RH(US:RH)2025-06-12 22:00Financial Data and Key Metrics Changes - Revenue increased by 12% in Q1 2025 despite challenges in the housing market and tariff uncertainties [6] - Adjusted operating margin was 7% and adjusted EBITDA was 13.1%, both at the high end of expectations [6] - Positive free cash flow of $34 million was achieved in the quarter [6] - Forecasting revenue growth of 10% to 13% for fiscal 2025, with adjusted operating margin of 14% to 15% and adjusted EBITDA margin of 20% to 21% [22] Business Line Data and Key Metrics Changes - Demand at RH England increased by 47% in Q1, with online demand up 44% [7] - European business saw demand growth of 60% across comparable galleries in Munich and Dusseldorf [8] - The introduction of new collections and a significant improvement in stock position were noted, despite a slowdown due to tariffs [23][25] Market Data and Key Metrics Changes - The housing market is described as the worst in nearly fifty years, with existing home sales significantly lower than historical averages [13] - The company is shifting sourcing out of China, expecting receipts from China to decrease from 16% in Q1 to 2% in Q4 [20] - By the end of 2025, 52% of upholstered furniture is projected to be produced in the U.S. and 21% in Italy [21] Company Strategy and Development Direction - The company is focused on creating a global hospitality brand and bespoke interior design business, aiming for long-term strategic separation [15] - Plans to open seven to nine new galleries per year, including significant locations in Paris, London, and Milan [28] - The company is delaying the launch of a new concept to spring 2026 due to tariff uncertainties [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a higher risk business environment due to tariffs, inflation, and global discord but remains optimistic about long-term growth [12] - The company believes it can double its current business by addressing key operational issues [42] - Management is excited about the potential of new gallery openings and the overall brand desirability [11][44] Other Important Information - The company plans to generate $250 million to $350 million in free cash flow in 2025 [18] - Significant investments are being made in iconic global locations, with a focus on creating immersive retail experiences [27] - The company is exploring sale-leaseback transactions for operational assets to optimize cash flow [46] Q&A Session Summary Question: Thoughts on demand planning for Paris, London, and Madrid - Management believes the RH brand can be as disruptive in Europe as in America, with early trends showing potential for significant growth [35][36] Question: Breakdown of the $500 million real estate value - Management indicated that they have several galleries for potential sale-leaseback transactions and a significant portfolio in Aspen [46][49] Question: Assessment of demand spike from recent sales - Management noted that increasing membership discounts has been a long-term strategic move to capture market share during a difficult market [78][81]