Shares of RH popped 25 percent on Thursday after the company issued guidance stronger than Wall Street analysts expected.
The company expects adjusted earnings per share between $1.02 a share and $1.04 a share. Analysts were expecting RH to issue guidance of about 80 cents per share.
"Our updated third quarter guidance demonstrates the earnings power of our new membership model, and a dramatically more efficient operating platform," Chairman and CEO Gary Friedman said in a statement.
RH also raised its net income outlook for 2018 to a range of $82 to $87 million from $70 to $77 million.
The improved guidance "tells us that sales continue to rebound, as do margins as the company gains back the lost profitability from past missteps," Deutsche Bank research analyst Adam Sindler said in a note Thursday.
The home furnishings company's stock has been having a stellar year, soaring more than 240 percent in 2017.