Headwinds, investment costs impact RH in Q4 and full year
The company chairman and CEO called fiscal 2023 "a year of adversity, innovation, and investment."
CORTE MADERA, Calif. — Furniture retailer RH posted a fourth quarter and full year of strong figures, although it fell short of recent heights. Leaders chalked those differences up to a still-strained housing market plus the costs associated with the brand’s latest reimagining.
“Fiscal 2023 was a year of adversity, innovation, and investment for team RH as we faced the most challenging housing market in three decades while investing in the most compelling product transformation and platform expansion in our history,” Gary Friedman, RH’s chairman and CEO, wrote in an executive statement accompanying the earnings report. “We have positioned the RH brand to gain significant market share in 2024 and beyond while building the foundation for our global expansion across the United Kingdom, Europe, Australia and the Middle East over the next several years.”
In the three months ended Feb. 3, RH posted net revenues of $738.3 million, down 4.43% compared with $772.5 million in the same three-month period of 2022. Net income totaled $11.38 million, or 57 cents per diluted share, which was off the mark set by Q4 2022’s $106.9 million, or $4.21 per diluted share, by 89.35%.
For the full fiscal year 2023, the company’s net revenues totaled $3.029 billion, a 15.63% dip against $3.590 billion in FY2022. Full-year income was $127.56 million, or $5.91 per diluted share, down 75.87% vs. $528.64 million, or $19.90 per diluted share.
“While aggressively investing during a downturn has put pressure on short-term results, it also positions us to capitalize on the long-term opportunities that present themselves during times of disruption and dislocation,” Friedman said.
For 2024, RH plans to open five North American Design Galleries, including its Cleveland showroom, which recently opened. Others will be in Palo Alto, Calif.; Raleigh, N.C.; Newport Beach, Calif; and Montecito, Calif., in addition to smaller RH Interior Design Studios, including one in Palm Desert, Calif. The company plans summer openings for two international Galleries in Brussels and Madrid.
Longer-term, the company will introduce RH Couture, RH Bespoke, RH Color, RH Antiques & Artifacts and RH Atelier over the next decade. It plans Design Galleries in every major market, which Friedman anticipates will generate revenues of $5 billion to $6 billion in North America and $20 billion to $25 billion globally. Its RH Residences plan will bring it into the North American housing market.
For fiscal 2024, RH is forecasting demand growth of 12% to 14% and revenue growth of 8% to 10% on a 52 versus 52- week basis. The company anticipates adjusted operating margin in the range of 13% to 14% and adjusted EBITDA margin in the range of 18% to 19%.
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