Morning Commentary: Restoration Hardware convertibles drop after earnings miss, lowered guidance

By Rebecca Melvin

New York, June 9 – Restoration Hardware Holdings Inc.’s two series of 0% convertibles were lower in active trade early Thursday after the Corte Madera, Calif.-based specialty retailer missed earnings estimates and lowered guidance for the current fiscal year.

Restoration Hardware’s 0% convertibles due 2020 were down 2 points to 70 and the Restoration Hardware 0% convertibles due 2019 gapped down 3 points to 77.5, according to Trace data.

Restoration Hardware shares were down $7.62, or 21%, to $28.45.

The company posted a loss for its fiscal first quarter of $13.5 million, citing production delays and shortages and costs, and compared with a profit of $7.2 million in the year-earlier period. Excluding one-time items, the loss was 5 cents a share, down from a profit of 23 cents a share. Sales rose 7.8% to $455.5 million.

Looking ahead, the company said adjusted earnings per share will be $1.60 to $1.80 for the fiscal year that began Feb. 1, down from $2.72 in the previous year. In March, the company had predicted profits on that basis would be largely flat and some analysts had expected profit of $2.66 a share.

Elsewhere, Weatherford International Ltd.’s 5.875% exchangeables continue to surge. The paper traded up another 1.5 points to 121.9, according to Trace data at late morning on Thursday.

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