Restoration Hardware Holdings, Inc (NYSE:RH) reported upbeat earnings for its fourth quarter, while sales missed estimates.
In fiscal 2019, RH achieved record results across every key metric of our business while continuing to elevate the brand and create strategic separation in its industry.
Adjusted revenues of $2.647 billion increased 5.4% over last year, adjusted operating margins reached an industry best 14.3%, and adjusted diluted earnings per share increased 49% to $11.66. The company also generated $330 million of free cash flow in 2019, and achieved industry leading ROIC of 35.3%.
While fourth-quarter revenues of $665.0 million were lower than forecast, fourth-quarter adjusted earnings per share of $3.72 exceeded expectations for the 13th consecutive quarter as we continue to manage the business with a bias for earnings versus revenue growth.
Adjusted operating margins reached a record 17.4% in the fourth quarter, up 230 basis points versus 15.1% last year. The record results were driven by higher product margins, plus lower occupancy and shipping costs due to the elimination of its Holiday assortment and the continued efficiencies of our new operating platform.
RH ascribes the revenue shortfall to two issues. One, the elimination of the Holiday assortment created unforeseen collateral damage to our core business due to the lower customer traffic in both its stores and online during the peak weeks, and two, we experienced higher than expected back orders due to inventories being down 18% year over year.
RH shares lost $7.34, or 6.2%, to $110.50
