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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.