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

  • 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.
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