Upscale furniture company RH on Wednesday boosted its full-year outlook following record revenues at the start of its fiscal year and said it has taken steps, including selectively raising prices, to “mitigate” the impact of higher tariffs on Chinese goods.

The California-based company said net revenues rose 7.4 per cent from a year ago to a record $598m in the fiscal first quarter, ahead of analysts’ estimates for $584m, according to a Refinitiv survey.

Net income rose to $35.7m, or $1.43 a share, up from $25.4m, or $1.01 a share, in the year-ago quarter. Adjusting for one-time items the company reported earnings of $1.85 a share, eclipsing expectations for $1.55 a share.

“Our focus on elevating the brand and architecting an integrated operating platform continues to result in our profit model leapfrogging past the home furnishings industry and RH becoming one of the few retailers that is increasing revenues, expanding margins, increasing operating earnings, and driving significantly higher returns on invested capital,” said chief executive Gary Friedman.

The strong first quarter prompted the company to boost its full-year adjusted revenue outlook to between $2.64bn to $2.66bn, up from $2.59bn to $2.64bn previously. It also raised its outlook for adjusted earnings to between $8.76 to $9.27 a share, up from its previous forecasts of between $8.05 to $8.69 a share.

That topped analyst expectations for adjusted earnings of $8.38 a share, on revenues of $2.6bn.

Investors welcomed the news, sending RH shares up 23 per cent in extended trade to $116.30. Shares were down nearly 21 per cent year-to-date as of Wednesday’s close.

The retailer, which overhauled its membership model in recent years, has imagined a business model that reflects characteristics of Apple, LVMH and Berkshire Hathaway, according to its CEO.

RH has prioritised earnings over sales growth and pivoted away from low-quality sales as it focuses on the long-term picture. The company remains on track to achieve planned asset sales of $50m to $60m.

RH, like other companies that source goods from China, has been vulnerable to higher tariffs as a result of the ongoing US-China trade war.

On Wednesday, the company said it “renegotiated product costs and selectively raised prices to mitigate” the impact of Washington’s decision to lift tariffs on $200bn worth of Chinese goods to 25 per cent, from 10 per cent. The company also said it is moving certain production out of China and exploring new partnerships and expanding its own manufacturing facilities in the US.

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