RH bullish on 2021 amid store, hospitality expansion; entering Europe next year
RH (formerly known as Restoration Hardware) finished the year strong with sales and earnings that topped analysts’ expectations, and said it expects its momentum to continue in 2021, with first-quarter sales rising 50%.
The luxury home furnishings retailer also detailed its plans for the year, which include further expansion into retail, food, hospitality, spa services and homebuilding. Four new stores (or “gallery” in RH speak) are in the works for 2021, all with integrated restaurants and wine bars. The locations include Knox Street in Dallas; the Historic Bethlehem Steel Building in San Francisco; St. Johns Town Center, Jacksonville, Fla.; and RH Oak Brook, The Gallery at the Center.
The company is set to begin its international expansion in 2022, with the openings of RH England and RH Paris. In nearly all cases, RH will not take on an international partner.
“The road to global expansion is littered with brands that put their trust in others, only to spend years negotiating repurchase rights decades later after the damage is done,” Friedman stated. “That’s not to say there won’t be exceptions where there’s an outstanding partner in a challenging country, but it will be a rare exception as we expand the RH brand around the world.”
In addition, RH will open its first “guesthouse” this fall, in New York City, followed by a second location, in Aspen, Col., that will open in fall 2022 and include the first RH Bath House & Spa. As previously reported, RH is also developing a residential community in Aspen for which it has already received “multiple unsolicited proposals to purchase the homes sight unseen,” CEO Gary Friedman wrote in his quarterly letter.
On the product front, RH is currently mailing out its outdoor catalog, which will feature 10 new collections. It expects that this year will see the most product launches in the company’s history. RH is opening a 1 million-sq.-ft. furniture distribution center in Southern California this spring, which will allow it to reduce delivery times by seven to 10 days for both outdoor furniture and special order upholstery in most major markets.
“Additionally our plan is to unveil The World of RH, a digital portal presenting our products, places, services and spaces this fall,” Friedman stated.
RH reported net income of $130.19 million, or $4.31 per share, for the quarter ended Jan. 30, up from $68.43 million, or $2.66 per share, a year earlier. Excluding one-time charges, it earned $5.07 per share. Analysts had expected $4.76 per share.
Net revenue increased 22% to $812.44 million from $664.98 million a year earlier. Adjusting for cost of goods sold and inventory charges associated with product recalls, the company reported revenue rose to $812.62 million, topping estimates of $798.
For fiscal 2020, RH’s sales rose 8% to $2.85 billion.
“We ended 2020 with just less than $3 billion in net revenues and believe the data supports the RH brand reaching $5 to $6 billion in North America and $20 to $25 billion globally,” Friedman said.