RH (NYSE:RH) Q4 2022 Earnings Call Transcript

Gary Friedman: Yes. I think if you think about it in relation to pace and how fast we go, and how many markets we are going to open this time and then I think about it just based on where revenues are, right. Because the spend is going to be the spend, right. So, we happen to be making the spend when our revenues are kind of what I believe top revenue trends and things like that. So, as a percent to that revenue, it’s 150 basis points, percent of another number, it’s 75 basis points. So, you can kind of assume and do that math, that spend isn’t going to be different, right. Based on the basis points we gave you, you can back into what the dollars are. And then you can say, okay, their business and flex, whether it’s the second half of this year, or next year when the housing market changes, and I mean, will inflect to some degree, no matter what the housing market is there.

What we are doing from a product point of view and redesign of our source books and the change out, the re-presentation of our galleries and so on and so forth that’s not going to be zero, okay. Like unless it is the only that’s zero is if the economy gets really bad, right. If the whole banking crisis falls apart, and we have another kind of meltdown that takes housing farther down, right. But at some point here, we are going to cycle the bottom, and things are going to change. And so €“ but we have an inflection point, that’s going to be some number. You can just take the investment and probably take a look at like what are they spending directionally based on all the things are working on, and number galleries are opening. And then you will be able to extrapolate that and we will give you some kind of guidance long-term.

But like you are looking at it, I would say, kind of through that, maybe the worst lens, things don’t get worse, in the economy. Maybe the worst lines are going to look through it. Other times, it’s going to look like a much smaller number.

Operator: Brad Thomas with KeyBanc, your line is open.

Brad Thomas: Hi. Thanks so much. Just a couple of housekeeping questions for me. Just one more on the first quarter guidance. Gary, you mentioned that trends had decelerated I think about 8 points, since some of the banking news was coming out? Is the guidance reflective of kind of the run rate of trends, or is this how things are playing out quarter-to-date, just trying to get a better sense of where demand is tracking, and how you all factoring that into guidance?

Gary Friedman: Yes. Again, just to be clear, I said it kind of changed about 8 points and then it’s kind of come back, right. So, right now, I think that there was a shock, and there was a pullback. Things look to be stabilized, right. In the banking world right now, at least for now, for at least what we know. A little odd, it’s has never seen the government kind of direct the top banks to lend money to the other banks for 120 days. It’s a little weird. What’s the implications of that, what does that really look like, is that a permanent loan, is the other banks going to be able to survive without that loan for how long, will anybody put their money back in those other banks that the banks that lend them $30 billion, so they are going to own those banks.