Continued investments, softer demand drive RH to Q1 loss


CORTE MADERA, Calif. — Growth-related costs, coupled with rough economic waters drove Top 100 retailer RH to post losses in the first quarter of FY 2024.

For the three months ended May 4, the Corte Madera, Calif.-based retailer posted net revenues of $726.96 million, down 1.65% vs. $739.16 million over the same period last year. It reported a net loss of $3.625 million, or 20 cents per diluted share, compared with net income of $41.89 million, or $1.76 per diluted share, in the first quarter of 2023.

RH’s adjusted first quarter EBITDA margin was 12.3%, down from 19.8% at the same time in 2023.

Despite the loss, Gary Friedman, chairman and CEO, said results for the first quarter largely reflected expectations.

“While aggressively investing during a downturn has put pressure on short-term results, it also positions us to capitalize on the long-term opportunities that present themselves during times of disruption and dislocation,” Friedman wrote in an executive statement accompanying the earnings report. “Those opportunities are beginning to materialize as a growing number of online furniture brands have ceased operations as the vast majority have demonstrated difficulty reaching profitability.”

For the year, Friedman said RH’s domestic plans include Design Galleries in Raleigh, N.C.; Newport Beach, Calif.; and Montecito, Calif., to go with already open locations in Cleveland and Palo Alto, Calif., as well as the first RH Interior Design Studio in Palm Desert, Calif.

“We believe there is an opportunity to address new markets locally by opening Design Studios in neighborhoods, towns and small cities where the wealthy and affluent live, visit and vacation, as we’ve done in East Hampton and the Napa Valley, as well as augmenting some of our Design Galleries in larger markets with additional design services in stand-alone Design Studios,” he said.

Friedman said RH expects home furnishings sales to remain challenged for most of the year, but he’s optimistic that as conditions improve, sales will recover.

“While we expect business conditions to remain challenging until interest rates ease and the housing market begins to rebound, we expect our demand trends to accelerate throughout fiscal 2024,” Friedman said.

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