Gary Friedman last night uh guiding lower on margins takes us to a mad dash. >> No, it was not a call that if you're looking for upside. I think that in some ways and I went over this with Ben Stos, my research director, that RH is to housing as strategy is to Bitcoin.I mean, you just they're linked. >> You mean like a leverage play. >> Yeah.And and I feel like that if you're really sure that housing's going to come back, really really sure because if you're just kind of sure that's Home Depot, if you're re ...

RH (NYSE:RH) posted mixed results for the third quarter after the closing bell on Thursday.RH reported quarterly earnings of $1.71 per share, which missed the analyst estimate of $2.16 by 20.87%, according to data from Benzinga Pro. Quarterly revenue came in at $883.81 million, which beat the Street estimate of $883.69 million."We continued to generate industry-leading growth with revenue increasing 9% in the third quarter, and up 18% on a two-year basis, demonstrating the disruptive nature of our brand des ...

Market Overview - U.S. stock futures showed mixed performance following a mixed close on Thursday, with major indices experiencing fluctuations [1] - The Dow Jones increased by over 600 points, indicating a rotation out of expensive tech stocks, while overall risk appetite remained strong after the Federal Reserve's third consecutive interest-rate cut [1] Economic Indicators - The 10-year Treasury bond yielded 4.17%, while the two-year bond was at 3.53%, with a 73.4% likelihood of the Federal Reserve maintaining current interest rates [2] Futures Performance - Dow Jones futures increased by 0.17%, while S&P 500 and Nasdaq 100 futures decreased by 0.19% and 0.54%, respectively [3] Stocks in Focus - Costco Wholesale Corp. reported better-than-expected financial results for Q1 of fiscal 2026 but saw a premarket decline of 0.52% [7] - Broadcom Inc. dropped 5.18% due to disappointing guidance regarding gross margins and a higher tax rate for fiscal 2026 [7] - Lululemon Athletica Inc. surged 9.49% after exceeding Q3 expectations and raising full-year guidance [16] - RH experienced a 4.26% increase despite mixed Q3 results, reporting earnings of $1.71 per share, missing estimates [16] - Tilray Brands Inc. rose 28.11% following the announcement of its new product line [16] Analyst Insights - Scott Wren from Wells Fargo anticipates moderate growth and easing price pressures in the U.S. economy, projecting S&P 500 earnings growth of slightly over 11% [12] - Wren recommends active management and suggests reallocating funds from Communication Services and Information Technology to sectors like Financials, Industrials, and Utilities, which are expected to benefit from AI capital expenditures [13][14]

Group 1 - The article does not provide any relevant content regarding the company or industry [1]

Core Insights - RH reported revenue of $883.81 million for the quarter ended October 2025, reflecting an 8.9% increase year-over-year and a slight surprise of +0.1% over the Zacks Consensus Estimate of $882.95 million [1] - The earnings per share (EPS) for the quarter was $1.71, down from $2.48 in the same quarter last year, resulting in an EPS surprise of -19.72% compared to the consensus estimate of $2.13 [1] Financial Performance - The stock of RH has returned -2.4% over the past month, while the Zacks S&P 500 composite has increased by +0.9% [3] - RH currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3] Key Metrics - Total number of locations for RH is 73, exceeding the average estimate of 68 by three analysts [4] - Total leased selling square footage at the end of the period is 1,639.00 Ksq ft, surpassing the average estimate of 1,594.30 Ksq ft by two analysts [4] - The number of RH Design Galleries is 37, matching the average estimate by two analysts [4] - The count of RH Legacy Galleries is 26, slightly below the average estimate of 27 by two analysts [4] - The total number of outlets is 43, consistent with the average estimate by two analysts [4]

Core Viewpoint - RH reported mixed third-quarter earnings, with a notable revenue beat but earnings per share falling short of analyst expectations [2][3]. Financial Performance - Quarterly earnings were $1.71 per share, missing the analyst estimate of $2.16 by 20.87% [2]. - Quarterly revenue reached $883.81 million, surpassing the Street estimate of $883.69 million [2]. Growth Metrics - Revenue increased by 9% in the third quarter and by 18% on a two-year basis, indicating strong growth despite challenging market conditions [3]. Future Outlook - For the fourth quarter, RH projects revenue between $869.27 million and $877.4 million, which is below the analyst estimate of $896.97 million [4]. - Following the earnings report, RH stock rose by 9.58% to $168 in extended trading [4].

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [26] - Consolidated gross profit was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [26] - Adjusted consolidated gross profit was $6.7 million, or 12.6% of sales, compared to $6.8 million, or 12.1% of sales in the prior year [26] - SG&A expense was $8.7 million, reflecting a 7% improvement compared to the prior year [27] - Loss from operations was $3.5 million, an improvement from a loss of $5.4 million in the prior year [27] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [30] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [31] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [31] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [31] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [7][8] - The bedding market shows signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [19][20] - Upholstery sales were impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [21] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [8] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [14][18] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but expects steady consolidated sales performance in the third quarter [36] - The company anticipates improving gross profit and lower SG&A, leading to significant improvement in operating loss and near break-even to positive Adjusted EBITDA for Q3 [36] - Management remains cautious about the timing of market recovery but is positioning the company to capitalize on future demand increases [46][47] Other Important Information - The company has a net debt position of $7.6 million and continues to manage liquidity and capital expenditures aggressively [32][34] - Cash flow from operations was -$1.2 million for the first six months, an improvement from -$2.6 million in the prior year [33] Q&A Session Summary Question: What is the realization status of the $20 million cost savings? - Management indicated that significant savings are being realized, particularly from the Canada facility closure and recent price adjustments, with most benefits expected by Q4 [41][42][44] Question: What is the incremental margin on the next point of sales growth? - Management confirmed that there is built-up leverage to capitalize on any increase in sales, with fixed costs in place allowing for significant contribution margin from incremental sales [48][49] Question: What is the status of the new tariffs in Turkey and Haiti? - Management explained that recent tariff changes have created challenges, but the company is well-positioned to navigate these issues and expects to implement mitigation strategies within 60 days [50][51][53]

Financial Data and Key Metrics Changes - Consolidated net sales from continuing operations for Q3 2026 were $70.7 million, a decrease of $11.9 million or 14.4% compared to the prior year period [2] - Gross profit decreased by $2.4 million, but gross margin improved to 25.6%, up from 24.8% last year [3] - Operating loss from continuing operations totaled $16.3 million, and net loss from continuing operations was $12.5 million or $1.18 per diluted share [5] - Year-to-date consolidated net sales from continuing operations were $211.1 million, down $22 million or 9.4% compared to the prior year [6] Business Line Data and Key Metrics Changes - Domestic upholstery sales increased by 3% in Q3, while Hooker branded sales rose by 1.1% [3][6] - Hooker Branded net sales increased by 1.1% in both Q3 and the nine-month period, driven by higher average selling prices despite lower unit volume [15] - Domestic upholstery gross profit increased by $261,000 in Q3, with gross margin remaining consistent year over year [16] Market Data and Key Metrics Changes - The hospitality business experienced a decline in sales due to the timing of shipments, with several large projects shipping in the previous year's third quarter [3] - Discontinued operations for Pulaski Furniture and Samuel Lawrence Furniture saw combined net sales decline by $11.3 million in Q3 and $22.5 million year-to-date [8] Company Strategy and Development Direction - The company is focusing on exiting low-margin, tariff-sensitive categories and directing efforts towards stronger brands [9] - A new Margaritaville license collection is expected to drive significant organic growth, with initial purchase commitments exceeding historical levels [10] - The company aims to transition from a cost reduction strategy to an organic growth story, emphasizing core expertise in better-to-best home furnishings [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic pressures, including elevated housing prices and inflation, but expressed cautious optimism about improving profitability [22] - The company believes it is better positioned to improve profitability even in a prolonged downturn due to a more efficient cost structure and sharper portfolio focus [22] Other Important Information - The company recorded $22.1 million in non-cash impairment charges, which do not affect liquidity or ongoing operations [4] - Cash and cash equivalents stood at $1.4 million, with $63.8 million in available borrowing capacity at quarter end [18] - A new share repurchase program was authorized, allowing for the repurchase of up to $5 million of outstanding common shares [19] Q&A Session Summary Question: Impact of shipment timing in hospitality division - Management noted that the hospitality brand had significant contributions from large hotel projects last year, which did not repeat this quarter [24] Question: Sustaining sales gains in core business - Management expressed confidence in sustaining sales gains due to product momentum and significant product introductions [25][26] Question: Retail partners' feedback on Black Friday sales - Management reported relative positivity from retail partners regarding sales during peak retail times, but emphasized the need for more consistent demand [27][28] Question: Revenue impact from discontinued operations - Management indicated that discontinued operations had a significant drag on operating income, with further details expected in upcoming filings [29] Question: Long-term operating margins outlook - Management affirmed that it is reasonable to expect a return to historical operating margins when market conditions improve [30][31] Question: Future showroom operations - Management confirmed the exit from the Atlanta showroom and indicated a small presence in Las Vegas will be maintained [37][38] Question: Margaritaville margin profile - Management suggested that the margin profile for Margaritaville could be estimated based on historical Hooker Branded margins [41] Question: Future cost-cutting measures - Management highlighted that additional savings would be identified as they finalize their cost structure and divestiture of brands [42][43] Question: Signs of demand recovery - Management noted cautious optimism from partners but did not identify specific green shoots indicating demand recovery [45][46]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [26] - Consolidated gross profit for the quarter was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [26] - SG&A expense for the quarter was $8.7 million, reflecting a 7% improvement compared to the prior year [27] - Loss from operations was $3.5 million, an improvement from a loss of $5.4 million in the prior year [27] - Adjusted EBITDA was negative $1 million, an improvement from negative $1.1 million in the prior year [28] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [30] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [31] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [31] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [31] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [7][20] - The bedding market is showing signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [19][20] - Upholstery business remains impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [21][22] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [8] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [14][18] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but expects steady consolidated sales performance in the near term [36] - The company anticipates continued improvement in operating loss and near break-even to positive Adjusted EBITDA for Q3 [36] - Management remains cautious about the timing of market recovery but is positioning the company to capitalize on future demand increases [45][46] Other Important Information - The company has a net debt position of $7.6 million and continues to manage liquidity and capital expenditures aggressively [32][34] - The company is owed approximately $4.7 million from the sale of its Canada facility, expected to be received in Q3 [36] Q&A Session Summary Question: What is the realization status of the cost savings? - Management indicated that significant savings are being realized, with most expected to be fully realized by Q4 [41][44] Question: What will be the incremental margin on the next point of sales growth? - Management confirmed that there is built-up leverage to capitalize on any increase in sales, with fixed costs in place to retain a significant portion of incremental dollars [47][48] Question: What is the status of the new tariffs in Turkey and Haiti? - Management explained that recent tariff changes have created challenges, but the company is well-positioned to navigate these issues [49][50]

Financial Data and Key Metrics Changes - Consolidated net sales from continuing operations for Q3 2026 were $70.7 million, a decrease of $11.9 million or 14.4% compared to the prior year period [2][3] - Gross profit decreased by $2.4 million, but gross margin improved to 25.6%, up from 24.8% last year [3] - Operating loss from continuing operations totaled $16.3 million, and net loss from continuing operations was $12.5 million or $1.18 per diluted share [5][6] - Year-to-date consolidated net sales from continuing operations were $211.1 million, down $22 million or 9.4% compared to the prior year [6][7] - Gross margin for the nine-month period improved to 25%, up from 23.9% in the prior year [7] Business Line Data and Key Metrics Changes - Domestic Upholstery sales increased by 3% in Q3, while Hooker Branded sales rose by 1.1% [3][15] - Hooker Branded reported GAAP operating income of $711,000 for Q3 compared to a loss of $1.5 million [15] - Domestic Upholstery backlog fell from year-end but rose year-over-year on a 3.5% increase in orders [17] Market Data and Key Metrics Changes - The hospitality business experienced a decline due to the timing of shipments, with several large projects shipping in the previous year's third quarter [3][4] - Discontinued operations for Pulaski Furniture and Samuel Lawrence Furniture saw combined net sales decline by $11.3 million in Q3 and $22.5 million year-to-date [8][17] Company Strategy and Development Direction - The company is focusing on becoming a higher margin, design-driven entity by exiting low-margin, tariff-sensitive categories [9][10] - The launch of the Margaritaville license collection is seen as a significant organic growth opportunity, with initial purchase commitments exceeding historical levels [10][11] - A new share repurchase program has been authorized, allowing the company to repurchase up to $5 million of outstanding shares, while also recalibrating the dividend [19][20] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the retail environment, noting that while peak sales periods are positive, consistent demand is needed [28][46] - The company believes it is better positioned to improve profitability even in a prolonged downturn due to a more efficient cost structure and sharper portfolio focus [22][46] Other Important Information - The company recorded $22.1 million in non-cash impairment charges, which included $14.5 million on Sunset West goodwill [4][5] - Cash and cash equivalents stood at $1.4 million, with $63.8 million in available borrowing capacity at quarter end [18][19] Q&A Session Summary Question: Impact of shipment timing in hospitality division - Management noted that the hospitality brand had significant contributions from large hotel projects last year, which did not repeat this quarter [24] Question: Sustainability of sales gains in core business - Management expressed confidence in sustaining sales gains due to product momentum and significant product introductions [25][26] Question: Revenue from discontinued operations - Management indicated that discontinued operations were a significant drag on operating income, with further details expected in upcoming filings [29] Question: Margin profile for Margaritaville line - Management suggested that the margin profile could be estimated based on historical Hooker Branded margins [41] Question: Future cost-cutting measures - Management indicated that additional savings would be identified in future announcements, with a focus on the divestiture of brands creating opportunities [43] Question: Signs of demand recovery - Management reported cautious optimism from retail partners but did not identify specific green shoots indicating demand recovery [46]