RH has released its financial results for the second quarter ended August 3, 2024. The company is pleased to report a 7% increase in demand during the second quarter, which has continued to show positive momentum, with July ending up 10%. Demand accelerated further into the third quarter, with August seeing a 12% increase. Product margins have also improved despite operating in the most challenging housing market in three decades.
Photo: RH.
It has reported its significant investments in product transformation and platform expansion are now yielding results. RH is gaining substantial market share in North America and laying the groundwork for long-term global expansion into Europe, Australia, and the Middle East over the next decade.
Although its inflection occurred a couple of quarters later than anticipated, management believe the critical factor is not the timing but the magnitude and direction of the progress compared to the industry. The company's vector, which measures both magnitude and direction, indicates that the brand is outperforming the industry by 15 to 25 points. Management expects this performance to continue gaining momentum in the second half of 2024, driven by the multi-year product enhancement efforts and the long-term platform expansion plans.
For the second quarter, the company's results aligned with management's guidance, showing revenues of $830 million, a 3.6% increase from the previous year, an adjusted operating margin of 11.7%, and an adjusted EBITDA margin of 17.2%.
While its aggressive investments during a downturn have pressured short-term results, they have positioned RH to capitalise on long-term opportunities arising from disruption and dislocation. 'We believe our demand performance demonstrates that RH is well-positioned to benefit from a rebound in the housing market once interest rates decline and home prices adjust, closing the affordability gap that has suppressed the market in recent years,' states the company.
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