retail watch | Dec 9, 2021 |
Shrugging off supply chain issues, RH logs another stellar quarter

Some people may be worried about the home furnishings business slowing down, but not RH.

Yesterday, the upscale home retailer reported another blowout quarter, handily beating analyst expectations. Not only that, but RH once again raised its forecast going forward, signaling that it expects the good times to keep on rolling.

Investors loved what they heard, driving the company’s share price up about 10 percent in trading Thursday morning. By midday, it was trading at around $633 a share—still down from its 52-week high of $744, but well up from a six-month low of $530 as recently as a week ago.

No matter which line on the earnings statement you looked at, the news was overwhelmingly positive:

  • Revenue up to $1.01 billion from $844 million a year ago.
  • Net income up to $184 million, from $46 million for the same period last year.
  • That worked out to $5.88 a share versus $1.64 last year and adjusted earnings were even better, at $7.03 a share.

Despite a stellar quarter, RH is feeling the effects of the supply chain crisis. On a conference call with analysts yesterday following the earnings release, RH CEO and chairman Gary Friedman cited delays in everything from sending out catalogs to the launch of RH Contemporary and the opening of its RH Guesthouse hotel project—all the result of the global logistical logjam.

The possible impact of the omicron variant and the postponed opening of its San Francisco gallery until spring also inject some uncertainty into the mix for RH. Perhaps for those reasons, the forward-looking increases are somewhat modest. “We now expect fiscal 2021 revenue growth of 32 percent to 33 percent versus our prior outlook of 31 percent to 33 percent, and adjusted operating margin in the range of 25.3 percent to 25.5 percent versus our prior outlook of 24.9 percent to 25.5 percent,” said Friedman on the call.

Nevertheless, he was confident in the hike—and this is not the first time RH has upped expectations in recent memory: “The power of our operating model gives us the confidence to raise our outlook for fiscal 2021 for the third time this year,” he said.

In addition to the delayed launches, now scheduled for next year, 2022 is also expected to see RH’s first gallery outside the U.S., when it opens in a 73-acre estate about an hour north of London, likely in May or June. On the call, Friedman also revealed RH has secured locations in Paris, Munich and Düsseldorf, and London proper, and that it was in negotiations for additional units elsewhere in France, as well as in Milan, Madrid and Brussels. These locations are not expected to start opening until 2023.

The RH plate continues to be full—in fact, overflowing—with the top and bottom lines to prove it.

Homepage image: Courtesy of RH

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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.

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