What happened

RH (NYSE:RH) investors beat the market month as the stock gained 19% compared to a 2% increase in the S&P 500, according to S&P Global Market Intelligence. The rally put Restoration Hardware shares back in solidly positive territory for the year, up 42% after having been down more than 20% in early June.

So what

September's jump was powered by surprisingly strong second-quarter earnings results. RH revealed on Sept. 10 that adjusted sales rose 10% and adjusted operating margin shot up to 14.7% of sales from 12.8% a year earlier. These wins combined to push adjusted earnings to $3.20 per share, or far above the figure Wall Street was expecting.

A modern living room set against a yellow-orange wall.

Image source: Getty Images.

Now what

Investors were even happier to see RH raise its outlook for the third straight quarter. The home furnishings specialist is having no problem passing along higher prices to consumers to offset new tariffs, and executives see no threat of a looming recession. As a result, RH is predicting 2019 sales will go up by about 10% at the midpoint of guidance, which implies a strong holiday season period ahead.

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.