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RH Reports Record Q1, Revenues up 78%, Raises 2021 Outlook, continues to focus on disruptive physical experiences

Thursday, Jun 10, 2021

RH (NYSE: RH) has released its financial results for the first quarter ended May 1, 2021, in a shareholder letter from Chairman and Chief Executive Officer Gary Friedman.

“Fiscal 2021 is off to a strong start, with revenues up 78% in the first quarter versus down 19% a year ago. Total Company demand increased 101% in Q1 and RH Core demand increased 109%, the strongest demand trends in our industry,” said Friedman.

FIRST QUARTER 2021 HIGHLIGHTS

  • Q1 TOTAL COMPANY DEMAND +101% VS. Q1 LY Q1 RH CORE DEMAND +109% VS. Q1 LY
  • Q1 TOTAL COMPANY NET REVENUES INCREASED 78% TO $860.8M VS. $482.9M LY
  • Q1 GAAP GROSS MARGIN INCREASED 600 BASIS POINTS TO 47.3% VS. 41.3% LY Q1 ADJUSTED GROSS MARGIN INCREASED 550 BASIS POINTS TO 47.3% VS. 41.8%
  • Q1 GAAP OPERATING MARGIN INCREASED 1,450 BASIS POINTS TO 21.8% VS. 7.3% LY
  • Q1 ADJUSTED OPERATING MARGIN INCREASED 1,260 BASIS POINTS TO 22.6% VS. 10.0% LY
  • Q1 GAAP NET INCOME OF $130.7M VS. NET LOSS OF $(3.2)M LY
  • Q1 ADJUSTED NET INCOME INCREASED 375% TO $142.3M VS. $29.9M LY
  • Q1 GAAP DILUTED EPS OF $4.19 VS. DILUTED LOSS OF $(0.17) LY Q1 ADJUSTED DILUTED EPS INCREASED 285% TO $4.89 VS. $1.27 LY
  • Q1 FREE CASH FLOW OF $136M VS. $(36)M LY

“Based on current business trends,” continued Friedman, “we are raising our outlook for revenue growth in fiscal 2021 to a range of 25% to 30% versus our prior outlook of 15% to 20%. We now expect adjusted operating margin in the range of 23.5% to 24.3%, an increase of 170 to 250 basis points versus our prior outlook of 100 to 200 basis points, with ROIC in excess of 60%.”

Our ability to transform our legacy stores into multi-dimensional Design Galleries that double our retail revenue and profitability in every market will enable the RH brand to reach $5 to $6 billion of revenues with a mid-twenties adjusted operating margin in North America,” added Friedman, “These inspiring and disruptive physical experiences render our products more valuable while creating strategic separation and unmatched brand awareness, enabling us to gain significant market share at lower advertising costs. This presents a conundrum for our competition who are closing or downsizing their stores while we build the largest specialty stores in the history of our industry. We believe our Galleries are proving to be a huge competitive advantage enabling RH to acquire customers at lower fixed costs versus variable digital advertising costs that can change daily for store-less or store-closing brands.”

“While fiscal 2021 will surely be a tale of two halves, there are many data points that lead us to feel optimistic that our strong performance will continue through the second half of 2021 with growth reaccelerating in fiscal 2022 and beyond,” said Friedman.

Source: RH IR 2021-06-09 [PDF]
Photo Credit: RH Store Finder

About Restoration Hardware

RH (NYSE:RH) is a curator of design, taste and style in the luxury lifestyle market. The company offers its collections through its retail galleries across North America, the company’s multiple Source Books, and online.

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