross margin decreased from 37.3% to 26.6% during that time period.

Quote: “Innovation and our iconic brand's reputation for quality continue to be big drivers of consumers' preference for Smith & Wesson. Combined with healthy, lean channel inventories as we enter the traditionally busy fall season, we anticipate these tailwinds will allow us to continue to deliver strong results." - Mark Smith, President and CEO.

Stock Price: While Smith & Wesson is up 17% this year, the stock is down 18% in the last 30 days.

Final Thoughts: Another good quarter of financial results for Smith & Wesson. Need another reason to invest in this company? Smith & Wesson increased its dividend a few months ago.

Express Welcomes New CEO

Fashion retailer Express (NYSE: EXPR) appointed Stewart Glendinning as its CEO on Thursday, which sent shares up by 4.61% in after-hours trading. Glendinning will assume the role on September 15.

Final Thoughts: Glendinning will try to turn the company around. The stock lost over half of its value this year.

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