05:55 AM EDT, 03/28/2024 (MT Newswires) -- RH (RH) shares climbed early Thursday as the home furnishing retailer anticipates annual revenue growth in fiscal 2024 with demand trends to accelerate throughout the year, even though it recorded weaker-than-expected fourth-quarter results.

The company forecast revenue to increase by 8% to 10% for the current fiscal year, as well as demand growth of 12% to 14%, it said late Wednesday. The consensus on Capital IQ is for revenue of $3.26 billion. In fiscal 2023, revenue came in at $3.03 billion, down from $3.59 billion in the prior year.

The stock gained 7.8% in recent premarket activity.

"While we expect business conditions to remain challenging until interest rates ease and the housing market begins to rebound, we expect our demand trends to accelerate throughout fiscal 2024," Chief Executive Gary Friedman said in an earnings letter to shareholders. "We do expect revenue to lag demand during the year by approximately 4 to 8 points until we read and react to the new collections, reduce backorders and shorten special order lead times."

Adjusted operating margin is expected to come in between 13% and 14% for the year. The company expects to end the period with an increased backlog of $110 million to $130 million, as a result of revenue lagging demand, potentially impacting its operating margin by about 140 basis points.

For the three months through Feb. 3, RH's revenue declined to $738.3 million from $772.5 million in the prior-year quarter, trailing the Street's view for $777.8 million. Adjusted earnings tumbled to $0.72 a share from $2.88, missing analysts' $1.71 estimate.

The retailer took a $40 million hit to revenue in the quarter due to "severe January weather and shipping delays related to the ongoing conflict in the Red Sea," according to Friedman. "We do expect the majority of the deferred revenue will be realized in 2024 when transit times normalize," he added.

The adjusted operating margin decreased to 9.1% from 16.6% the year before, reflecting deleverage from lower revenue, increased markdowns to support product transformation and investments in international expansion, Friedman said. Selling, general and administrative expenses narrowed to $256.7 million from $257.2 million year-on-year.

RH projects revenue to move down by low-single digits for the ongoing quarter, with demand to grow by mid-single digits. The Street is looking for revenue of $760.6 million.