Friedman: RH’s second quarter earnings ‘exceeded our guidance’

CORTE MADERA, Calif. — While its Q2 earnings didn’t match last year’s levels, they outperformed guidance for Top 100 retailer RH.

“Revenues of $800 million and adjusted operating margin of 20.2% exceeded our guidance for the second quarter due to a $25 million revenue benefit from faster than expected deliveries and a shift of approximately $40 million of advertising costs from Q2 to Q3 reflecting the later mailing of our RH Interiors Sourcebook,” Chairman and CEO Gary Friedman noted in an executive statement that accompanied the second quarter earnings report.

For the three months ended July 29, RH posted net revenues of $800.48 million, down 19.28% from $991.62 million over the same three-month span last year. Net income totaled $76.48 million, or $3.93 per adjusted diluted share, down 37.45% compared with $122.28 million, or $6.12 per adjusted diluted share in the second quarter of 2022. RH reported adjusted EBITDA of $197.94 million in the quarter, giving it an EBITDA margin of 24.7%.

Through the first 26 months of the fiscal year, RH recorded $1.539 billion in net revenues, down 21% from $1.949 billion after six months of 2022. Net income totaled $118.37 million, or $6.10 per adjusted diluted share, vs. $322.99 million, or $12.75 per adjusted diluted share through two quarters of 2022. With $344.597 in adjusted EBITDA after six months, RH’s six-month EBITDA margin stood at 22.4%.

For the year, RH is raising the low end of its revenue guidance, expecting it to be in the range of $3.04 billion to $3.1 billion vs. the prior outlook of $3 billion to $3.1 billion.

Friedman said he anticipates the hurdles faced thus far in 2023 will continue for at least a while longer.

“We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs and the current outlook is for rates to remain unchanged until the second quarter of 2024,” he noted.

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