RH - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the RH Fourth Quarter 2020 Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Ms. Allison Malkin of ICR.

Allison Malkin

Thank you. everyone. afternoon, Good joining year for our quarter fourth Thank Q&A us conference fiscal XXXX call. and you for

Joining me today Jack are Gary Friedman, Chairman Preston, and CFO. CEO; and

that of laws, we and any description our Before legal no within today the our revise the start, may as revision I financial of measures, statements business these could the today. issued actual matters issued referenced our risks like other forward-looking involve of Also, materially. results release about and forward-looking note a that press press we uncertainties items. non-GAAP discuss results remind of or that factors call, results. of we in may undertake our impact during obligation as adjust this federal the this the statements of differ securities in of would our that events. the to These are disclaimer of statements also number make and detailed to reflect opinions information new to affect to SEC will forward-looking which risk GAAP cause future we of the to statements results you release a release certain that refer well for of call, meaning certain our including light statements our to Please our outlook today, only publicly Please more filings, forward-looking eliminate or date these as

results live of opening also the our remarks. measures for to ir.rh.com. section measures of Investor non-GAAP website is find over Gary additional GAAP A available that, and non-GAAP turn information broadcast financial a today's Relations to will I'll regarding the reconciliation call With on of financial call You these at this in these released.

Gary Friedman

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we model and versus with year last continue only X% in our the to performance; an increasing platform growth. Our XX.X% XX.X% operating operating business basis industry productive to build margins adjusted most XXX points on revenue

seen points more home closest that X% me market, that XXX an than competitor. basis growth. than revenue furniture only Let say never furnishings in the margin in operating and again, the better It's XX% before on

own. puts a in XX% of in also it ROIC Our XXXX of class our

demand in of XXXX to that and than our lag cash demand that one-tenth not approximately virus revenue retailers greater other temporal generated revenue a that due shift of and a offs from core end at the and - is furnishings merely Remember, XXXX. model customer, XXX% have virtually direct disruptions, due lag and revenues represent due being our season. supply where assortments our That to important unsustainable pandemic the is is X% carry an demand cash sell with results seasonal large is to businesses. home recognized lift million to in business of who which to than as note floor revenue XXX chain carry Our our systemic be will stores the is to less to was also gain. a basically of much It's

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basis With the XXXX to result XXX of XXX growth say in XX%. with adjusted operating XX% should to revenue excess to range points in in the the ROIC XX% it's of safe margin we basis believe momentum business, and in expanding points

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Okay, for I'll the over operator it to you, turn open to call questions.

Operator

of [Operator Instructions] And Zaccone your first question comes from from the Steven line Citigroup.

open. Your line is

Steven Zaccone

and addition offerings newness, this Gary world of global happy the standpoint, the Congrats growth and and significantly of you lot outpacing in in long-term momentum profile business. of hospitality on momentum results a the and thinking gained how business? right call. your potential pandemic this margin for growing With where more the significant in new confidence about of outlooks all the changed from to now you're have early be the mind has earnings the a to business product amount have strong the a you

Gary Friedman

don't know based changed us on anything's pandemic. if for I the really

think believe. the mean, In I customer changed don't look as much fact, that as people think just our fact business basically has with or is start I XXX% you platform. to direct most

pandemic the where So with and our virtually order neutral here. we've whether it from stores anybody was We or shifted channel when entire don't care online really places people. through to an been existence our order

accelerate their I years. is not points would and a indifferent going indifferent fact an next of happen. accelerated due might customer the to may or say shift an and - That see have knew that. platform looking models reopened, the inherent business it's shifts years reframing know and next XX, the thinking model to world and a this with kind had the as or a Internet channel-neutral We're may that more we they've next a about implications business really business are may We that that of old a just We into across channel to going soon true about direct to at that rush rate going that. with by lot growth decades. ahead it. without of happen got view is over view this built galleries the we're XX been business there's and As the stores online be strategically channels in as retail anticipated within over several channel and there. We're for this closing all architected pretty XX saying, been the several looked could all XX, the our there's happening. our their ago was talk People XX architected across that to years be normal true. We've the to going of that strategically independent a beginning the recently well It I because and model indifferent was business financially.

whether That's shift live it X% there's let this a lot If to people anything, the online an just be think be into business, world. be investing to rush digital-first strategy of are a completely our or It rushing online out some a to where fundamentally it has estate to long say rush of the take we nothing don't have compelling tactical. And motivated are out. rush the I'd remain going it in anybody to strategy strategy great I XX% to the with few online. about it's post things indifferent business, shift, building incredible assortment in people very business. think time services relevant. physical focus pandemic industry. or world to rush the physical it follow be pandemic, focused to changed - And anything - - herd to in gets chasing kind a doing. we very So most that I anything it's product inspiring of we're solely lot only in we're service a of to goes on more think this even And on digital-first deeply, figured the experiences because those relevant most indifferent. into the can scared to right business we physical a most place Great. We - based that me there going physical thought physical greater world - this presented the slower all on shifts a believe stores. and platform our or pandemic. change I faster or we - it and immersive with that There's whether not will we we're everybody's we're shift Others - the about we the on, know great in real so we're and doesn't about

way way, didn't you coming If you're until it behind. see now,

Steven Zaccone

Great. That's helpful very detail.

margin versus your question strong think a points Just the And the on two OpEx product leverage year? side basis outlook to to gross margin points expansion, the XXX had that very standpoint? this Do about how years expect from much. you've XXX basis of specifically that you continue a strength for Thanks growth we on should expansion.

Gary Friedman

Go Jack take that Jack. I'll let ahead, one.

Jack Preston

been driven years said, on our couple in the like the Well, Yes. of line. you primarily expansion gross margin margin last has

So gross where points 'XX increase, three of quarters nearly for XXX fiscal margin. is the basis

- going on increasing balance to that see of quality you're the And continue. think that so I margin

at what going to the margin, guiding characterize exact would portion specifically of more. gross least not half is not basis it say XXX points come And XXX from points I so if to as to basis while we're

Gary Friedman

on let me Jack's Yes. point. And build

not have it brand tends this me of what clear as deeper this It smarter substantially. probably going manufacturing But in - if the the weaker the us think take is to that business, think we not and here climb evolve the relationships I makes probably probably think quality as pricing. you're people as I naturally. will obvious to the seen get our products. get continue about because continue asked and But it's reposition better mountain, the pricing product to outside that as and we you with develop stronger, our we value And partners. key move up product will with is move equation luxury not we

that ours be And mathematical not throughout it. And a might you you if what is get and you prices think in be equation just would to everybody have - so the that the dots to the luxury if margin can ability as connecting a simple it's essence try you about would market. quote be that. products you're Arnault's capture is simple in in clear leverage hard up the So the truth and not luxury and the equation, on. probably you kind product There's it if to of middle But Bernard to right? only playing get margins. make that that's you This the - of simplicity a supply also a take of model maybe build relatively very chain, like

Operator

ask to one due to time one that we constraints, limit you follow-up. question And and do please yourself

line to question of comes Barclays. Adrienne Yih next from Your

is line open. Your

Adrienne Yih

seems we've more news Gary, before creation, of the no of the a future etc. on you're RH pipeline like not demand sales continuing. desire how of but creation longer customers. London, in momentum about of It Aspen, P&L number building investments is a single percent RHX, a a Wonderful confluence on and making the it's spoken

and RH comes the everything that who So with it. wants lifestyle, right,

So you line of advertising creation how forward? much. about and we should very in that demand think Thank itself going

Gary Friedman

It's a question. good really

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Adrienne Yih

very helpful. that's Gary,

Gary Friedman

in one it the consider I time. I best questions of got a long

Adrienne Yih

growth part is tighter. have welcome. the translate. at It Your Actually quick spread now be seems to one and one. numbers XX% growth, then in Jack, of And or XX% a demand - the between two those lack is What revenue would the that closed. like where we're due we really inventory? - philosophy always poor least were is XX% stores to congestion this

Jack Preston

going for going Yes. strength in the and given the of QX that and the to see continue supply the QX acceleration potential with same were the the chain to exceeded look, And in and in growth dynamics QX constraints. business strength see that Well terms and growth you're revenue to demand the you're reasons demand. same acceleration in

Gary Friedman

happens, - least. going things generally pretty key is - that. so XX% we're at you we there's least hit of give beat years, have at least Then to the operating right? at we But least word want the lot consider again, handedly. last at at then means it's of least many but kind at And how So is give we the at we sure that margins, few at least over more to it's tend this, And at least, at to XX%. we of times to the least, whatever kind Yes. make than - least you but a yes,

Operator

Your of of next question comes America. Curtis from line Bank the Nagle from

is line Your open.

Curtis Nagle

have should for I think enhancer - to years? how points little profit just RH could just bit perhaps Gary, say, specific about are as you of - as and the kind that? brand the ecosystem important meaningful we how bit you guys thinking that do that or more a a out. guess go How a I three five business, Adrienne's, revenue be about must former of over, two as a questions. as And a more important, standalone on piggyback a the think question rolling next contributor perhaps just - that you

Gary Friedman

me to have think I enhancer. brand upon it's going it's would a started you brand - - be told you a five I seven think this, meaningful meaningful ago, enhancer. going work if or we ask And be I it's Well, if I funny would Yes. years to

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turns and the XX passion get XX. high really in about that really financial things the value, that be And And and moderate strategic choose we an the based every with our biggest financial financial high what idea, out have the so that think talk happens what really idea times hand, emotional the so of company the what really the at and have relatively to effort just opposite. lenses. value things company - at opposite because and to get seen high an care strategic and up right? seen look happened We give seen The is value, be change about, or that in decision three about the pretty value of base good you on work is a But strategic you I trying We care financial we're value, is what value emotional to going if strategic high relatively the knocked it, that value, outcome. good. value if I've but believes just that value in the if I've out going the manifest really bring it. idea to organization the the of to super they value if to really financial really that just that going is in idea emotional value value. value got people on high focus to They're turned the ideas really never is moderate itself. learnings in financial you've on high things high right? I've but with Because financial emotional nobody's ideas have die order, the shit nobody life, and down value, it

idea $X you Musk And because was effort. do has run three idea put outcome, cared it's want it. no $XXX million right? companies. an million There's Somebody asked, worth being nobody Elon different to thought extraordinary you be - about great have the up - shortcuts, to the a work, you effort extraordinary to enough wind

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So hours do I very I person times three three he I it's times - goes, And than average so could work three the work times more simple more. math.

really out we what If out you you with do. our in people the hung love organization, find that we

cannot You stop us.

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week's And high a the about in in a work. than a huge it. because value, emotional when day's It this reflects these is value. And outcome that. people, they we're has and so, put it's and ideas passionate is, emotional have it - don't worth They put day

the So models. financial I render feel more hopeful clear today I'm the massively, good they'll at about high-level, way. And have really will will that also the elevate think more these these massively valuable. a by I and brand homes

the fully thing, I and The do want homes single that than how can I all extraordinary the They're ever apartments got that want go to a is in celebrations, for Guesthouse think designed no or and world money got we create like I great somewhere I'm else market, do know, think a in doing to year for to will can an people of what things home no own private. what think of the think be beautiful right like a a fantastic for think we'll which just market. Like rooms, consumer and a I no better apartments, think luxury but how furnished in and nothing, we in like, we lot we've know. homes doesn't you does family it's a a do make, Whether we're and I we can - place. and many need I condominiums, about much easier and very they I mean, them it, home don't got that, idea. they really homes, and we one's really homes few a I into the product because don't math live done. world. the lot It's sell two, It luxury know we it we a money is well apartments live bought no no no but me weddings, thing. that it's anybody make buy things business. like the there's But meeting not interesting if build could things

what soon, and this it. of created rate we're we'll sense but can about and we'll soon room this of extraordinary all unbelievable privacy So it we know yes, for depends luxury we get excited kind know rooms

Curtis Nagle

thoughtful and see some very for thank fall we of in Clearly the person. us can hopefully answer start Yes. and you to come

year for of and the thanks. luck good the So rest

Gary Friedman

right to we Hamptons. to again there come like be we'll in maybe something I greatest start for be we'll think stay of think New it, speed a do to We we're we right? can't see the in like maybe week you We'll a Yes. want room And do York party get a thought taken. right? Because so like like do I then we some - out do of a Hey, York how Wall to the It right? I'm probably people. in it through how launch we We might before ever but will traveling in get tour world coming so hallways, figure out really I seen. do like right? walk a because like little two have right guys it and You it's hotel, what you in think can in a of can't an do sleepovers, XX a here. sleepover try to right do influencers for one's the just the and times a to Where XX to are people do XX will But be taking the while like rooms, of who through invited during the and night Fashion house try be once we're it's think the people And meeting - for and - going can I good it Street open We people open have come right thinking. public around people back New and going going anybody in everybody and can't tour you time get guest get do open who's we and but with XXX Fashion don't investor that know we're September. to this. it's kind people coincide still a sleepover these and to of yes, back the we only we privacy a no the the everybody to could - bring room and up week is Week probably to bunch Week conversation. We party thought, a

not but this today. is us. Sorry, we privacy about sorry, Yes, excuse know

do to And it before like really to and of it so there's going see one be to we'd of kind opens. kind that shot

Operator

the next from of comes Rakhlenko Max Your question from & line Company. Cowen

line Your is open.

Max Rakhlenko

Thanks a the lot incredible guys congrats on quarter. and

points And margin what as of biggest as the do So XXX buckets about opportunities ahead as do opportunity XXX the ahead is? additional XX% to term basis to see beyond of you then the expansion we as EBIT think you look we XXXX? plus, basis in longer XXXX, points what see

Gary Friedman

said, of look, to you, to $XXX We're the million been We - kind said hey, kind dots points out some a XXX basis we've points, We kind Yes. also start of - Well right? this that of XXX we with. for XX basis put of had year. XX. would've at shift

so, to And got XXX XXXX, right, - another points basis is get X,XXX. higher then we we which then points XXX basis you than to XX

get of So, It's you not moves. lot there a pretty can easily.

some really never and this. is never career. I've through I it reason this these revenue been how where like to pointing Recession you. how recessions to of like, I've will depend many go mean, don't like been is XX Great for we're it's I've just some I of - to multiple continue trends through revenues need revenues the here. We seen I've now a really the If kind anything my been - in - get of And home in much I've mean the - lot years, category where interesting. years.

anniversary. And me didn't me I XXth Jack get He happy to Just I it's year the goes, other it like even that. sorry. day that but my to everybody anniversary, God don't know I'm not your wished here, even missed anniversary He Oh, my anniversary. know was reminded

going XX comes interesting America of into I've to of time. here's XX tend XX home during for to I've like yes, smart person home into here when like, gone today, from smart. I've out really that go seeing lot And in this. one or anything the - it's This in suburbs. of different pandemic Williams-Sonoma, second getting insights demand hasn't pessimist at been that company. be we're never think cycles to deep tend with the that you the going the out - into It's Don't the credible it whatever architect the business. And smart quite Gary, some I way, thing this. years, And And one to suburbs talked seen great seen an good because business of of think for the away. a I that the stay. from people analysis the to really - by I've a really it I've years. cities away of And what look, a XX% news been think this thinking years that I pretty is yet. thing you're about. is So, - to not our the us. not is shift is me business to now, just like given of And which is suburbs - for have - move because us markets, there's everyone I be tend in this, right

to customers XX,XXX-square-foot in move and yards It's in that And didn't the lawns - consumer. have from to X,XXX-square-foot move footage And to moving the to a a on Gary, so the pools apartment was a believe about outdoor in And before. I are furniture they X,XXX-square-foot it's said, expansion cities not their city. look, maybe moving have furniture is and now thought big the and And and house or a two so apartment they times expansion because that outdoor in suburbs for so hadn't are And square their suburbs. the forth. that all a point. the map square your they really have the they footage just by suburbs. interesting more And

thought to right think do getting house. like I that to a get contractor. you And a to or buy But they it, if so have have of now remodel out to And done to I I footage expansion six with it me, that contractor anything really that months a consumer. that. the issue didn't the you issue go thing about a other is wait and it you was could huge said just of hadn't the right? like square the

So believe this some are or months longer real there's lag. six they - and

the their for They Anybody to went, people Hamptons started York. how that of Everybody even the very like Hamptons, in was flew our rent think could respond. they like, their going that had that could didn't not back the about the was and said people went this buy of was they so lag, you right, I relocated this believes accelerate there a massive know right? whatever, Hamptons. house I shift, Hamptons, the one. a Like, more different, that pandemic they house place permanently. about And New that because the kind rent, this to longer that That's the because and to could. in I'm one year. Like of Anybody talking to believe at me business the house, the right? person moving bought to

like So, first but sudden a kind a shift of and everybody this And wanted of people to a lot there's how thing. temporal different of be at in. thing. was it live it then coming And are a them a of more all perception could let and of back then permanent

business about think market. markets you our our if this prior about numbers much And long depends you So give before. XX% to thing is, pandemic urban I've be and think bigger longer right? how say suburbs,XX% last? so that well and a the the never XX% home I tale second permanent and move Like, talked you business was it could to all really yourself, It on does I'll moving a some much then how But move.

vertical about is Angeles, think part market, Angeles right. Los right? city I'm is So not when in talking the Beverly urban Angeles, city, called it's Like Los the I Hills not city City. The the Los of

The lot kids. and So big got vertical almost have more a makes got much homes our sense. business That that vertical you've that backyards, we everywhere, Manhattan and markets homes we relatively have volume. like high of some are end have Chicago, right? really or suburban is bigger, But driven

our etc. the home have more to home You've XX%. that XX% it pandemic more the family hit really happened business second And this got of rooms, numbers like more bedrooms, you etc, markets and second of markets. things. from spaces, went explosion then shifted to And all is our And

think big basically shifts business is remember a group addresses. is of two person becomes - this years going XX% XX%. spent don't model you big the shift, city percentage be is for yes, And at about going XX% XX, to is rush and of this when moves back cities down shipped, by and going a the another right? product it. be - for certain if that was was not even and the might less XX% our city I years, XXs Now there's data, of people is whatever they same they XX% also And XX% the to here where the the moved perfectly cities think and in good because XXs talking cities. of our points of the to this But shift and me the within a kind going that not this right? about the people They has are back. mean back business there's being move out of of that think that into that move So cities. demand that a and going, that think that be the of with generate, of lot rushing a might not like stayed temporal. how of old are this They to you're went about last to This this XX where kind kind of consumer right? there's and think and to a sharing the when business people and go And becomes really and to about ReGentrification sort out the to XX much our the moving is just of that the that exponentially long-term there's into every That's really faster But think So in then years, X%. try about if and XX you change then the are I stay place redo XX%, younger to stick. the of shift to suburbs the are a architected - moves me everybody. and and I means shift kind XX, to long-term back. over then the and pandemic suburb the consumers study they're the many all the coming think logic here cities happening, back the XXs it that kind - so here that there's is

but everybody as the believe scramble it's If and accelerating cities things going the all our here home you think up got this side where with I kind and there's out almost point a figure got of is about and it's is - the to like and really and about there second kind moving I worth back the this out this the just come. and backed and days. like People out to try thought a to needed demand is. like Like that everybody's you what's right? pandemic thought. sharing here's moved they and kids Like it's a the during suburbs, happening quick new we another odds What little saying contractors. are But you advantage in really think this it couldn't out to design wanted and Why of all leave are to furniture are rush really cars get movie, I up, up all that pent for weeks, people people, And getting people is and get is are the XX right homes, just furniture right? two I in house happening? think low, of in of this doing of advantage, and need people of they there's right? is And you lot you like the I luckily got moment we're a that one lot now a renting now? know demand need the installs, And finally out I

it Not in because get or stocked and weeks, three think weeks we actually can everything. need I actually quickly. we're one you benefiting product they were So We furniture. stocks now few that two of the places it the

have low that, this the where ever model. get thought model returns our earnings - is of I Wayfair right. model setup for the did like think business We if weakness beauties that's that big what's a backwater capital where one no But work model really about inventory, to like where model a can one call But the of is a model and Paragould, in anybody inherent online. now. you the versus of But times our should a marketplace you high else right? special order they in and we're advantaged this, only is What I it's

And got can look like If what small look you businesses you've lot in weaknesses, they're capitalized Paragould. is the and to mostly on their platform anybody and marketplace. the by shit these They'll be out - on approval at of Wayfair doing we on buy - you us. big like there of take with what stocks - then competing of go not We unbelievable. might amount anybody at who a just a It's and - they're trying that process. way. sell Because a a and

to want You on go Wayfair. sell some

selling So, if you your that on have to that you many vendors of platform. actually get really quickly standards Yes. high who's don't

your on possibly can't and pull the inventory, right? again, and of And Like of money. those people actually, They know if you market. in we some know the all never furnished there are lot of have are world. inventory. people. You can't a don't I live the we lot a But next I'd sustained it things that level this, to actually actually, afford but to could in So house vendors. the off week talk a we who any the thought major if we like it, means you think of needed have I approving new we people factories people look many I have That around low

go I So that's point go are and the the to just operating big beyond XXXX. big, that to what margin want XX% us. opportunities But a opportunity about for

Just a think we of lot thing, scale are right? lot this a margin-enhancing of have Like initiatives. and we strategies that strategies initiatives

home is RH well, an in think initially your investment. I

less I on to galleries. our And it's on And new a that. think have more keep have productive our we fine investment. going think productive. and I model a going great like lot be tuning We return to they're just

is better. business massively going be restaurant Our to

versus waterworks we've got something better, EBITDA XX points that. points I three got like Our we've the the probably XX years ago, XX, business, better, think -

So, and this thing. then scale you just

- this be smart billion Just simple that about so much $X.X we're could bigger. company. a here and we've really can And think platform you built That scale. like,

the up about like a up last leverage results you think What other and Sonoma me outcome. And - they’re but they're scale, already so great as I we had $X.X somebody week And something. doing or - think as job. obviously tremendous And brought to $X.X at even they fantastic billion half scale points have do we yes, like, XX So, billion? size right? of And have right? billion, company. $X we places that it, Williams-Sonoma. now, $X.X is basis margins in, operating billion, in not the just the the today, different we’re So pick eight Like,

a line plus it’s plus. think to sight why that's operating - real have we get You XX% we And of so margin today, a right? leverage,

we - and it margin the sooner - every right? be clear confident straight line So, you wouldn't and see like, given much than we far much we've the tell so couldn't you so And there we so we've to target if numbers. yes and draw couldn't later, faster, got

get always always the So moments just students we constant that kind we're rarely Like, at here. don't - not we And Like, But unsatisfied, We of learn. we move. on super we celebrate. it's for learning keep it's excited. all.

more you what with where never can if you satisfied so keep keep learning, And - see if just seeing more, and then you you're are.

people So some public team. of - new We've We've we new human of weren’t capital here. and made into lot culture, think of leaders idea. We've leadership that And we've our investments like, because - leaders with I got allows that's got kind of this got more. yet around do - the of talk to integrated, our right? can't kind international a the I chain. team XX But senior and we've also lots talent room. supply us sitting about

anyway, rambling answer. So, long

that just that affect I move to through think suburbs square and about and be of to But us some that. to moves the thought was the to stuff think just helpful some about - this and footage the like the growth. helpful. might Sorry how me could That pandemic how

because two be going three playing issue so And times - going up. just to more Yes, an our way orders because consumer. it's kind really is because are selling that. could you growth of footage square furniture to interesting same actually like the the think I way it's out higher, average tickets

Operator

the Your Forbes next Steven of from question comes line from Guggenheim.

line is Your open.

Steven Forbes

control be your expand was What it be Would on at? hoping right? the business the whether that more Gary, you mind experience? and over thought of other you right process of control more I design RH whole in Where hear around maybe on can just getting mentioned business the gain is to manufacturing, are at, looking some ideas whether control. theme, In-Your-Home right, your love you think process, the I it aspects

Gary Friedman

Yes.

So a Steve, question. this is good

about As models that the here. it with you to is like we to think mean, into cash are we going there's lot our I strategically, right, invest cash? clearly, do up - going business. it what of And throw can

back stock. You could your buy

manufacturing, I never so pipeline luxury dividends look I whether at pay out you brand biggest it's create to taking it raw that kind we we many look whether and on more and forth. to and this is it's do model is But the over so we’re - there's is think we to the like one at take what say much got You idea the sometimes give might most advantage us a of procurement whether materials. Do like of like and And like been the of in say, see aspects the raw positions - four sourcing value. these and just control get certain woods I the material in whether you this do quality quantities. it of can of in of made take meaning to to of so realizing is wood, it's furniture made always where mean if our whatever we product like getting it the and is think should right? competitive next five what know. discussing with opportunities years, species of don't fragmentation are we or our so it's one the more as do scale more we’re controlling I There’s mountain. are ones And the biggest products front

control do a you you better It shipping and platform be find, advantage. easy bulky so not is to could doing term. that. know say manufacturing, that all as and I very thoughts between we and to - going platform got and going heavy of be certain we just around furniture I we've materials do competitive that. are efficiencies give our to I manufacturing that - a cheap works to are I than to just world. manufacturers. smaller. this, if also Manufacturing a that. world's you teak one call and we there's And the outdoor It's upholstery here we you out of there's think keep access mountain countries way But, but going and as should more scale breadcrumbs parts getting less up less going furniture they'll the a Very if like and what and high business, about long advantages that there I be about think securing as with to to are to big own have That Right. raw And business in we've get learned kind our it producing mean, today Competitive we've bespoke are countries build in think smaller so North about world. of And challenges think luxury neutralness that. climbing should access Carolina, big It's But and us things about global. lot more you massive labor or couture How scale the there. goods of end. scale the could it's how keep think I workshop a a and here up very - you're more thinking different in tend the more world's outdoor you keep have own technology, and furniture put maybe, go Other not furniture sold others. superefficient good. the If have done should of or

we today. different going think I the XX the than we very platform. made Should America world our furniture Asia. I in look furniture we build Should have think what's in - to And now for world about Should to Europe. you're made is have we is, think have it from way for right furniture in America. in made of Europe the Asia for years

the model. that is know right You

failure. have or now kind I right? of that. tariffs. build it’s of of are of don't negotiate to like there’s XX% And global be. making But and, make like like, and going So And what you all Or all I think any does your - biggest you in about one What one hit billion figure - have pandemic especially all - our this, single chain you situation of us And then you like? of business points that a a to manufacturing of country got centric your supply You’re brand? kind supply built this capabilities. a one's you move no think no where is you a chain is try way you Like, look industry. by crap. And you out parts have this replicate And the you the also, for right? only one you around look learn move, it. that you $XX person got have there. can is happening way should We a oh, is and something mean, tariffs sudden to this in like things the demand got

it's our right raw lot do whiteboard also got there's the got the and of of we’re control now. And we to the separation to invest, accessibility. we've just been things make more that's whether a you do just we sell every chain Like, we how think try a run others. as There's and people versus right, a the are we allocation home whether just have - delivery, spending end even - think structure something right? right? So kind fulfill And peak other in years and market that's and us strategic you have the you're to it's the - strategic So, and give high time leverage those right? on than all do about sell there, a acquisitions material right completely yes, I capabilities have things lower to the crippled, get And the that. we've How be to have just have leverage like to whether at it aspect a thinking procurement, of to that think - lot like, So lot leverages capability - about, done. to do, of - vision? never at selling but we So the we end, capital can't things chance of about the peak capital raw what if and next XX thinking we're it's These we things and throughout things going opportunities. invest leverage so and manufacturing, supply about every we're materials we over selling we

Steven Forbes

sorry, you Gary. then for that. Thank - And

Gary Friedman

those Yes. you’ll the of things soon. you I I was saying some tell just yet with can’t about with hear - but about

Steven Forbes

thinking has you the Aspen. anxiously opportunity whole? bigger given not await originally those idea where or behind thought. something indicate quick quicker maybe the a you them. mindset curious right, a if maybe the The in - for proposals maturation bigger is bigger just the We as follow-up, the out right that on it sounds proposals It just than the But unsolicited about like maybe it residences a residences is

Gary Friedman

rush think kind don't of got I we've to Yes. here.

think beautiful I got for rush and think I of conceptualize hard of right to model. sell we've kind build don't be going us homes them. to to and kind learn it's to the

I this. is do we we this what do. do we're, it? right really, to like think that the decide do How you to - is say, Like really go model? where Where let's one it you is can

we taste, we and RH have want have There to what we're read and procure do land, partner Let's may partner have that, Don’t be with people want had the our I've are we've our inbounds, you to may I have and had right. CEOs brand if the could good have companies really wow, be us Aspen that partner us get major to reaching our that people that build we and today, would know but press want brand some there like and home strategic - also really JV. And so don’t say together know of opportunities works that to see homes to And don't or out secure there at know our at this people release. opportunities we and style. how be so like tests with have speak. creativity, scale it. homes one. like don’t ability to build where acquire a

there’s So, optionality of not - here. lot there’s

I think in great the the years we're of gist here have - thing I XX% only the think I that, the to the business. said for team

We’re XX% their the in average house. to me, business? the house of at the people the the And mean business XX% sometimes price People the new only compared the people high - what XX% of spend about of to on say do the in end. of you on we're furnishings

furnishing got a million you home, about it. spend So million if $XX you've a $X

spend You $XXX,XXX. it, allocation home, right. $X Not $XXX,XXX but on million, just you that's breakdown. it's the furnishing always spend directionally the And a million That's $X math, right. perfect, average generally probably

So I we're proportion home. a said really I've business times home. of the always architecture actually the lot sell designed XX% a We XX% And like home, could of the furnishing crappy like we're of a home bad because bad handicapped in business. the don't in being where the

proportionately render more even it more Like in valuable, way it all the of so, renders goods beautifully, valuable. our And a right. are goods galleries protected, our doesn't that

into Our what and - design. on, great like most go XXX. Zillow, a many click we X%. Redfin, in how you. It’s and go have in Like through It's less like just It's good than tell would - the do in X of Like I number. me again, really architecture such go like a homes homes how most many homes. you small interior less than have like say go whatever

so right? market. new can an idea It’s the create like just not so the You way. could like like you not furnished high create And just it's furnished create market to it’s in well-designed a love like that’s homes, big RH market market, well-designed, - they’re a I - sitting the - want we new at logic, new to the home because architecture, then And when of that, this everything, people incredibly. the some what that the So thinking is, just landscape house, look that whenever the really whole an the numbers entirely like, end about the can pool, for thing and our sell that is home. architecture,

to time and save high less my people value. just value. right? for money like, people the at just what sell that at a less time you it's move you time time. in, money sell time. so Like, this like, time. go, money, People you with And will have want You we wealth on of you There's they're can And, And more planet right? People again, end? can with have have - now age. pay accumulated more They've than lot more

You're XX.

you and have left are really to pay said, going going people sell? You sell how much for And look you will what We're think value, you right? to time time that. that's - and buy value, time about if think I you to

Operator

Your comes from Markets. next of Anthony Capital from Chukumba question the line Loop

Your line is open.

Anthony Chukumba

going And, your on want I'd as whose points, the question. I my spending you taking for time say like what Thank today left stock to you rating buy had either. to Tweet thinking just a later analyst sell-side you're much so a Gary, about don't XXX

wanted get of kind sense. So to that I just

Gary Friedman

That’s good. Anthony. Thanks,

Anthony Chukumba

No worries.

wanted Thank and Probably in But the of what for So I terms Jack these see bit housekeeping so expectations you. just more of gross color get more specifically, the margin just CapEx questions. drivers specifically to just then we Gary. than are a drivers, kind little could your are XXXX. leverage SG&A if

Gary Friedman

Yes, Anthony.

relates product talked it very think margin. as gross results strong on as as about I to So, margin the historically product side we've far

increase had is luxury we talked about QX. mountain, in is than margin product It's outlet our at the margin a what And level. QX the business that about business, about the promotional filings. and cycling three rug things, in decline quality in the of in the in talked talked rug as of of among we higher Obviously, no operating business so it’s MD&A the a about we pickup things number different a quarters other our lower which product,

it. year, range $XXX of you'll where section is putting is flow. then it for But it's we that's you're that this we cash see to million. need next getting of as - you adjusted week, portion $XXX the of So seeing because filed a up as amount the is That than - with we're predominant XX-K a ends And up concerned, of the ended CapEx, year look million. sort up the at far $XXX is million the when ended to it higher at op CapEx this in little in year

I'll So, say sort happening on hills of a then was the of are land about there's hat of will in that opening is that period. a a year what those one finishing elevation just development the lease. then And future CapEx of we're monetize stores number this

there's year a just internationally. a to of starting So just that higher CapEx are driving money this number spend including factors

Operator

The next from of Lasser the comes question UBS. from line Michael

open. is line Your

Michael Lasser

profitability Thanks Gary, been for in the sharp a home players in taking increase lot my the of industry. of a the question. there’s many furnishings

So will the do sector half some the to the structurally year second about two second form more higher half just where unique think how does of and think facing margin? how itches you comparisons? when now be And that two varying half in and much talk factors about the you the our difficult that you profitability earning is or

Gary Friedman

question. Good Yes. Sure.

to right? of you X% businesses revenue hit growth answer point the expansion margin XX.X% point I I letter that's to experienced kind on right? So what's made X% of growth. in why I we the that look got repeated operating points question XXX we XXXX, that revenue the on in and margin really the basis growth, think at And that the had revenue

do do right? So growth tailwinds, to that's to nothing home that. right? that, with the X% that's got revenue because can got the furnishings pandemic. you book away That's nothing it, with first not part kind So That's of going with of nothing do to

have two the was that's hit, it's is thought So it the halves. the about did into And we turned we we it about I and we'd Our make all before what the - would going pandemic what mean, pandemic thought pandemic, okay? XX% to model we structural were by way what then with he just and hit. earn

optimize was a did We here did our there? but Now we revenue bit and little have plan to slightly higher. growth

but about right came out what there. we So -

what you've sticks? of got of kind much had How of say that there grown - then if So And got they business, - structure how we where much out here faster what to figure people to XXXX of historically, in kind to the than less one get important promotional you right? So have of that there's really going leverage didn't promotional. a the structure the everybody's is price sticks? and land the

the of back they the right. XXX they happened is shift. have the a right? which right? That's point, at is increased now businesses can is - X we're that out revenues. our amount our basis much people have revenue ours increased revenues - on their and you be not of to of the there switch. When they our cycles So up points, sticks? able have pulled that because this we're we're How be businesses discontinuing - they've things because non-promotional should, promotional revenues they maybe demand So a we We only margins they product we have points we have have because are have used back promotions don't that's open assortment but what to industry, if XXX demand. The tied to not, pull as in promotions stance? I'm promotions, don't and there's to some promotional maintain margin - thing And or to a picked basis on really study is Because there's business, me world promotional didn't industry to sure an of

in saw if our We - nothing we promotional we have be, not not would we of in planned membership been - it’s our have that kind is our year - But margin if would We view this again, we There's product you. XXX and XX% we less XXXX basis pointed margin, model, time revenues pandemic-assisted. one hit structural. to are at that the maybe you have So would pandemic-assisted. of our $XXX revenues million nothing to you and we model. of would operating have have have than there's in that a were said, about about if points that

It's our Wayfair growth at then I'm So if you're so piece, if other other margin all Wayfair. picking particularly advertising, one on real say saw right? margin temporal point you and the growth. to So if I'd looking, what is necessarily product not at I'd that's looking you the the is somebody or not at you're And said. like

company? snow revenue of what's very if now, closed. in and so most America And in I my to it's I right? The honestly, built S-X, Wayfair look to is it's thought thought the - their when margin going yes, doesn't think and the think the I generate about like it. but structural was think to their respect world a I've Wayfair, real lot you and appreciate I you’re this restaurant filing the a like And grown of in if with with where thought they’re first studied Wayfair every is like when like someone I There thing quickly. question Wayfair mind I not right like ability - make real platform blind

kitchen, Because My like brand kitchen cooked eat on and we kids college she's home the things went stuff, got you're household girls to because are a run be out, I like we she out anybody every all night the She's of and partner kinds like now my go like a toasters out even got stuff. night, we've I mean, every way So on in now. new cooking like because my and out new stuff, that and pans and right? I not kitchen eating pots never and whole selling so if going people did raid like other eat are you buy before. we’ve like

might categories at first happened, everything of said businesses, be XX go, they of on categories I whether Wayfair everybody’s may these going is when not the are also do. to promotional those now, and it where XX not, not. going sale toasters on right? things says very, it's that pages buy whether these sold pages I be cookware to of she the think aspects I like has so was kind those think of or some I or are I sale was of the website, very buy XX different, around, of joked and going if pandemic it's toasters, pages I sustainable was right? XX look on is was the analyzing Like I or some more it out. And it and and And She It

sit that. But So run businesses you try the think I have so on about like - the to a industry and I when think industry, where in about I we understand a lot no gift, we revenue what differences a was was revenue the right? of that gift. ship didn't demand have of We it. a gift, that Like a of any was

then is oh, other me. XXX basis the and and excuse growth X% one points, have we advertising, So the

source business right? cycle, leverage catalog As cycle year. missed we We got like any about all last some like The book - advertising - right? got you think business, advertising other a someone Wayfair every or leverage

$XX million, $XX right, that, So or like something I don't million. that, call know,

Jack Preston

Yes.

Gary Friedman

in million total the was… on we advertising year in the still that $XX is XX-K see The less

Jack Preston

million. $XX Yes.

Gary Friedman

Yes, XX - yes.

million So less. $XX

a what So you’ve point About is little than a less - half? a that? got - and

Jack Preston

Right.

Gary Friedman

big promotions, we need But do a Our in that’s then the to need mailing Like, books? on big back less the can our is I'd to we twice - go say And something based restaurants this? what margin that, you I’m those model. back. I’m - to the to occupancy sure traffic. of So Can if investments But the might like, think and mail going promotional sure. a guys galleries not that do lift like into question. more we got then, come revenue, And and and yet. there? structure got and that’s things advertising it. they're say, some - a sustain about. not of you back that put You’ve a course, Do Gary. piece hey, people driving year? we leverage advertising And that get structure good that book

pandemic nobody like - can kind was growth So We I how we’re be going in wants are that's are industry, going orders hey, - business - be of how as happy. globally, why in all the really because sustainable have to X% believe I XX%, to Europe point I'm our XX% it because our countries. we and look today? if everybody us, the operating and - when we start Without is margin had don't you little, is. margin today, boost and growing - much a including got. across And up like growing like, what to maybe I right? - we That's we know structure to of a snow-blind online right, open I XXXX? made roughly have pandemic, to If ship Europe. to internationally. able only of going take I And to going start we're revenue then I do open So We're here revenues

of the something. volume, Montreal we're should So the the Sacramento we're it's a like And Vancouver, us, in in States we're opening Europe opening market mean, in in or for size in closest - United or like I not opening a new right. store a and be size huge country,

I people things to analysts, I America So big. of with us to coming a it’d like the that brand they’re not, saw negative the know. don’t know they or be if that’s write phone all like that's some Like tend time. Like kind about - some on

their going me not knew to like say, oh, like - don't no average restaurant. could oh, give - Like that's talk no some their study. notes the they - who like, York they're awareness. quarters, we their But, anyway, But fourth So make anything down have said of business people awareness are. I their they Like, at a - break. they New we - and they’ll but yes, they after like like don't mean, look one know market - in us. have is Like, they're market

many X%. the half Aveza, is that is go same customer labels. each to top while and Our are of DeSanto in who Aspen. X%. things. on They us. of our Go and know on is same have Paris, vacation top - into watches go business the top talk awareness. In London, They to Rolex into core cases they X% St. go the all dressed go brand that other Do the and restaurants. all all they They all know other the They Bay, Barts, all the

and about So, to awareness why brand want know like you we're confident.

about the brands, the know buy because they that Okay, us. luxury great other people

of only or category in sell they do the Everybody high-end player. is They else We’re brand a self-sofas kind the world. just our lighting.

kind. only one We’re our the of

the a something you’re opportunity maybe and we London, so like whole for whole then - Paris opening long-term as in that and coming a and to gallery gallery growth open that’s to like about like think when market when Internet and well-known don't like compare you York market like segment relatively that And us New about in countries at in to think America it start the stores. And go is go and you opening opening being L.A. right? you targeting and the that

think markets. it about as don't You

to and in myself. and they stepped could New else's New could be we America, been generate think across shipping I fly the I've States years. L.A. the when United the run You there any better buy from amazing I've L.A. to company be house And had brand the wanting ship than York to have it's my here Like anybody think on a think about and it stuff to international. and going knew who they them had what I in all a model York website container find, pond. Like a go - a and sudden store for shop if stores and I

Michael Lasser

what demand will guess I follow-up is. My we figure is sustainable sustainable trying helpful. what we're out to is when That's all demand and question know

the year I or this core February it demand like calendar clock would and -- that the and demand replay assume you for last can So year it’s was XX%

Gary Friedman

up up February year was last X%, last X%. year X%, was yes, February

Michael Lasser

And how did us some… March in full to give

Gary Friedman

store March, March, - March, yes. the is

I before it the last told world was we year everybody was X%, fell up February So apart. think X%,

was last X% up where be. is in for X% other weeks business should of the it we're like February so were of And first And week right XX% two week. think the one up on and X% it kind of and In down core we March, year. we thought I up top the X%

So weeks, X% against we So of if the okay? the up points about two XX% you of flat on you'd to if first up flat you'd the March, way add X were you've it and the two weeks in to XX%, XX%. neutralized think kind or XX%, February, up so we're said, X% those be okay,

months. And so two of stabilize the kind to if want you

Michael Lasser

Very helpful.

Gary Friedman

doesn't outlets. were it our remember, outlet up restaurants the and they have closed it closed against all so and when closed, galleries business, a website. And And closed

to business realized for outlet business pandemic longer hit the got time and zero and could the for zero So our to a stuff. Obviously contract RH took we're period everything restaurants on time, orders core we core zero went on we business, the outlet, then be zero. the the and went business to going to still and that our really a went into long and hotels take went we that into and business, people we restaurant, right, closed contract a in and in the our business,

year-over-year, to comeback like again business betting pickup big buying year-over-year the now think a big now in for they're year-over-year like spend cycle, are hospitality outdoor restaurant things our right? furniture, So by - starting is new contract big pickup in pickups that. big reinvesting, and a So business about hotels business outlet the our because in

Jack Preston

Jack. Michael. It’s

Michael Lasser

I think it'll…

Jack Preston

Go ahead.

Michael Lasser

have you think a the you'll it'll then and reopened, you’ll business be reasonable economy for will of run get comparisons Do June May, of kind is? rate be the some what sense

Gary Friedman

I Michael. XX, and you're Jack, think Yes, than up August, business. take started of might in like I good XX the in it going or comping think pretty something season, core May the in that, peaked longer to that We June. kind we - We September, fall

Jack Preston

in XX August.

Gary Friedman

XX in August.

Jack Preston

the were September in XX core number.

Gary Friedman

yes. Okay,

we in of of clearance had and QX So year. a of in had moving QX last and we the that there in we period more were bit kind merchandise a kind some slowdown then of peaked that through we

probably We and things. some of had So more rates our other floors stuff. down our bit a year-over-year. growth We that brought were that transitioning just

we this the of lift some But weeks of two gave accelerated real January, were little that we see So I last started that January, to the moving XXs. last extra that the XXs had weeks the right? that's question us business. the up in We is The two kind started about kind the through we think the into into percentage that lift, yes, Michael instance, revenue. things of for a acceleration unexplainable, we February And trend think this into it and XXs look of weeks it And of more, is and XXs. think we a then of the at right? how it. about March first dollar went But two then an

I up is swing but that’s XX. sense are the and XX, dollar like, business And collapse, the that other people looking home to dollar the there’s saying points don’t I trend at business might it’s in yes, going could XX that got to economic right? business So dollar happens, in of like the a think second and of think trend maybe we a trend the probably the business nothing the my unless the of trend dollar the real here if move soften half

So, slowdown. know XX, of a people everybody got that the comp but in don't not I know. some thing building it's it's This we us that don’t none the is we’re dollar right? could roll yours true. the like could one It's The year for year it mean Like stay of someone's through out, for trend to trend. Like of I think for that, the a going much kind structure going carry I when could the dollar you'll company unbelievable, year's the just based I inside out right? trend if think right I think longer now and be that sit this and going trend. on were last many us headline so companies our the than good dollar we XXXX behind. is cost building sector people - longer, are other up slowdown, could stronger running think go too that not But means And we March, are don't structure for like in ever chase cost and for have be or we thing home could we're think to if most there's stronger So sales, positive the really to XXXX, I chase cost trend is dollar always be and the get this much it some be someone part, be higher that that right? February, might and like here the sales through costs

to get during So of kind more time. this period everybody's leverage going

intelligently kind store don’t between shouldn’t the or We online pandemic the and kind without need think to about just for understanding trying ambivalent I We be pandemic, just and long so the So or is us, about ambivalent of, this we're but about it of can we trying term future. our pandemic invest through it’s - really and whatnot. figure like, out we're it the or long with pass to business We term invest pandemic all fundamental we’re care figure the a channels. and for all out. pandemic. mean, look care to where to

Michael Lasser

you. That’s very Thank helpful.

Jack Preston

you the you add Michael, to in In profitability not just mailed think it’s books in if HX not And, fall. clarify. here. spring did just one to Jack. want I we giving I asked XXXX, but about when about But advertising, specific direction want just the point

going books to the mailed Obviously, mail book. the be in happen versus fall. of main outdoor most going is happened opposite HX. We'll to the - books But in this the spend clearly HX year. So are the

a of flop going are flip have you to So advertising…

Gary Friedman

right. shift of should so of for should kind out their Yes. It’s probably we get probably models big - advertising people that yes. We map that can a they

Jack Preston

Yes.

Gary Friedman

Yes.

Operator

Capital Your of line Thomas next Markets. comes from from KeyBanc Brad the question

open. is line Your

Brad Thomas

little could hoping RH. And to And do was redesign transactional importance RH world you be the that? Gary, of just this on about RH. more about Web website? more How of presence think going and color the as a making is world any separate? site of the the better of us a a you this I tell your Is

Gary Friedman

Yes. a the just and business. website of Yes. the platform really entire - of of digital kind rebuild it's It's

And into beyond it of to thinking think you as scratch it's it about a So spaces. about that places, brand. kind the it's our all website. portal world the about our business new RH, - our it of our starting a just right, think and of through a aspects can products, across we take from just these But dimensions our of Right. services,

all know Right. and categories. it's products the And you so

we We have Contemporary Modern, RH RH RH have Interiors, come in.

have on We RH Baby trial.

Outdoor. have We RH RH teen. We've got

have We Colors Couture RH Beach RH RH coming Rugs, coming Ski is RH House, in. House, is RH Bespoke coming. in. RH

architect a So our and screen? do our that How Right. how RH, about our product and we do look How when think just you residences. have we places. world out our of get navigate we think the are of that? guest all do flat through then our someone And restaurants about for that? houses, you really you galleries, credit on Right. It's

all are those our places. so And

at areas, our New gallery do you we residences dimensional were the that have the New galleries or Walk three how online like do connect in maybe someone How the York So now get way? be can of in restaurants? reservation able guest to you galleries, about galleries the How walk navigate either through a our do thinking a in through those like of and a York about house? the one you online development? How different right shop do aspects selling through you what how gallery store. like the to and and you're the explore and are there in gallery look learn

to at kind multiple of interaction. right on and Lastly experience be to we're technology looking able create levels the

places. our So that's our products, that’s

about think we as today, design have them services, services. we Our interior

can our service RHX, all soon and they’ll services And which you luxury installation going mountain and view and say, ecosystem buy spending of the about in is spaces we RHX our you'll services business can kind we are we services which think kinds in business, business, a be planes kind services can also kind have that. luxury be brand. of And do business. able charter of into of with be long-term platform, driven sort of think of business unique RHX things as amplify right, website as a the and We that, contract the RHX, then architecture services on our landscape a the silly get homes a and then go rich, of you you get brand no go very rich of the and a to part to so yacht, the really deal really, build of of you kind you lot them think and kind spaces the up our from we pyramid. top today and RH you the And right? corporate because but world. then one’s of architecture designed And - even we and a seen you luxury about a you but of of we're buy homes be to in - planes jet and vision they're yacht, that and really are RHX. hierarchy trying of buying with of And again, it's I kind buy the those then kind that we to

we’ve And because that have challenge beautiful how we Gulfstream, you're do And RHX done - the would been they to them RHX things. and tell which ever is think through to help ask never you most so them going things that built. see we’re done and RHX you they've plane if

you going to the you're I'm that and send to great, design for you for Marcus. that's X:XX in clients. you everybody when galley I'm okay, And the with custom In sell galley custom said, recap. a - XX-hour that send feeds meeting Gulfstream to fact that and - had till other morning to their my they Gary, a designed, the when we're going after upcharge engineers long going galley that to want have a a there doing [indiscernible] I and we said, that

know beautiful but know - plane. to a design like we We lot about right now. a design plane how So

ready talked here into see primetime and for month and something this to be World and who about beautiful of really relates of redesigned as spaces. yacht designing things a it have of basically to RHX that. upgrade The and just other and in world the experience layers I Massive and building then RH spaces massive evolve will or to leapfrog of you’ll a really that it the of the for are of it’ll that design product, content. that on in right? We in things interested are are about about see consumer other and mean, you documentaries kind kind people just just Lots a rich buying

Brad Thomas

on That's we and Jack but Gary. for many give any great. impacting have as prices in model just a prices think think models that how you the power, the that have does all might sense about we of demonstrated pricing we be here? Thank you seeing. freight you've us material impact about thinking rising industry question raw that model? the how should you, any that Could about in Obviously are And

Gary Friedman

ours - as factors point sales, sales cloud to we’re a with lot look of to is Crate is & like jump going our to sofa $X,XXX percent a and a much product So be and yes, you going freight sofa product places designed fundamental a those as Again, Dalmar $XX,XXX much to than in on if percentage more the Will point a to we same I'd of like So again, are have right? Barrel a lot $XX,XXX the to with the you’re or smaller it's to or to using for of a West to Pottery $XX,XXX. degree to at the got if are as goods that, the or smaller goods be will start $XX,XXX $XX,XXX or it's sofa be freight So about CBX that to expensive, lot you right? $XX,XXX wood it amount Sure. just start lower a higher a me that price a our a sell percent on better second. yes, a than less, quality like or Barn a you The structure impacted? - - be we but percentage. just right? that Let something

because that's at talking why in and the is this hear about our you it us impact it’s much don't as less model. point So

Operator

from Your JPMorgan. the next Zakaria line comes of question from Tami

Your line is open.

Tami Zakaria

Thank you results. quick so questions two much team for and questions. my very the I strong taking the do congrats to have on

is coming the you on that's or details incremental what helpful. incremental Any the some The to distribution be expense terms be around to rent first live could run that details center operating would incremental would it? share build the of CapEx one it in or on

Gary Friedman

our it’s model. DCs and our Yes, projection. all models. in our like disclosing in know that it's rents all all we're in in all of if but our individual stuff don't It’s plan. I It’s

So…

Jack Preston

CapEx XXX… the it And the to modest XXX as to is relates

Gary Friedman

Yes, nothing… Yes.

Jack Preston

It’s step there's you. DC, gave …I a a little non-event. up here. you have anytime a Like

cost. here step up absorbing a in we're but we’re So that

a leverage - And two, right, of bit in so the drag the property, versus on it's probably start on year by we'll we'll But first the it’s occupancy. three, getting a step-up. year year

Gary Friedman

in - projections. so our our and in But model it’s it’s

Tami Zakaria

a operating did points revenue to the go second comment to expansion of to growth. great you in I X% question. segue XXXX of XXX want my saw that’s margin that back So on basis

XXX top-line XXX on this of you’re XX%. growth points XX% for So points to to basis year basis to guiding

So year be basis I years us going just sales think year are why being would through? to expansion margin points to on XX% natural - or should XX help of points be that results and would - XXX there to basis operating that the being next and to conservative, should go are sort XXX to growth? So only pressing XXX understand sales come away XX% is there any this for there all conservative from leverage of are should be you because onetime the expenses

Gary Friedman

a we And at I we here can history and draw our we look years expectations, right? the right? yourself, how conservative be we're relatively conclusion, nobody conservative, the But generally you made comments outperformed feel in there Nobody are we are I big generally just ask earlier, Like, of I aggressive of our that so. on growth kind we the to And the I that. So the The over pessimistic I mean about recession, - not, question at year. XX% that here we've to of projections, with things there here XXX Yes. would unless Like, look especially know will minimum But knows and will will and now. promise than to - history generally a we there guide. - economic points else said, we basis at be like optimistic XXX you knows deliver, basis XX% would beginning the last wouldn't say more something we points X a give number don't under is right that. ones happen? tell tend change? is obviously, if of

Tami Zakaria

super Got helpful. it. That's

So, are, sort unnatural conservative nothing of onetime this there's it's impacting prudently really just or - something being conservative.

Gary Friedman

Yes, essentially. way. that it frame can You

Tami Zakaria

so Thank Great. it. you Got much.

Gary Friedman

was say wouldn't that wrong. I

Operator

from Group. of Telsey the next from Fernández comes line Advisory Your question Cristina

open. is line Your

Cristina Fernández

across some hopefully which to out questions you've I need roll quicker you Your guess, to couple testing still California. think RH that now Home U.S.? of to improve a a what it do been be and able time commented you the in for In one. times, The only you Two

Gary Friedman

Yes.

In we've think Home Fernando, Your only testing a RH been long, year? how I for

Jack Preston

months. Three

Gary Friedman

Three months.

months. Yes. tests, full now So three

year, of I Yes. another yes, - don't level talked kind really in detailed is anything talked then furniture and of, been months. to testing about a like think talking and we Your really whole So, We've way anything for Teslas this or three never Home you we've RH about In the ambassadors a it other? for

Jack Preston

no. No,

Gary Friedman

Yes. no. they into doing the It’s highly interior soon putting home have the a investment person process high car, experience, like It’s obviously in But customer and in there's an completely car. is our we if furniture another it they have and person I problem, testing him kind you're things team, trained we'll don't a But road of it. to might all yet, going delivery in kinds order. the the for of And ambassador But with and so managing RH it sending have right, designer furniture truck whole gray paid a that Tesla furniture solve a different this No, the upselling the Tesla. a got relatively ambassador different home, whole an a it’s it's experience. Yes. right. home, the we're so you’re that right. I is immediately, - different customer goes we're the person It's is have with down, the another on stress a That quality Teslas in a home. gray person separate ambassador thought sending the almost

Cristina Fernández

was the Okay. first of feel give today's for Bespoke, what Thanks. us some And of then about those. the businesses, Can sort some RH you've RH those other I like vision you Couture and question the talked new your businesses time detail are?

Gary Friedman

It's the words and I'm all use imagination. would take themselves I just giving you. your

Operator

of question Baird. the line comes from next Peter Your Benedict from

open. Your line is

Peter Benedict

asked wanted been and questions a to Happy wish have Gary my answered. of just Anniversary. I most Listen

Gary Friedman

Peter. Thanks,

Peter Benedict

quickly. different guys few don't question? take anything versus - Cal, not one need this I Well, doing yet in if you very Gary, only this is me so there you my what ago. closed you're now. bigger I getting much. just have that's previously it know Is new with Southern now Thanks just a just know DC The that DC in may so is years just are let

Gary Friedman

Yes. It’s really an kind of investment.

as business. about outdoor order investment it think the and I special into furniture an

better. those kind building way two experience, design and businesses, businesses, is and of So two for two more better run services to it’s leverage architected those a businesses, business grow to those business in customer them those focused get and for

different coming for California full example But with Asia, of of out had things China out Indonesia like of DC - that. California, most each furniture our have furniture just yes. of of we a outdoor and in out and - things coming in redundant Northern Southern DCs kind before and is teak all Vietnam, Southern is So like coming of parts metal that

Oakland of and in coming major up ship Southern going every that's Oakland. stopping in the container is first So to California - then port

we're if lot market think our furniture businesses, process pick to then very you the logical. thought of just Southern going then largest outdoor southern are immediately and consumer there handle very, is and So the a way right to seven far. up days speed strongest crosstalk then by this you outdoor And about is the furniture the and our business states California

in furniture ability and an business the the is and we the this the are biggest - our can outdoor biggest - businesses end, internal to furniture by mean the competitors businesses our this are I southern lines of the not right? having high against faster we’re hit they’re are entire at delivers think it. these some of - That’s outdoor their conversation think some than I bigger can trucking I think do right? get states just real far here. today businesses goods our I markets and - but our So Like, business. about like, everybody really is the faster businesses think our reason the do big, outdoor

like you like, or about, brand I quality like national something a that. higher think about, might think -

this. like a That’s starting about great it’s So scale have business, real right? thing to the

how And a way, investing businesses. investment. do business run two can it’s you things then businesses ran order for really like And like different focus in talking been time, you allow it customer and segment efficient - much internally only that? very business, you and if that business, special of We've completely You that about unique this model. on kind we business. the delivery, more an a think different faster optimize service, at about a way those a into long got to a So better businesses it's

Operator

question of Wells Zach next the Fargo. comes from Fadem from line Your

open. is line Your

Zach Fadem

Public. today Quick thing with mentioned haven't you the curation one. art initiative General One is

your about little see as bit, Just for this a art curious opportunity a business. talk you and if you how potential can fine

Gary Friedman

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Operator

some And call closing at I time. this over turn remarks. there are the back management further questions to will no for

Gary Friedman

products the of of Great. is products and keep We it’s kind brand. a risk people not to of behalf made and making and you, world our chain our difficult all all to Thank for are company everybody you the the business This making our couldn't a your just thank of and imagined in of excited all work and the in of none and and that to going lot that today and work and lot delivery year in sacrifices only more thank of future opportunity. your like we lot and time for we our this supply the the interest very have customers, thankful attention our company everything and a about just been year want us work. know of could on be of thank sure crazy the we about a world people around just and much

you talking forward you, the we everyone, thank So to first end the at and look to of quarter.

Operator

Ladies this and today's conference gentlemen, call. Thank for you concludes participating.

disconnect. now may You

RH (RH) 25 Mar 212020 Q4 Earnings call transcript