Restoration Hardware Makes Curated Home Ecosystem a 2022 Priority

Supply chain bottlenecks are still slowing delivery of some RH items, executives said Wednesday (Dec. 8), but most customers are willing to wait as the pandemic has permanently shifted the way people view their home.

Though in the short term, spending will shift back to travel, leisure and other parts of the economy, RH Chairman and CEO Gary Friedman told analysts on a conference call, two years of spending an increased amount of time at home has made people reconsider their priorities.

“It may have created some kind of a permanent shift in the importance of the home, the amount of time people are going to spend at home, the way they’re going to spend their time at home, the amount of entertaining at home they’re going to do, the number of homes they want to have, if you can afford that,” Friedman said.

And while wait times for some furniture items have become longer in recent months because of factory closures and delays at ports, “customers have been conditioned to wait,” he said, likening the company’s approach to setting expectations to that of Disneyland. When a sign next to the Matterhorn says the wait will be 45 minutes, people at Disneyland can trust that’s accurate and are willing to wait.

“What we’re trying to do is be Disneyland,” Friedman said. “Don’t say four weeks if it’s going to be five, if there’s a risk of five. If it’s a risk of five, say six. And if we lost a little demand, that might happen, but there is nothing worse than disappointing customers.”

In the third quarter, RH recorded net revenues of just over $1 billion, up 19% year over year and up 49% versus 2019. The company also raised its outlook for the full fiscal year, projecting revenue growth of 32% to 33%, up from previous estimates of 31-33%.

Extending the Brand

Friedman noted the number of launches RH has set for next year, including the introduction of the RH Contemporary furniture line, which was pushed from this year because of supply chain issues; the opening of the first RH Guesthouse in New York; the unveiling of The World of RH, a digital portal encompassing the company’s entire ecosystem; and the launch of the company’s yacht and two jets, all of which will be available for charter.

RH is also expanding its delivery experience, called RH In-Your-Home, which sees “furniture ambassadors guiding every detail of your delivery and extending the selling experience into the home.”

“Our strategy is to move the brand beyond curating and selling product to conceptualizing and selling spaces by building an ecosystem of products, places services and spaces that establishes the RH brand as a global thought leader, taste and place maker,” Friedman said, adding that the strategy has “proven to be both disruptive and lucrative” thus far.

“We believe there are those with taste and no scale, and those with scale and no taste, and the idea of scaling taste is large and far-reaching,” he said.

International Pursuits

The company is also set to expand its presence internationally with the opening of RH England, set for late spring or early summer. Friedman said this will be the only international opening in 2022, but he feels good about the pipeline of openings set for the coming years.

“What we’re doing is not a quick rollout, and we like to say extraordinary takes more time, requires more people, costs more … but it’s worth it,” the CEO said.

Friedman added that the international openings are also different than the openings that RH does in the U.S. Whereas domestically, a new location might open a market, a new international location in Paris, for example, opens the entire country of France, and RH England will open the entirety of the United Kingdom.

“These are big economies, and one by one, we’re doing to open up countries,” Friedman said, noting that the company will be aided by consumers’ adoption of and comfort with shopping online “for just about anything.”

“Taste can be elusive,” Friedman said. “And we believe no one is better positioned than RH to create an ecosystem that makes taste inclusive and by doing so elevating and rendering our way of life more valuable.”