RH Reports Fourth Quarter and Fiscal Year 2022 Results

March 29, 2023  by HFBusiness Staff in Business Strategy, Industry   

Fourth Quarter 2022 Highlights

-  GAAP Net Revenues were $772M vs. $903M last year, and adjusted net revenues were $772M vs. $902M last year.

-  GAAP Gross Margin of 47.8% vs. 50.5% last year and adjusted gross margin of 47.8% vs. 50.4% last year.

-  GAAP Operating Margin of 14.5% vs. 24.1% last year and adjusted operating margin of 16.6% vs. 25.2% last year.

-  GAAP Net Income of $107M vs. $147M last year and adjusted net income of $73M vs. $164M last year.

-  GAAP Diluted EPS of $4.21 vs. $4.91 last year and adjusted diluted eps of $2.88 vs. $5.66 last year.

Chairman and Chief Executive Officer Gary Friedman included some thoughts for the RH shareholders, “Fiscal 2022 was another outstanding year for the RH brand. While revenues of $3.59 billion were below the pandemic peak of 2021, we finished the year with an adjusted operating margin of 22% and adjusted EBITDA margin of 25.9%, the most profitable business model in our industry.”

“Our strategy to elevate the design and quality of our product is central to our strategy of positioning RH as the first fully integrated luxury home brand in the world. It is also the most difficult part of our climb as it requires attracting higher value, more discerning customers by offering higher quality, more desirable designs.”

“While it’s a climb that becomes more difficult as we reach new heights, it’s also one we’ve navigated successfully over the past twenty-two years, so don’t expect us to waiver from our vision anytime soon.”

Friedman continued, “Our plan to expand the RH brand globally, address new markets locally, and transform our North American Galleries represents a multi-billion-dollar opportunity. This Summer we will be introducing RH to the UK in a dramatic and unforgettable fashion with the opening of RH England, The Gallery at the Historic Aynho Park, a 73-acre, 17th-century estate that will be a Celebration of History, Design, Food & Wine.”

“Our global expansion also includes opening in Brussels, Dusseldorf, Munich and Madrid as well as an Interior Design Studio in London over the next eighteen months, followed by Paris, London, Milan and Sydney in 2024 and 2025.”

“As noted in our previous shareholder letter, we expect business conditions to remain challenging for the next several quarters and possibly longer as a result of the accelerating weakness in the housing market, the uncertainty generated by the recent banking crisis and the cycling of record Covid-driven sales and backlog reductions.”

Friedman turned his focus to the future outlook, “Based on current trends, we expect fiscal 2023 revenues in the range of $2.9 to $3.1 billion and adjusted operating margin in the range of 15% to 17%, which includes an approximate 150 basis point drag due to the ramp up of our global expansion. We estimate the 53rd week will result in revenues of approximately $60 million.”

“For the first quarter of fiscal 2023, we are forecasting revenues of $720 to $735 million and adjusted operating margin in the range of 13% to 14%.”

RH Leadership hosted the conference call with these results and the call and replay can be accessed via audio webcast at ir.rh.com.