The following highlights showcase RH’s financial success throughout the quarter:
- Total company demand +16% q2 rh core demand +24%
- GAAP net revenues of $709.3m vs. $706.5m LY
- Adjusted net revenues of $709.7m vs. $706.5m LY
- GAAP gross margin increased 520 basis points to 46.9% vs. 41.7% LY
- Adjusted gross margin increased 550 basis points to 47.5% vs. 42.0% LY
- GAAP operating margin increased 460 basis points to 19.3% vs. 14.7% LY
- Adjusted operating margin increased 690 basis points to 21.8% vs. 14.9% LY
- GAAP net income increased +54% to $98.4m vs. $63.8m LY
- Adjusted net income increased +72% to $123.0m vs. $71.4m LY
- GAAP diluted eps increased +30% to $3.71 vs. $2.86 LY
- Adjusted diluted eps increased +53% to $4.90 vs. $3.20 LY
- Free cash flow doubled to $218m vs. $109m LY
RH’s investments have allowed them to elevate their brand and increase product margins significantly – increasing 490 basis points in the second quarter, driving adjusted gross margin expansion of 550 basis points to 47.5% versus 42.0% last year.
“The emergence of RH as a luxury brand generating luxury margins has arrived years sooner than expected and we now believe we will reach 20% adjusted operating margin in fiscal 2020 with mid-single digit revenue growth. If revenues grow at a higher rate in the second half, we would expect adjusted operating margins to expand beyond 20%, and now see a long-term path to 25% adjusted operating margins,” noted Chief Executive Officer, Gary G. Friedman, in RH’s press release.
Friedman also noted that RH is benefitting from “the COVID-driven shift of spending in favor of the home.” This has created a systemic shift in the company that is causing necessary changes to their operating model.
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 at RH.com, RHModern.com, RHBabyandChild.com, RHTeen.com and Waterworks.com.