Restoration Hardware talks Q2 margin erosion and mailer on call, Jefferies upbeat

|By:, SA News Editor

Restoration Hardware (RH) is 3.6% weaker premarket despite beating estimates and raising guidance Tuesday with its Q2 report.

Other takeaways: RH is moving to a once per year Source Book mailing and gross margin fell 260 bps Y/Y for the quarter (see Q&A on conference call with BofA's Lorraine Hutchinson and Goldman's Matthew Fassler for more on these issues). The company says margins should recover in Q3 and Q4. (CC transcript)

Jefferies' John Marrin says the company "is in the sweet spot of spending on the home — affordable luxury — and is poised to take market share for many years to come." Price target hiked to $88 from $68. FY13 and FY14 EPS estimates hiked to $1.69 (from $1.45) and $2.20 (from $1.95) respectively.