Restoration Hardware Warns As Ports Slowdown Hits Views

Restoration Hardware became the latest company Thursday to warn on the West Coast ports slowdown, issuing first-quarter guidance that fell short of Wall Street projections. But the recently resolved labor dispute's effects should not last for long.

"While we have been negatively impacted by the West Coast port disruption in the first quarter of this year, we believe at this point most of the revenue and earnings ... should shift forward and have a positive effect on the second quarter," said CEO Gary Friedman.

The upscale furnisher guided Q1 earnings to 18-20 cents a share — including a hit of 5-6 cents from the port congestion — which is below views for 23 cents a share. The sales outlook for $415 million-$420 million comes in far below analyst expectations for $437.8 million.

For the year, Restoration Hardware (RH) sees EPS of $2.95-$3.10 on revenue of $2.13 billion-$2.17 billion vs. analyst views for EPS of $3 on $2.24 billion in sales.

Shares fell 5.6% in late trading after closing up 1%. The stock has been consolidating for over two months.

Operating margin guidance of 10.3%-10.6% for the current fiscal year would mark an improvement vs. GAAP operating margin of 8.9% and adjusted margin of 9.3% last fiscal year.

The ports issue has hit a variety of retailers, including apparel chain Lululemon (LULU), home improvement giant Home Depot (HD) and department store Macy's (NYSE:M) .

Rival Williams-Sonoma (WSM) also blamed the ports slowdown in its earnings report last week. The retailer said that the aftereffects will have a "more significant impact" through the first half of the year.

Restoration Hardware's Q4 results were mixed. Earnings rose 23% to $1.02 per share, a penny above views, marking a slowdown from Q3's 53% surge.

Sales grew 23.5% to $582.7 million, just missing views for $582.9 million. In early February, the company announced preliminary revenue of about $583 million. Direct revenue rose 33% to $304.8 million — 52% of all Q4 revenue.

Friedman called fiscal 2015 a "bridge year," with goals for midteen sales growth for the year before "re-accelerating to our long-term goal of 20% as our real estate transformation steps up in fiscal 2016.

He said that he's "pleased" with the performance of Restoration Hardware's Design Galleries, sprawling showrooms as big as 60,000 square feet that run counter to many retailers' strategies to plant smaller real-estate footprints.