RH surged more than 40 per cent on Thursday after the upscale furniture brand formerly known as Restoration Hardware boosted its full-year earnings and sales outlook and beat expectations for second-quarter earnings.

Revenues rose 13 per cent in the quarter to July 29 to $615m. However, the company swung to a net loss $7.9m, compared with a profit of $6.9m in the previous year’s period.

On an adjusted basis, earnings per share of 65 cents on revenues of $619m topped Wall Street expectations in a FactSet survey for 47 cents and $606m, respectively.

Chief executive Gary Friedman touted the group’s “brave decision [in 2016] to transform our business from a promotional to a membership model that we believe will enhance our brand, streamline our operations, and dramatically improve our customer experience.”

He said that he was “pleased to report strong second quarter results as we move past the most uncertain stages of our transformation.”

Looking ahead, RH lifted its guidance for full year adjusted revenues to $2.42bn – $2.46bn, from $2.4bn – $2.45bn. Adjusted profits are now pegged at $70m – $77m, from $60m – $70m.

Oppenheimer analyst Brian Nagel said that “we come away encouraged with indications of stabilisation in trends at the chain, but still worried about risks of a seemingly shifting business model strategy.”

The shares spiked 46.2 per cent to $72.30 in mid-morning trading in New York. Thursday’s rise helped RH almost entirely counteract a heavy fall that began in July. But shares are still down markedly from the November 2015 high of $106.49.

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