MILAN — Shares of American furniture maker RH surged on the NYSE on Friday for the second day in a row, after the company expressed confidence in demand momentum for the duration of 2024 and beyond.
The company’s confident outlook sent RH shares soaring over 25 percent in Friday trading, outperforming the NYSE index, which traded up 0.9 percent in midday trade.
Thursday, RH reported that revenues in the fiscal first half rose to $1.56 billion in the period ended Aug. 3 from $1.54 billion in the same period of 2023. Net income fell to $25.3 million from $118.4 million in the fiscal first half of 2023. This was an improvement on the first quarter when the California-based luxury furniture-maker reported a $3.6 million net loss, as the firm forged full speed ahead with its ambitious European expansion plans with the opening of two international galleries, one in Brussels and one in Madrid.
Related Articles
RH forecasted full fiscal year 2024 demand in the range of 8 percent to 10 percent, down from 12 percent to 14 percent guided in June, and revenue growth now in the range of 5 percent to 7 percent, down from 8 to 10 percent revenue growth.
You May Also Like
Chief executive officer Gary Friedman was upbeat on the company’s performance, after a series of lackluster results.
“Our investments in the most prolific product transformation and platform expansion in our history are now resulting in RH gaining significant market share in North America, while building the foundation for our long-term global expansion across Europe, Australia and the Middle East over the next decade,” Friedman told analysts during the conference call.
Friedman also said RH is outperforming industry peers by 15 to 25 points, adding that the third mailing of the new RH Interiors Sourcebook is planned to be in homes early January through February, “capitalizing on what is traditionally one of the largest selling seasons for furniture post consumers and designers returning from holiday travel.”
“Despite expectations for industry conditions to remain challenging until interest rates ease and the housing market begins to rebound, we expect our demand trends to accelerate throughout 2024 and into 2025,” he said.
Analysts at TD Cowan were positive on the guidance.
“We’re encouraged by green shoots as the question of recovery feels more of a ‘when’ and not an ‘if’… We’re positive on August demand, which was up 12 percent and product margin inflecting positive, which gives the second half guide credibility,” wrote Max Rakhlenko, an analyst with TD Cowan, expressing confidence in demand momentum and maintaining a buy rating on the shares, as the shares are “positioned to outperform peers in the near term.”
Following efforts to amp up its product offering with European-made designs and an international roster of fresh and established creatives, Friedman also said he is forging ahead with plans to expand RH’s galleries in key design cities London, Paris and Milan in the near term, emphasizing RH’s European potential, especially in Italy, ending the call on a high note.
“Milan’s the center of the universe for design; it’s the home of Salone, the biggest design show in the world and 500,000 people go to Salone. Almost every great interior designer in the world and brand in the world and aspiring designers… There’s nothing in Milan like what we’re doing. Nothing close. It’s just incredible. I mean, gives me goosebumps talking about it.”