It has been about a month since the last earnings report for Restoration Hardware (RH). Shares have lost about 2.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Restoration Hardware due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

RH Q2 Earnings & Revenues Beat Estimates, Margins Rise Y/Y

RH reported stellar second-quarter fiscal 2020 (ended Aug 1, 2020) results on the back of strong demand and solid margins. Both adjusted earnings and revenues handily beat the Zacks Consensus Estimate, as well as grew on a year-over-year basis.

RH witnessed a 16% increase in demand for the fiscal second quarter. For August, the same was up 47% year over year. It further increased to 44% in the beginning of September.

Earnings, Revenue & Margin Discussion

Adjusted earnings of $4.90 per share impressively surpassed the consensus mark of $3.44 by 42.4% and increased a whopping 53.1% from the year-ago level.

Net revenues of $709.3 million grew 0.4% year over year. Adjusting for recall accrual, net revenues increased 0.5% from the prior year to $709.7 million. The figure surpassed the consensus mark of $695 million by 2.1%.

Adjusted gross margin expanded 550 basis points (bps) to 47.5% for the quarter. Adjusted SG&A contracted 140 bps owing to lower advertising and compensation costs, partially offset by an approximate 40 bps drag from incremental COVID-related expenses.

Adjusted operating margin increased a notable 690 bps year over year to a record 21.8%. Adjusted EBITDA also surged 38.9% year over year to $185.8 million for the quarter.

Store Update & Balance

By Stanley White and Eimi Yamamitsu

TOKYO (Reuters) – Trading on the Tokyo Stock Exchange was brought to a complete standstill by a hardware failure for all of Thursday, in the worst-ever outage for the world’s third-largest equity market.

Japan’s TSE said it would reopen as usual on Friday, but frustrated investors were left unable to buy shares in Tokyo following an overnight rise on Wall Street.

The outage will test the exchange’s credibility just as new Prime Minister Yoshihide Suga has prioritised digitalisation and could dent Tokyo’s hopes of wooing banks and fund managers from Hong Kong amid a new security law imposed by China.

“I feel painfully responsible for all the confusion this incident has caused for investors and market participants,” TSE Chief Executive Officer Koichiro Miyahara told a news briefing

The TSE said the glitch was the result of a hardware problem at its “Arrowhead” trading system, and a subsequent failure to switch to a back-up. It caused the first full-day suspension since the exchange switched to all-electronic trading in 1999.

Fujitsu Ltd <6702.T>, which developed the trading system, said it was investigating the problem, while the TSE said it has no plan at this point to ask for any compensation.

Tokyo Governor Yuriko Koike said a quick fix was crucial to ensure trust in the roughly $6 trillion market.

“The timing is really just bad,” said Takashi Hiroki, chief strategist at brokerage Monex in Tokyo, adding that many market participants had been hoping to buy back their stocks or increase their holdings after an overnight rise in U.S. markets.

“The market was robbed of that chance,” he added.

The meltdown also coincided with the release of the Bank of Japan’s closely watched tankan corporate survey, which showed business sentiment improved from a decade low.

“It hasn’t