Q2 2024 RH Earnings Call Transcript
Key Points
- RH (RH) reported a 7% increase in demand for the second quarter, with positive momentum continuing each month.
- The company achieved revenues of $830 million, up 3.6% year-over-year, with an adjusted operating margin of 11.7% and an adjusted EBITDA margin of 17.2%.
- RH (RH) is gaining significant market share in North America and is laying the foundation for long-term global expansion, particularly in Australia and the Middle East.
- The company is making substantial investments in product transformation and platform expansion, which are expected to drive future growth.
- RH (RH) plans to open several new design galleries, including a 90,000-square-foot location in Newport Beach, California, and a 50,000-square-foot gallery in Raleigh, North Carolina, which are expected to be major brand-defining physical locations.
- The inflection in demand developed a couple of quarters later than expected, impacting short-term results.
- The company is facing pressure on short-term results due to aggressive investments during a downturn.
- RH (RH) is forecasting an increased backlog of approximately $80 million to $100 million, which will negatively impact adjusted operating and EBITDA margins by approximately 100 basis points for the year.
- Investments and start-up costs to support international expansion are estimated to be a 230-basis-point drag for 2024.
- The company is operating in a challenging housing market, which is expected to remain difficult until interest rates ease and the housing market begins to rebound.
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Good day, everyone, and welcome to today's RH second-quarter 2024 earnings call. (Operator Instructions) Today's call will be recorded and I will be standing by should you need any assistance. It's now my pleasure to turn the conference over to Allison Malkin of ICR. Please go ahead.
Thank you. Good afternoon, everyone. Thank you for joining us for our second quarter fiscal 2024 earnings conference call. Joining me today are Gary Friedman, Chairman and Chief Executive Officer; and Jack Preston, Chief Financial Officer.
Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward looking within the meaning of the federal securities law, including statements about the outlook of our business and other matters referenced in our press release
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