RH (NYSE:RH) today announced revisions to its outlook for fiscal
2022.
Gary Friedman, Chairman and Chief Executive Officer, commented,
“The deteriorating macro-economic environment has resulted in lower
than expected demand since our prior forecast, and we are updating
our outlook, particularly for the second half of the year.”
Taking into account the macro-economic conditions and our
current business trends, we are providing the following outlook for
the second quarter and full year, which assumes demand will
continue to soften during the remainder of fiscal 2022:
Fiscal 2022 net revenue growth in the range of (2%) to (5%),
with adjusted operating margin in the range of 21.0% to 22.0%.
Second quarter net revenue growth in the range of (1%) to (3%),
with adjusted operating margin in the range of 23.0% to 23.5%. The
second quarter outlook remains unchanged versus our prior forecast
due to faster backlog relief offsetting lower than expected
demand.
Mr. Friedman continued, “With mortgage rates double last year’s
levels, luxury home sales down 18% in the first quarter, and the
Federal Reserve’s forecast for another 175 basis point increase to
the Fed Funds Rate by year end, our expectation is that demand will
continue to slow throughout the year.”
Mr. Friedman concluded, “While we anticipate the next several
quarters will pose a short-term challenge as we cycle the
extraordinary growth from the COVID-driven spending shift, shed
less valuable market share as we continue to raise our quality, and
choose not to promote our business while we navigate through the
multiple macro headwinds, we continue to believe our long-term
investments will enable us to drive industry-leading performance
over a longer term horizon.”
The Company also noted that it has not repurchased any shares
since announcing the expansion of its common stock repurchase
authorization on June 2, 2022.
ABOUT RH
RH (NYSE: RH) is a curator of design, taste and style in the
luxury lifestyle market. The Company offers collections through its
retail galleries, source books, and online at RH.com, RHModern.com,
RHBabyandChild.com, RHTEEN.com and Waterworks.com.
NON-GAAP FINANCIAL
MEASURES
The Company’s adjusted operating margin outlook does not include
certain charges and costs. The adjustments to operating margin in
future periods are generally expected to be similar to the kinds of
charges and costs excluded from adjusted operating margin in prior
periods. The exclusion of these charges and costs in future periods
will have a significant impact on the Company’s adjusted operating
margin. The Company is not able to provide a reconciliation of the
Company’s non-GAAP financial outlook to the corresponding GAAP
measures without unreasonable effort because of the uncertainty and
variability of the nature and amount of these future charges and
costs.
To supplement its condensed consolidated financial statements,
which are prepared and presented in accordance with Generally
Accepted Accounting Principles (“GAAP”), RH uses certain non-GAAP
financial measures including adjusted net revenue, adjusted
operating income, adjusted net income or adjusted net earnings,
adjusted diluted earnings per share, adjusted diluted net income
per share, ROIC or return on invested capital, free cash flow,
adjusted operating margin, adjusted gross margin, adjusted gross
profit, adjusted SG&A, EBITDA, adjusted EBITDA, EBITDA margin
and adjusted EBITDA margin (collectively, “non-GAAP financial
measures”). We compute these measures by adjusting the applicable
GAAP measures to remove the impact of certain recurring and
non-recurring charges and gains and the tax effect of these
adjustments. The presentation of non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. RH uses these non-GAAP financial measures for
financial and operational decision making and as a means to
evaluate period-to-period comparisons. RH believes that they
provide useful information about operating results, enhance the
overall understanding of past financial performance and future
prospects, and allow for greater transparency with respect to key
metrics used by senior leadership in its financial and operational
decision making. The non-GAAP financial measures used by RH in this
release may be different from the non-GAAP financial measures,
including similarly titled measures, used by other companies.
FORWARD-LOOKING
STATEMENTS
This release contains forward-looking statements within the
meaning of the federal securities laws, including without
limitation, our outlook for the second quarter and fiscal 2022,
including with respect to net revenue growth and adjusted operating
margin; RH’s expectation that demand will continue to slow
throughout the year in light of mortgage rates being double last
year’s levels, luxury home sales being down 18% in the first
quarter, and the Federal Reserve’s forecast for another 175 basis
point increase to the Fed Fund’s Rate by year end; RH’s expectation
that faster backlog relief is offsetting lower than expected
demand; the fact that RH has not to date repurchased any shares
since announcing the expansion of its common stock repurchase
authorization on June 2, 2022; the next several quarters posing a
short-term challenge as we cycle the extraordinary growth from the
COVID-driven spending shift, our plans to shed less valuable market
share and raise our quality and our choice not to promote our
business while we navigate through the multiple macro headwinds;
the statement that we continue to believe that our long-term
investments will enable us to drive industry-leading performance
over a longer time horizon; and any statements or assumptions
underlying any of the foregoing.
You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “estimate,”
“expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,”
“should,” “likely” and other words and terms of similar meaning in
connection with any discussion of the timing or nature of future
events. We cannot assure you that future developments affecting us
will be those that we have anticipated. All discussions of new
developments are subject to inherent uncertainty as to timing and
the manner in which a new development may ultimately be launched
including that certain new concepts may be canceled prior to
introduction. Important risks and uncertainties that could cause
actual results to differ materially from our expectations include,
among others, risks related to our dependence on key personnel and
any changes in key personnel; successful implementation of our
growth strategy; uncertainties in the current and long-term
performance of our business including a range of risks related to
our operations as well as external economic factors; general
economic conditions and the impact on consumer confidence and
spending; changes in customer demand for our products; decisions
concerning our investments including with respect to the allocation
of capital for among other purposes the repurchase of additional
shares of our common stock which will affect shares outstanding and
EPS; factors affecting our outstanding indebtedness; our ability to
anticipate consumer preferences and buying trends, and maintain our
brand promise to customers; changes in consumer spending based on
weather and other conditions beyond our control; risks related to
the number of new business initiatives we are undertaking including
international expansion, our real estate and Gallery development
strategy and our expansion into new business areas such as
hospitality; strikes and work stoppages affecting port workers and
other industries involved in the transportation of our products;
our ability to obtain our products in a timely fashion or in the
quantities required; risks related to our sourcing and supply chain
including our dependence on imported products produced by foreign
manufacturers and risks related to importation of such products,
risks related to the operations of our vendors, risks related to
tariffs and risks related to the impact of COVID on our business;
and those other risks and uncertainties disclosed under the
sections entitled “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in RH’s
Annual Report on Form 10-K most recently filed with the Securities
and Exchange Commission, and similar disclosures in subsequent
reports filed with the SEC, which are available on our investor
relations website at ir.rh.com and on the SEC website at
www.sec.gov. You should not place undue reliance on these
forward-looking statements. Any forward-looking statement made by
us in this release speaks only as of the date on which we make it.
RH expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to such statements to reflect any
change in its expectations with regard thereto or any changes in
the events, conditions or circumstances on which any such statement
is based.
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version on businesswire.com: https://www.businesswire.com/news/home/20220629005916/en/
PRESS truthgroup@RH.com
INVESTOR RELATIONS Allison Malkin, 203.682.8225,
allison.malkin@icrinc.com
RH (NYSE:RH)
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