RH(RH)2025-06-12 22:02Financial Data and Key Metrics Changes - Revenue increased by 12% in Q1 2025 despite challenges in the housing market and tariff uncertainties [9][10] - Adjusted operating margin was 7%, and adjusted EBITDA was 13.1%, both at the high end of expectations [10] - Positive free cash flow of $34 million was achieved in the quarter [10] Business Line Data and Key Metrics Changes - Demand at RH England increased by 47% in Q1, with online demand up 44% [11] - European business saw a demand growth of 60% across comparable galleries, specifically RH Munich and RH Dusseldorf [12] Market Data and Key Metrics Changes - The housing market is described as the worst in nearly fifty years, with existing home sales significantly down compared to historical figures [16][17] - Despite the housing market downturn, the company is performing at levels typically expected in a robust market [18] Company Strategy and Development Direction - The company is focused on creating a global hospitality brand and bespoke interior design business, with plans to open new galleries in iconic locations [19][30] - Strategic investments are being made to elevate the brand and expand product offerings, with a forecasted adjusted EBITDA margin above 20% [20] - The company plans to increase its membership discount from 25% to 30% to capture market share during the downturn [22] 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 [15][24] - The company is maintaining its revenue growth guidance of 10% to 13% for fiscal 2025, despite macroeconomic uncertainties [26] Other Important Information - The company plans to delay the launch of a new concept from late 2025 to spring 2026 due to tariff uncertainties [25] - The company is shifting sourcing out of China, expecting receipts to decrease from 16% in Q1 to 2% by Q4 [23][24] 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 [39][46] Question: Breakdown of the $500 million real estate value - Management indicated that they have several galleries for potential sale leasebacks and are being patient with timing due to current interest rates [50][52] Question: Assessment of demand spike from recent sales - Management noted that increasing membership value and promotional strategies have led to significant business during peak seasons, particularly in outdoor furniture [83][89]