RH(US:RH)2025-09-11 21:15Retail Expansion - As of August 2, 2025, the company operated a total of 72 retail locations globally, including 67 in North America and 5 in Europe[135] - The company anticipates an annual revenue opportunity of $5 to $6 billion from opening new Design Galleries in major North American markets[144] - The company aims to build a projected $20 to $25 billion global brand in terms of annual revenues through international expansion[146] - The company opened RH Paris, The Gallery on the Champs Élysées, in September 2025, marking a significant step in its European expansion[146] - The company plans to incorporate hospitality into new Design Galleries, enhancing the retail experience and driving incremental sales[144] - The company is exploring new real estate strategies, including transitioning from leasing to development models for Design Galleries[227] Digital Transformation - The company is actively pursuing digital reimagination, enhancing its online portal "The World of RH" to elevate customer experience[147] Financial Performance - Net revenues for the three months ended August 2, 2025, were $899,151 thousand, representing a 8.4% increase from $829,655 thousand for the same period in 2024[149] - Gross profit for the six months ended August 2, 2025, was $764,592 thousand, up 10.6% from $690,795 thousand in the prior year[149] - Operating income increased to $128,876 thousand for the three months ended August 2, 2025, a 33.9% increase compared to $96,127 thousand in the same period of 2024[149] - Adjusted net income for the three months ended August 2, 2025, was $57,812 thousand, compared to $33,468 thousand for the same period in 2024, reflecting a 72.3% increase[157] - EBITDA for the six months ended August 2, 2025, was $265,732 thousand, an increase of 28.9% from $206,071 thousand in the same period of 2024[163] - Consolidated net revenues increased by $69 million, or 8.4%, to $899 million for the three months ended August 2, 2025, compared to $830 million for the same period in 2024[174] - RH Segment net revenues rose by $66 million, or 8.4%, to $847 million for the three months ended August 2, 2025, compared to $781 million for the same period in 2024[175] - Gross profit increased by $35 million, or 9.2%, to $409 million for the three months ended August 2, 2025, with a gross margin of 45.5%[178] - Consolidated net revenues increased by $156 million, or 10.1%, to $1,713 million for the six months ended August 2, 2025, compared to $1,557 million for the same period in 2024[195] - RH Segment net revenues rose by $154 million, or 10.5%, to $1,612 million for the six months ended August 2, 2025, driven by higher core business revenue and increased hospitality revenue from new Gallery openings[196][197] Cost Management - The company is adapting its supply chain to mitigate risks related to tariffs and trade policies, which may affect product costs[137] - Selling, general and administrative expenses increased by $1.8 million, or 0.6%, to $280 million for the three months ended August 2, 2025[182] - Selling, general and administrative expenses rose by $40 million, or 7.4%, to $580 million for the six months ended August 2, 2025[203] - RH Segment selling, general and administrative expenses as a percentage of net revenues decreased to 30.6% for the three months ended August 2, 2025, from 33.2% for the same period in 2024[183] Interest and Debt Management - The company reported interest expense—net of $57,358 thousand for the three months ended August 2, 2025, down from $59,262 thousand in the same period of 2024[149] - Interest expense—net decreased to $57.4 million for the three months ended August 2, 2025, from $59.3 million for the same period in 2024[187] - Interest expense—net decreased to $113.961 million for the six months ended August 2, 2025, down from $116.034 million in the prior year[208] - The ABL Credit Agreement was amended to provide an asset-based credit facility with initial availability of up to $600 million, expandable to $900 million under certain conditions[221] - The company entered into a $2,000 million Term Loan B with a maturity date of October 20, 2028, requiring quarterly principal payments of $5.0 million[222] - An incremental term debt financing (Term Loan B-2) of $500 million was secured in May 2022, also maturing on October 20, 2028, with quarterly principal payments of $1.3 million[223] Cash Flow and Capital Expenditures - Net cash provided by operating activities for the six months ended August 2, 2025, was $224 million, driven by net income of $60 million and an increase in non-cash items of $169 million[228][230] - Net cash used in investing activities was $134 million, including $110 million for retail stores and $32 million for a business acquisition[232] - Net cash used in financing activities totaled $87 million, primarily due to net repayments under the asset-based credit facility of $65 million[234] - Adjusted capital expenditures for the six months ended August 2, 2025, totaled $156,051 thousand, compared to $132,801 thousand for the same period in 2024, indicating an increase of 17.5%[165] - Adjusted capital expenditures for the six months ended August 2, 2025, were $156 million, with an anticipated range of $275 million to $325 million for fiscal 2025, primarily for growth and expansion[224] - As of August 2, 2025, $201 million remains available for future share repurchases under the authorized $2,450 million Share Repurchase Program[243] Economic Challenges - The company is facing challenges due to macroeconomic conditions, including high interest rates and inflation, which have negatively impacted its business[136] - The company expects variability in financial performance due to ongoing strategic initiatives and market conditions[141] - For every 100-basis point change in interest rates, the company's annual interest expense could change by approximately $25 million[250] - Anticipated adjusted capital expenditures may be adjusted in response to macroeconomic factors such as increased inflation and higher interest rates[224]