Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Where we got arrogant around pricing during COVID and we had all the price increases from the tariffs and then the supply chain and raw material goods going up, we're just a lot stronger, and we're going to play a very aggressive game because we can |
| And yeah, I think it's -- I think we'll be in really good shape by the end of Q1 going into Q2 |
| But nonetheless, even if they do, you're going to see us perform pretty well in any environment based on -- just based on the work we've done and what's in the pipeline and the plans we have |
| You have some pricing coming down here or there in some markets but the good news for us is we're just taking a long view, we're trying to position the brand and the business for the next big run and I think we're going to be meaningfully better positioned than anybody else in our sector, not by a little, by a lot |
| I mean the galleries look great, the teams are fantastic, the right people are coming in |
| So it's really encouraging being in Munich, getting a really good feel for it |
| So we have this incredible experience for the customers at a lower investment rate than we'd make, and the lower occupancy costs than we would expect to have |
| Thank you for making us so proud and especially the teams that just brought our international galleries to life |
| Gary Friedman Yeah, and we may learn in some of these smaller kind of what we refer to as a design studio, it's really in Palm Desert, it's like a design office, right? It's really enabling entrepreneurs, interior designers that maybe don't want to work in a retail gallery and where there's market opportunities to do something to improve art and have a more dominant interior design presence, we think that's really good for the RH brand |
| Look, starting the year, we're going to be in a better position than let's say, the start of the quarter, but I think we'll be going through continuing to sell through the markdown goods by the end of the first half, that's probably.. |
| I mean -- and to be at the very beginning of this and to be executing at that level and to have that quality of people and that energy in the galleries, just gives me and the team here a great deal of confidence of what we can do globally with this brand |
| We're really happy with the work we've done, with the team we have, with the initial, you know, feedback we're getting from consumers and the kind of people that are coming and all that looks directionally right |
| I think we're gaining market share in a lot of people today |
| Although RH England is our most unique and spectacular Gallery to date, and the only one with a hospitality component in Europe, all three are architecturally impressive, multi-level expressions of the RH brand, only to be outdone by our even more impressive teams in each location |
| While I say that the inflection point will peak in Q2, that's just based on what's in the pipeline, which coming on the next cycle likely will create higher and higher peaks, right? Because we just -- we're creating an entirely new foundation for the business, a stronger, bigger, better foundation to the business |
| We expect our demand trends to accelerate though the first half of 2024 as our product transformation unfolds, in-stocks improve, we complete the reset of our Galleries, and introduce our new Modern and RH Outdoor Sourcebooks in the first quarter of next year |
| 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 |
| Yeah, we opened what we believe is the highest quality hotel experience in New York City |
| 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 |
| I mean like we look -- you go into Germany, we look really good |
| I think this is the best work we've ever done |
| While a product transformation of this magnitude will be margin dilutive in the short term, we believe it will become margin accretive over the long term as selling rates stabilize and allow for supply chain and sourcing efficiencies |
| We do that very well |
| Taste can be elusive, and we believe no one is better positioned than RH to create an ecosystem that makes taste inclusive and, by doing so, elevating and rendering our way of life more valuable |
| I feel very confident that the overall mailing of contemporaries is going to be incremental, as we believe interiors has been and as we believe modern will be and as we believe couture upholstery will be and bespoke furniture will be and everything we do |
| Our plan to expand the RH brand globally, address new markets locally and transform our North American Galleries represents a multi-billion dollar opportunity |
| I mean what I was -- I think, beyond my expectation was just the excitement for the brand and the quality of people that were at the opening events |
| I'm really happy with just the initial turnouts for the events and then the amount of traffic just coming into the galleries, just exploring and coming to see us |
| The response to our opening events was beyond our expectations, with RH Munich hosting over 900 chic attendees roaming the three floors with Cipriani Bellinis and Vesper Martinis, and traffic in both Galleries has been strong since opening |
| 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 |
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| To our people, partners, and shareholders, net revenues of $751 million were at the midpoint of our guidance to the quarter, and adjusted operating margin of 7.3% was slightly below expectations due to higher than anticipated expenses, including international openings, as well as costs related to our pending acquisition of the New York Guesthouse property and unsuccessful efforts to secure the iconic One Ocean Drive Miami Beach location |
| Additionally, the home furnishings market has become increasingly promotional, and we believe that it will create a mix shift towards clearance products, pressuring gross margins |
| We're now at a level that's below 2019, granted the macro is challenging |
| And so where I think we've -- we lost some market share because we were slow to kind of ramp back up the product development and marketing of the business post-COVID, we rebuilt those muscles, where we were arrogant from a pricing point of view, there's no arrogance anymore |
| This is -- I mean, we compared the exact numbers to 2008 and 2009, but this is -- if it's not the worst, it's the second worst in my career |
| But, I just say generally, I'd be surprised if anybody's outperforming us when we get to Q2 of next year, I'd quite be shocked |
| If we're sitting here, the end of Q2 and we didn't get the inflection point we needed, that would surprise me |
| We didn't buy back $2.2 billion of stock because we think the model has a problem |
| Follow up on that comment there, Gary, just so I was going to ask you about the conditions you thought were required to get you back to that 20%-ish operating margin, clearly that an unfreezing of the housing market |
| So that'll have same kind of challenges, lots of new product |
| That's a painful thing to do |
| But I think, what I'm amazed by in RH England is that the demand is building into a slow season |
| In light of the current market, we are delaying the mailing of our RH Modern Sourcebook until the first quarter of 2024 when we believe demand conditions will likely be more favorable |
| So, you're laughing really big down numbers in the housing market and they're still down |
| But at the same time, we've sharpened our value proposition at regular price, and we're going to be tough to compete with, even if people go on sale |
| So look, we couldn't be more excited |
| It's that bad |
| For the past 23 years we’ve heard others tell us what can’t be done, and for the past 23 years we’ve failed to listen |
| Now everybody's cycling that and, I think you're going to see people's, as you're seeing it, people's and businesses inflecting downwards in this environment and our businesses inflecting upwards and it will continue to do so |
| So that's the biggest issue facing the market today |
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