The company formerly known as Restoration Hardware is tightening its belt.
Citing “the lack of clarity regarding when it will be safe to reopen,” RH said it has temporarily furloughed approximately 2,300 employees and is permanently reducing its workforce by 440 associates. The company is also implementing temporary tiered salary reductions across the company ranging from 10% for leaders and salaried associates, 20% for directors, 30% for VPs to 40% for senior VPs and chief titles. The executive leadership team will forgo 100% of its salaries until business stabilizes.
Additionally, RH said it will significantly reduce capital expenditures and expenses by approximately $130 million and $150 million in fiscal 2020. The capital expenditure reductions are primarily the result of delaying its store transformation efforts with the exception of RH Marin and RH Charlotte, which will open sometime this spring-summer when state and local governments permit, the company said.
The $150 million of expense reductions include approximately $70 million of compensation savings, assuming its retail locations reopen in June, $50 million of advertising savings, and $20 million of savings related to the delay of its store transformations.
“While the doors to our Galleries are closed, our interior design teams across North America continue to open their minds, and are finding creative ways to help our customers reimagine their homes while sheltering in their home,” stated RH CEO Gary Friedman. “We also believe the seismic shifts in consumer spending that are beginning to take hold, and the new habits being formed as a result of social distancing and sheltering in place, create opportunities for the RH brand to play an even more important role in the lives of consumers who are making their homes the center of everything they do.”