Restoration Hardware drops on disappointing preliminary results; Chesapeake holds in

By Rebecca Melvin

New York, Feb. 25 – Restoration Hardware Holdings Inc.’s two series of 0% convertibles fell sharply on an outright basis and contracted on swap on Thursday as common shares of the Corte Madera, Calif.-based specialty retailer tumbled after preliminary results fell short of expectations.

The company’s quarter ended Jan. 30 was hurt by stock market volatility, depressed energy prices and currency fluctuations, among other things, chairman and chief executive Gary Friedman said in a news release.

In particular stock market volatility hurt the high-end consumer that generally makes up its customers, Friedman said.

Restoration Hardware’s 2020 convertibles fell about 10.5% on an outright basis, its 2019 convertibles shed about 9% and the shares tanked 26%.

Elsewhere, there were convertibles that expanded on the day. Spirit Realty Capital Inc.’s 2.875% convertibles were up 0.5 point on swap against shares that added 1.7%. Tesla Motors Inc.’s A and B tranches were a touch better, a New York-based trader said.

Chesapeake Energy Corp.’s 2.5% convertibles recovered to end about unchanged on the day after slipping back a point or so in early trading. The Chesapeake common shares retraced about 5% of the prior day’s 23% gain. The Wednesday increases were based on news of debt buybacks and other measures being taken to conserve cash and improve its balance sheet.

The Chesapeake 2.5% convertibles due 2037 ended the session at around 42.75 after earlier trades at 41.25 and after rising 30% on Wednesday to 43 from 33.

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