RH (NYSE:RH) Q4 2022 Earnings Call Transcript

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But we have made during those half times. We have a history of making a few very important moves that have positioned the company that really shouldn’t be here today, right. It was really a bankrupt company enthusing to see one of the leading companies in the world is what we do. So that’s how we approach things. It may be different than everybody else. We are not pushing the panic button of promotions. I wouldn’t call it panic button of promotions. It’s really trying to hang on to the illusion of where business was during the pandemic, right. Like the pandemic has come and it’s gone. Some of the after effects are still lingering. We are acting like it’s never happened. And so whatever the giveback is, the situation is, does it really matter?

If our business looks more like 2019 coming out of it, but it’s really built on a strong base and foundation with a really exciting long-term strategy and vision. That’s what we think is important, not hitting the sale button is not spending out sale e-mails. I don’t know check your inboxes unless you are getting filtered. Lot of people are saying, we are not really returning to promotions. I am sorry, if you are sending me promotional e-mails every other day, if not everyday, multiple times a day, calling them different things, you want to call your promotion something different, that’s interesting. Let’s see what happens when all those people have to anniversary those promotions, right. Let’s see how many more promotions they at when they anniversary those promotions.

Let’s see what happens over the long-term as their operating margins start to grind down to where they were historically. And that’s what’s going to happen here like we are not doing anything different in our operating margin this year. We guided to a midpoint of 16, yet 150 basis points of drag for international. You have got 17.5. We entered the pandemic with 14.3, right. So without changing anything, we are ahead of where we were. I don’t know if everybody else is going to end up there. I think there are some new businesses that have grown quickly up a smaller base. But based on some of the sales growth that you see, the operating margins aren’t where you think they would be. So, I like where we are. We thought deeply about the decisions we made and this is the game we are going to play right now and we feel good about it.

As it relates to the stock versus full mix for these new collections, what are the in-stock levels? We are going to be in stock. Many of the products we run our upholstery business mostly is a special order business just because the customers want choice and color of fabrics. And then we generally stock our broader furniture collections. We also are planning to transform our galleries and our floor sets beginning in this late second quarter into the third quarter when we can get the enough product and our collections. For us to put a single collection in a gallery is generally what we order, I don’t know, it’s 1,500 to 2,000 pieces of that collection. And so getting factories to ramp up for that kind of a change out is pretty massive. And so you are balancing the decisions between looking to galleries and being in stock.

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