When is a furniture store not just a furniture store?
When it has restaurants and bars is one answer. Or when it is developing hotels, private jets and yachts for leasing. Perhaps when it aims to sell entire residential environments, or when it opens its first British location on a 73-acre historic property.
When is a furniture store not just a furniture store? When it is RH.
In announcing second-quarter earnings that border on the insanely great—revenue up 39 percent, adjusted net income up 105 percent, and EBITDA and margins up by equally impressive levels—the upscale home furnishings retailer laid out its latest vision for the future, both short term in 2022, and for the next decade. In doing so, it took up its forecasts for the rest of its fiscal year, putting its faith in a sustained future for America’s love for their homes—and in RH to furnish them.
“Our strategy is to move the brand beyond curating and selling product to conceptualizing and selling spaces,” said CEO Gary Friedman, the impresario whose two-decade tenure at the helm of the company has seen it transform from an oddball seller of knickknacks and mission furniture to the country’s leading luxury home furnishings chain. “We believe the data and current trends support the argument of a more long-term and sustainable step change in consumer spending on the home. An important point to consider when analyzing the strong demand in the housing market is the migration of consumers to larger suburban and second homes.”
While speaking with analysts late Wednesday afternoon, Friedman also said that all of the leading indicators point to continued good times: “This trend is resulting in substantial square-footage growth that is driving increased furniture and furnishings demand. Add to that historically low interest rates, a record stock market and the reopening of several large parts of the economy, and elevated spending on the home could have a very long tail.”
That long tail will extend far beyond furniture—and beyond its existing U.S. footprint. To wit, some of the plans Friedman outlined include:
- Next year, RH will open its first store abroad, RH England, The Gallery at the Historic Aynhoe Park, located in Banbury, about 70 miles northwest of London on “a magical 73-acre estate designed in 1615 by the legendary English architect Sir John Soane.” A second store in the U.K. and a Paris location will follow.
- RH’s long-awaited debut hotel property, RH Guesthouse, is now scheduled to open next spring, around the corner from its Meatpacking District gallery in Manhattan. The hotel is the first of many planned boutique-scale properties—the New York location will have less than a dozen rooms available—which Friedman says will eventually roll out in upscale resort and residential markets around the world.
- The launch of The World of RH, “a digital portal that integrates the ecosystem of products, places, services and spaces all designed to elevate the RH brand.” RH Media is another element of this plan, though details are scarce right now.
- The brand has more experiential elements in the pipeline, including the private jets RH1 and RH2, as well the luxury yacht RH3, which is available for charter in the Caribbean and Mediterranean.
Not to overlook the company’s core business, Friedman said RH will introduce an unprecedented amount of new product, making up for delayed introductions due to supply chain and pandemic issues. It’s “the largest new product cycle in our history, highlighted by the launch of RH Contemporary in the spring of 2022, plus our latest RH Interiors and RH Modern source books, which have not been mailed since the spring of 2020.” These will be followed up “with RH Contemporary, RH Couture, RH Bespoke, RH Color, RH Antiques & Artifacts, RH Atelier and other new collections scheduled to launch over the next decade.”
RH earnings calls are always a unique experience, an opportunity for Friedman to roll out his expansive (but zen) outlook on business and the world in general. But this call raised the art—and the science—to a new level.
“This leads to our long-term strategy of building the world’s first consumer-facing architecture, interior design and landscape architecture services platform inside our Galleries, elevating the RH brand and amplifying our core business by adding new revenue streams while disrupting and redefining multiple industries,” he said. “Our ecosystem of products, places, services and spaces inspires customers to dream, design, dine, travel and live in a world thoughtfully curated by RH, creating an emotional connection unlike any other brand in the world.”
Homepage image: The interior great room of RH Dallas | Courtesy of RH
Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.