What happened

Shares of RH (NYSE:RH) were up 9.6% as of 3:30 p.m. EST Tuesday after the home decor and furnishings retailer announced strong fiscal third-quarter results.

RH's quarterly revenue climbed 7.4% year over year to $636.6 million, translating to a 66% increase in adjusted (non-GAAP) earnings per share to $1.73. For perspective, and though we don't usually lend much credence to Wall Street's demands, most analysts watching the stock would have settled for earnings of $1.27 per share on roughly the same revenue. 

Contemporary room decorated with Restoration Hardware products


So what

RH's top-line growth was helped by a 4% increase in comparable-brand revenue, though that figure would have climbed 6.5% after adjusting for inventory-reduction efforts in the same year-ago period. The company also credited "strong full price selling, higher outlet margins, and continued cost benefits from [its] new operating platform."

RH chairman and CEO Gary Friedman stated, "As we near the completion of our second year focused on executing a new business model, architecting a new operating platform and maximizing cash flow by increasing revenues and earnings while decreasing inventory and capital spending, our results are demonstrating that we are building a disruptive brand and business that will continue to gain profitable market share for years to come." 

Now what

In the meantime, RH increased its full fiscal-year 2018 guidance to call for revenue of $2.519 billion to $2.529 billion (up from its old range of $2.489 billion to $2.521 billion), and for full-year adjusted earnings per share of $8.33 to $8.47 (up from $7.35 to $7.75 previously).

Friedman also reiterated that RH plans to "pivot back to high quality, sustainable growth in fiscal 2019 as we return to our product and brand expansion strategy [...]."

As such, RH offered preliminary fiscal 2019 guidance for revenue to increase 8% to 12%, or to a range of $2.72 billion to $2.82 billion, which should translate to adjusted net income per share of $9.30 to $10.70. 

In the end, this was a straightforward beat-and-raise that should leave long-term investors more than happy with RH's position today. And the stock is unsurprisingly soaring in response.