Daily News
From Home Furnishing Business
RH Reports First Quarter Financial Results
May 29,
2023 by HFBusiness Staff in Business Strategy, Industry 
RH has released its financial results for the first quarter ended April 29 in a shareholder letter from Chairman and Chief Executive Officer Gary Friedman, available on the Investor Relations section of its website at ir.rh.com.
“Our goal to position RH as the arbiter of taste for the home has proven to be both disruptive and lucrative, as we continue our quest to build the most admired brand in the world,” Friedman shared.
“Our brand attracts the leading designers, artisans and manufacturers, scaling and rendering their work more valuable across our integrated platform, enabling RH to curate the most compelling collection of luxury home products on the planet.”
Friedman continued, “Our efforts to elevate and expand our collection will continue with the introductions of RH Couture, RH Bespoke, RH Color, RH Antiques & Artifacts, RH Atelier and other new collections scheduled to launch over the next decade.”
“Our plan to open immersive Design Galleries in every major market will unlock the value of our vast assortment, generating revenues of $5 to $6 billion in North America, and $20 to $25 billion globally.”
Friedman concludes, “Our strategy is to move the brand beyond curating and selling product to conceptualizing and selling spaces, by building an ecosystem of Products, Places, Services and Spaces that establishes the RH brand as a global thought leader, taste and place maker.”
First Quarter 2023Highlights
Q1 GAAP net revenues of $739M VS. $957M last year
Q1 ADJUSTED net revenues of $739M VS. $957M last year
Q1 GAAP gross margin of 47.0% VS. 52.1% last year
Q1 ADJUSTED gross margin of 47.0% VS. 52.1% last year
Q1 GAAP operating margin of 13.4% VS. 21.4% last year
Q1 ADJUSTED operating margin of 14.9% VS. 24.7% last year
Q1 GAAP net income of $42M VS. $201M last year
Q1 ADJUSTED net income of $52M VS. $181M last year
Q1 GAAP diluted eps of $1.76 VS. $7.22 last year
Q1 ADJUSTED diluted eps of $2.21 VS. $6.63 last year
Chairman and CEO Gary Friedman further commented on the results, “Revenues of $739 million and adjusted operating margin of 14.9% exceeded our financial outlook in the first quarter despite a continued decline of the overall macro environment, especially for home-related businesses. “
“With 30-year mortgage rates trending at 20-year highs, the possibility of continued economic tightening required to tame inflation, and uncertainty regarding the recent regional banking crisis, we expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year.”
Friedman continued, “Based on the above and current demand trends, we are now forecasting increased markdowns to clear discontinued inventory required to support our product transformation over the next several quarters.”
“We are raising our revenue outlook for fiscal 2023 to a range of $3.0 to $3.1 billion and lowering our outlook for adjusted operating margin to a range of 14.5% to 15.5%, which includes an approximate 150 basis point drag due to the ramp up of our global expansion.”
“As previously mentioned, it’s times like these that businesses tend to move in herds, pursuing broadly adopted short-term strategies that lead to mostly similar outcomes. It’s also times like these that present opportunities to pursue long-term strategies that can create strategic separation and significant value creation for those teams willing to take the road less traveled and pursue their own unique path.”
Friedman concluded, “That path for RH is our climb up the luxury mountain and our long-term strategies of Product Elevation, Platform Expansion and Cash Generation.”