RH CEO expects elevated demand for home decor to carry through 2021September 11, 2020
- "There's clearly, you know, a consumer shift that's happening and you know people are holed up at home," RH CEO Gary Friedman told CNBC.
- "We're benefiting from some of that shift, and at the same time … our teams did a great job of kind of improvising adapting and overcoming," he said in a "Mad Money" interview.
- "I think there's going to be some systemic shifts in spending that will last, I think, for the next year or two — could be longer," he said.
Demand for home goods is still on the up and up, based on the quarterly results published by home furnishings retailer RH.
RH, formerly known as Restoration Hardware, posted a top- and bottom-line beat in its fiscal 2020 second-quarter report as the company capitalized on the stay-at-home environment, CEO Gary Friedman told CNBC's Jim Cramer after the Corte Madera, Calif.-based company reported earnings.
"There's clearly, you know, a consumer shift that's happening and you know people are holed up at home," he said in a "Mad Money" interview.
"We're benefiting from some of that shift, and at the same time I'd say our teams did a great job of kind of improvising. adapting and overcoming."
RH reported revenue of $709 million in the quarter ended Aug. 1, a 0.4% tick up from a year ago, but a turnaround from the 20% revenue decline the company saw in its first fiscal quarter. The company recorded profits of $4.90 per share, smashing the $3.41 estimate in Factset.
Core demand has improved exponentially month over month since the U.S. economy began its recovery from the coronavirus lockdown earlier this year that brought world commerce to a near halt. RH said that that demand was up 7% in May, more than 30% in both June and July, and up 47% in the month of August. Core business grew 44% through the first 10 days of September, the company said.
That trend, however, can be ephemeral, Friedman said. Long term, RH is looking to grow net revenue by 8% to 12% and adjusted net income by 15% to 20%. The company expects the increased spending on home decor will continue through 2021.
"I think there's going to be some systemic shifts in spending that will last, I think, for the next year or two — could be longer," he said.
"We'll benefit from the shifts right now, but, you know, that's not anything what I call strategic. We'll make the most of what's happening, but it really doesn't affect our long-term vision or long-term strategy."
Shares of RH surged more than 20% to $385.46 at Thursday's close.
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