RH (RH) 31 Mar 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the RH Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]

to Malkin, conference Investor like speaker to now Allison today, Relations. would hand over the your I Thank you. Please go ahead.

conference fiscal Thank you. for XXXX and us for you Q&A year Good afternoon, our everyone. fourth Thank call. joining quarter

Joining me and Officer; Jack and Friedman, Chief Officer. Chief Financial Executive Preston, are today Gary Chairman

about to today. laws, I meaning release release outlook that our results are in These the results. within you involve to the issued more legal detailed including certain today, of well the disclaimer and our we number actual Please uncertainties start, materially. referenced remind make as today Before risks to that for factors our the issued statements securities federal of refer statements would like a and forward-looking affect statements business matters of that our of may differ SEC description we will cause for forward-looking other press press that risk our could filings, a as our

note obligation Please revision in no as this undertake we that opinion these publicly any new the statements of call, future or to information and results date only forward-looking reflect of release of the our revise light of also events. or to forward-looking statements these

non-GAAP this call, the we measures, Also, eliminate during our may financial results items. adjust to discuss GAAP which impact certain of

press today’s is Investor results website measures reconciliation call ir.rh.com. of a on financial the non-GAAP A these of and find GAAP of will Relations financial regarding to measures information our available You in these additional live at also non-GAAP section this release. broadcast

for Q&A begin the to over session. call to the turn I’ll Operator, ready we’re that, our questions. With operator

is UBS. Lasser question of Please Michael go ahead. [Operator Instructions] The first from

open. is line Your

for taking Thanks my evening. questions. Good a lot

two-parter. a it’s So

guys mid-XX% If the think given You closed? continues? Thank do you in rate look a we about as your . as there’s business dynamic, the closing the you realistic those stores, experienced beyond you. rate that a think stores the you this? of to have profitability rate run run run And kind long model rate the run realistic business that low decline of how to are should this if at

Michael. Sure,

let’s run we’re think, early any First, rates. I way to comment realistic on say, just too

had – days closed think, been for we’ve XX have now? what we I

It’s right. Yes.

days. Yes, XX

So, I to wouldn’t commit anything. necessarily

such weekly, a and of not in where We’re a change It’s hourly. uncertainty. this time changing but changing, are – not daily, is things time

States President on If now believe, just United will and think There’s the a Sunday of President States you right April. be said the for changing reopen closed things back so many of the on United second, said now. country I end The through XX. step the the that to country is Friday, of on going

pay at important what’s The thing attention to changing. is

rush. of less The take will, patterns establish of a you the It’s to a you and it’s amount important thing, of, you do and we can do and I now noise. try and view time believe, that’s the the information we a and not I look from again, to Board, is available try try make. ahead. the so decisions to not motor try make. about think time It’s decisions about point if recent more. whole the data up quiet And kind think to to to chess right this more, It’s the most see and quality to of And

nobody store – ago, country ago two two weeks a be closed. in over going to little knew look, the weeks was But every

think everything out. leading I be be to business a is can. unimaginable to not try rush a to And time to company. you leading to kind the we’re don’t going So, this of figure

release, everything that today. and at to decisions everything right is we make and our what wrote picture know we see the right the got you’ve I think, now. that of press of we in big can And kind look what big kind put letter the we in

comment anything just – unwise Beyond would be it to that beyond we’ve that, any already said.

are $XXX have Okay. give mention sense look your facing business million what this get us much. in it down business, And the planning letter, or a – can as we So like? the you’re the these cash a summer. in rate is better to the you especially Thank Can very you pressure? liquidity pay some just for understanding you of the a of burn and did rate stores of closed burn

actions Yes. today on beyond and before. – confident based position in not Again, what we the we’re feel where we And that the we’re in plan I see. $XXX We to can we we costs. million deferring going convertible cash, a comment we’re we notes capital we taking pay say to down appropriate just letter. in to – we’re of confident the know and as what – and we just – what commented reducing And in

different nothing there. So

good very Thank much luck. you Okay. and

you. Thank

comes go Forbes question Guggenheim Securities. ahead. from next Steven Please Your of

Your open. line is

Good to focus… afternoon. I want

Hey, Steve.

thinking now …hey, of stores sort on of your closed. are the that to efforts is these that focus wanted team I design now, right? So about the times broadly right

if What the recently? have to stress you those on of how efforts? of Gary, helped – could you could on I business you’ve some efforts And don’t base So, the you think they’re on successes interacting if your whether today? alleviate with the know customer back expand those seen more

sure. Sure,

weekends. say have including by part across that extraordinary of know, Saturday. and of been call conference being generated or a conference weeks. amount leaders has I And of our the these every, country eight past yesterday we nine-hour doing that’s don’t I’d with would innovation over every couple we’re across First, people company calls, our the Jack, the daily

and an that such and from the that are dumber in time then smartest generally like closest who’ve and important dumbest customer and people me away of makes company dumber those to and the are this guy is customer that farther us of gotten company. kind because the the get this in those – the learn say to And listen, to we lead, the

So by innovation impressed our the the I’m and to lead. first happening lead of across through people then learn anytime only just country. listen, amount way so to is And then that’s

And people, view, design you We’re reimagining interior not of RH location trying how and interact on in how so – do you and you physical forth. with how and and just work the moment. how do having a a only particularly from imagine, continue, so do reimagine, gallery live how customers, and with to continue, point do you not

What now? that news the What stay up people with trying overwhelming. are bombarded is stay to of Because we right marketing How our to is everybody most just information start just safe today, do amount consuming amount there of the stay is up-to-date we and market valuable? should customers? what basically the – the be and are just communication,

communicating typical a so, we And is, believe way fruitless. in

And so we’ve consumers. tried to with imagine how working how we’re – we’re communicating, reimagine

sense open. for doors letting to and can get a me The closed know what be current may front galleries a addressing we what website, our closed, say, our the website that, you doing. If everybody everyone and you know hearts whole are our but our situation go the minds are for of with we’re letter starts let

demand Skype, this can. time And We FaceTime, team generating hourly extraordinary. we’re innovating, to like is our adapting Hangout, teams I during Zoom. live and way we’re set daily. up Recall, that are any here design appointments is, improvising, virtual and it’s in Our we think, help learning the using overcoming and

in be moves So, important back its about uncertainty. moves we were really important most company think we’ve they the the made. brand this has the you in different. believe, – biggest most I the if letter, and will steps is And look I articulated as times in history, big The transformational this been no and have this this taken made

never Winston for this our best. when to crisis good let culture, we’re a at think, I go waste. Churchill said, is our probably So, And

define kind and run to that So, evolving, be going see that’s just upward and our I business forever. just our is – this – is there we just are in how lead effort ways But is that that our you’re – run and think business the spiral period. an that an going just not to going business of to are short-term to different not changing

this time way the doing change than many in our different of ways virus going is country forever this and this no elevate going company in our and forever change think, business to world, is I our to culture.

we So, as interior residential have yes, is, so largest strength design one interior strategic really and – I that strength. in firm differentiator our of do great and think it’s having a true today the America design North firm

knowledge our BXB our with a now we’re similar have business of also side in of the we our large being and operate assets direct leveraging in both And business into – have all learning that and and contract the are our BXB can And all attributes way customer. daily. a trade right

right gets better. the going – I make it look, and what it’s to it’s – now is, just tell So that, will before get headline it worse teams get mistake, better. no But

how up it We’re different all and possibilities downsides. all assumptions doing our our much coming So, the with – gets? worse and modeling own

service the greatest kind as transportation, they aspects descriptions with of can yes, side warehousing, long deal supply confident. for if to I if describe and on we’re think, the that we our run think risk decide of business the direct I and is, very industry our business, logistics, chain – change governments essential as the

they – define If how gets governments our essential, is got if transportation in and changes. everybody warehouses that new entirely for today everything you’ve describe ballgame. redefined, business everybody’s think, I stops, change that that delivery and industry, and an changes functions if if

port model in would shutdown. The distribution that containers the that would United to shipping But an Every port of every of you like. all operable become shutdown, does of Every if understand the and center And, would look would right? States, would world that have implications the to course, shutdown. smart, like to movement the industry back also and up. have worldwide have entire what system has you’re of right, on

of and that’s sort the some way in I us – think that industry some me customers. has business to to online today is everybody because greatest interface face, this any of almost risk So with

had at direct that business was the on other we some we of point these our business galleries opened as have we down and So one hand expected. it’s XX% as a come bigger a

so business, our business through But our and capable and and through very website, so only but direct-to-customer not contract and of we’re forth. hospitality business on trade

our say I mean, hospitality, business, when business. and and – not hospitality food I contract hospitality So beverage

current and this at all the again, moment, change things time. can So

leadership doing moment-to-moment. I’m in rapidly I’ve been are But day-to-day, – from We’re I’ve seen time position young guy been been anymore. never doing a what I’ve this time, and a changing I’ve quite long a a like, never where things not

I thing whole from move in think there’s try to patient, be a war, the the for peace, important And the decisions to until everybody so decisions point – I short-term of don’t it. for you for rushing see see that make by plan be strategic pray risk and for view. environment more can devastating think wrong making There’s this is Board the

So it this And seen We’ve this will get worse, have the we will how in the key do right? better. is period you curves China. and navigate data, through but get

good not China And it’s We’re data China. in look, different is. in how so sure very the is

videos getting You cattle, going and happen so our like down country. of probably off to not that’s people right? sprayed in see that buses planes Like, being and

be and you different. start had curves where So bad countries Spain in the somewhat may flatten. Italy But breakups, see really the curves even and to like can they’ve

is, temporal. If Is through And longer months? Does is things can it – it it – three to a it possibly is see you month? three mid-summer? Is change. starting months? can – You question Is than go this the two-months? it you

other this? The you time time how point and do you do how some to we’re is, And what do do changes. that’s you question to this optimize your at of position through on you during thrive the this But navigate position yourself business about. yourself? how survive thinking How and here side

are of whether disruption, potential And given more orders right, doing of of the chain follow-up right, what the in and, sort then thinking guess, any future global quick just Or reach do it’s getting that, envision get ahead – global virus? the just to chain? about I you on Gary, a or supply of supply you sort disruption ahead. back

Sure, sure.

has already and So end the that and the And the broader back much source of China really Asia, business that with dealt business, we out of the to disruption our of Asia. biggest normal. pretty on happened is that piece

actually normal. It’s back to XXX%

Yes, XXX% back.

then and a got at And so, look pretty got challenge more the business it we’ve we’ve if big out coming of you globally, Italy.

some We’ve upholstery of of Italy. a disruption – got some we’ll there, importer big biggest the the Italian We’re of and We’ve so in bedding that’s world. percentage have business. furniture got coming out and our not

where situations. back got relatively The good bedding stock we’ve business, side the of

And so back happen we business as with in deals happening portion if curve U.S., of months. of really long But to several what’s massively coming Italy going upholstery things U.S., material good our a the still – don’t the relatively it the special in most will have especially the be as then think order in and next we come business, flattens in of some Mexico. that and our and out

But think behind I Asia controlled the biggest virus that the been relatively at us. challenge challenge has is The Vietnam. well

factories are to back We’re – all of XXX%. our Asia

becomes, right? quality always you platform? manufacturing think never the made do So strategic before. that for how this has Is our these furniture, company, our key advantage true about been quantities it in I’ve said

key it’s partners let do a partnership. create permanent any than our the of all is some in sending with are virus there’s platform. manufacturing in there real I no It’s the partnership “Announcing rent.” world, how – think different in built saying, we’ve estate damage? paying right? not And it key you So no working built letters again, And that out Like people the they’re

of be like really a a other no rent. you and letter the the public partnership, hits When you to the right. not That’s how’d letter? press, on make paying that Well, just landlord you’re a declaration side

in canceling solve integrated business – you and are a great And and going orders how the not is on does Just built how very not This out their is the built build that – way. partnerships is companies great and partnerships. problems. you

believe unknown. three staggered so, from And likely the There’s this months, in year. order? recognize Most No. to dislocation. at down supply it is we two the it And have months? it we key will. they us the next point, to a It may That’s is demand business one-month point reopen chain view, is Will down month, of months? Will stores for throughout most problem. a The likely. down. come Yes. Is it XX%? or Do in three up stay stay

And few then it And XX, year. XX is Is is look by down for those the XX while? like? for XX down end to of it months? what then XX? down it get scenarios you it’s Then XX down So is it down after back a to a the down

back to supply the But that of on get how so on so to people and depends the I chain. promotional think in decide forth. some key becomes

when the and of this today. to to have we several to where How product on product that is you other share We not try to And side manufactured How today. things a that’s being enemies This The our going better opportunity been in is create partnership? an in a the on invisible being partnership? Where the need today. There don’t manufactured partnerships another There’s do enemy? is exist handle do is, do do product virus. that’s today. there’s the create more product weeks. over that normal. We is enemy? How need to water the relationships, partnerships finished pain because we return last build we greater

the together problems solve ways short and doesn’t if opportunity and the And the partnerships doing businesses if the to is and so people partnerships running have, ways the together not the It’s we matter have, this new have, of only business, through becomes partnerships company of estate come we imagine for it supply doesn’t together It work forever. reimagining better real to it’s the time – and a new our if time, inside matter have today. design chain. the we it’s partnerships outside we manufacturing it’s

happening. disheartening, kind of some honestly, see behavior the that’s so, And it’s when I of

are all the or you. the making paying canceling time of a orders The great about that’s people are Those business or proclamations navigate not – not like a will partnerships overcome to only for way rent problem. not this. good strategic in Some a

Thank you, Gary.

ahead. Your Please Curtis next go Nagle from question of Bank America. of comes

your line Nagle, is open. open. line Your Curtis is

Hi, you… Curtis,

Yes, mute. sorry on about apartment a Hey, in small Gary. that

So…

all worries. busy there. We’ve No

...trying anyway, thanks noise for the But question. to the keep taking out.

think just XXX, availability that be Jack. for around the the a case. What may I First, but quick is? it’s revolver current one not

little liquidity or may just But I kind And kind about, the then, hopefully Thinking getting for, maybe things positioned pretty kind dust guess, the you, of position. and be that a clears and it your and capital you for the myself thing? more about macro capital would is How competitively, are you gets an Gary. environment of in gains, guys most I it, not of when direct ahead think to terms And now? there I of maybe about appropriate be thinking and thing you things here. right of better. guess, are get do better, market a when in opportunity normalize decent share competitors think do could that’s structure say

take then back Sure. Jack credit to me – give over – to availability. about the I’ll Well, and facility answer the let it that question to question. Jack I’ll give it

We I’ve significant The that survive. was X% I operating Depression. went was like X% Look, been I’m know think downturns. the our Great through X%. something – that, to difficult or through going Great to Depression And into how I margin And

expansion had last points of operating talked press We’re least having last we XXX right, XX.X%. at prior in to just the release virus. reported about on opportunity of – margins this call in of We the operating XXXX, margin basis

simple guided of least math, and if you we we – just points we basis So XX.X% XXX said, we had reported – at if the if do just expansion. margin

XX.X% get least. to get the you You if

had somewhere basis wouldn’t kind above unless points, a teens, than higher “Hey, given this you say, you at XX.X%? take view operating we more that. Because more company “Hey, least, obviously have of XXX will, say, had we optimistic kind margin more if that.” than probably was and You of you the could in a there happened If before this

like So look What it of difficult And This navigated does is, looks I I’m way. heck better. times like into with lot it really I opens It time XX%? of opportunities. it operating X%. like look team up a what a margins with say, at going difficult it potential this – aperture does clearly has it of margins a this. operating of the

you a you navigate going can this. key themselves right is, put view how So times unveil the set and opportunities yourself you are moves again, in to of kind How the strategic that short-term? that strategic the see the up do in The do can position to happen. like

And so, the going are to gains long-term share market massive. us for be

If that you were, fact the the XX% to XX% their most business I the XX% don’t to probably like players we’re, call is XX% model, think for resources structure, don’t part, our about regional average capital most know, of don’t key manufacturing on their the – XX% a smaller stores distribution our operating of of don’t other and to have that mom-and-pops, our all our have don’t have mostly platform, have individual this. partnerships company

what And we the there’s is, building never important those everywhere. and estate just think, be The more everybody money. – partners to will three probably point to ago more view, different started when thing opportunities of these all so big like years a integrated five make no opportunities galleries, bigger I are? same our We key of real with the to for thought become us than

build analyst how to crazy a ego? they ago, of five written mansions Freedmen’s of be possibly that written. three his are money XX% kinds the to years being stuff are All in – building If for read you reports going

about was It it magic. gut weren’t realize trying about about It mansions. instincts. I and wasn’t all It logic. people all build that think about was Now nothing was to we math

one arguably environments profitable so, one today. of experiences kind And industry retail and of productive physical – most exciting probably of physical in our the the and most we and have

become lot people And partners. to or age for crutches lot going the more so be, There’s opportunity that there even – a this to important I handicapped dislocation. a to a of to on there’s more were of are going and period with There’s time, important to for be our going players. most think, be there’s and financially going less

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promotional at not all. We’re

like In had XXXX with we to and levers pull XXXX, margins, X% operating immediately.

We just offer there’s at like and arrogant us. have and back industry. take not We’re is, not have look in pulling and mean ways, that any do think present a we really peer how we that the stand brand uniquely we way. levers positioned. a have the today. an anybody we we think don’t a We we it, doesn’t in it in are real if what We We many you how do think

I’m know, and is how I are We up, the potential people environments think by and – with today, cooped slingshot about the of calling When people, office we’ve and XX-feet the who got you on apart. way, our in Dave when don’t guys here? a feel, Jack mean, incredible that and are like don’t our physical rest all I like, Dave, – teams effect I know Jack in what I

each sprayed yet. We other Lysol haven’t with

are so one going What The to dying out. to to going going the want got it’s up. Hopefully, people – I Spring a do nicer. is that’s going But out. speed. do got architecture magnificent rooftop kind get think weather we’ve to subsides interior parks, are People to think to people want be got get be are and going out. you from got that’s virus of integrated coming. get is to that’s get presentation People And design better that’s point of to that’s cooped an and – want view. been hospitality, to out? physical inspiring when environment from

so just spend forced I time and start my happened? going these is so things need as to at believe can need I time god, “Oh to Oh Everybody like, just like, weeks, my as house. or what’s my many treatments.” looking think, the there��s that update I much home. think couple if to – what my or last update wish about home – sofas were you different window around I Like been spend at can’t god I I’ve spending pillows of my you I god, much

home So And is the transpired inspiring And at and place this people more to think, home virus way, here I is it’s home. refresh. for of the important. live live having what by way an a to because probably of the become time because at going even

to happens like are are I canceled going right they something Hawaii summer? to or be this the How many fact America? traveling about many like also South things to Europe people Africa? many being Yes, or or are were it’s going to vacations just people whether now? So how really travel going this like wherever it think go, yes, how that

mean, plans reimagine all permanent our But of people going I to their to number home inspired of personally, kind be how summer. are people just that traveled changing. the of I think a and are kind and escape of I our many that a our create fraction last galleries that’s people life. like, home to would when – more an from like feel that on to go think environment the are you what going real and reimagine a How by you’re feels feel many way, vacation like I galleries a know vacation?

not and so the And think that What side do? that. reimagined. to swing true Because today? pendulum us that so all What to far opportunity for to can see we so think many the different other advantages a an we but we things are to would that, have all set see the we’re RH How position I change, incremental up about do are in things leapfrog the to moves? opportunities

invest. position We’re in a to

ways position to partner in a in can. We’re nobody that else

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everybody up to the by being of and the those got strategic lot view short-term day decisions to have But anything fight in we, not as a and make tough sure context future get we and in fear. short-term, of here have we make moving everybody live another a haste we’ve to of driven by decisions and we’ve do, screw And does, now. else else got to through the here make and to

What the know? we the patterns? we How do do how What locked the next at all searching right you up moves? if facts, the you So say do you the like are a ever down recognize do haven’t, home. facts? set fear. movie the the chess, we’re about seen now Fischer, remove data? we we Bobby – we for right it? XX that the And What’s if think How set If up playing

moves. And you in of and young Fischer. use chess named leadership see the movie who move player can about, Josh, I you a YouTube final street the and boy about see a see a to don’t the Board, pull we plays the big that just trained searching point encourage game, movie It’s and as whole it until game until he Google final to our right? kind gets the for by a actually Bobby you see of everybody it up young Don’t the In it, watch it in company. Russian was training and the all don’t move master.

we to platform the it’s going car model allowed and when decided ourselves of we greater a in XXXX if think, make a rearchitect from way, the in rocky and we the pull entire a brand. and with when to exponentially exponentially I those of we’re than after And modern, our see we that’s greater model that’s pits than to start operating moves redefine promotional the in the correctly, membership move did redefined XXXX to kind XXXX, RH that XXXX, decided elevate ourselves those us and to in business we we

the global are like opportunities environment to going this And think have incredible. we’re in I an

I don’t so, know we a a it’s – – lot. but really right now. great like have script And here we’re It’s

like I’m we’re are just RH you giving lifetime kind of evolving thought. evolving, So things

to turn it So I’ll over jack.

Hey, Curtis.

is So as million far $XXX full line a as is so loan. the availability, size. the asset-based it the an But reminder, revolver as

available. we So today, you year the and it’s with available. we that momentarily, then will it inventory XX-K the depends $XXX that be how as see much And other $XXX million ended And have. will million collateral sit in filed we

much, very Thanks All appreciate I it. Got it. guys. right.

Gordon Haskett. comes Your from Chuck next ahead. of Please question Grom go

is Your open. line

sure a deeper the cost We’ve done just could bit, a little I’m structure, everybody. cost wondering afternoon, your a of into guys goods happy I’m I about which you’re both maybe job pay your really of the are dive Good of on flex cost SG&A, guess, little fixed helpful? components streamlining variable? closed little structure, you good really a your sold, any much Thanks. if bit be of beyond Just going are to – to the front would April color Would for employees down? how be What deadline? those that versus XX on you you bit now. think costs you your if color can stores pay of continue

lot percentage the of have shutdown we There’s outside much filings. are of interior us if of not because transaction. financial communicated too our our being that think in relatively people shutdown, nature a what business our engaged design – while I because and are working a – direct in our – detail what’s high of stores of our about of you

connected. So we’re

is just remain as today We’re if cost have we’re other reaching redesign structure? really to out we kind traffic where environment it have don’t we – and so. of do. and Of businesses believe to about more much I closed and than as saw industries course, news Is current Macy’s things our Will operating. as a stay that on other I rely and significant do. the businesses? we we

It’s in have it’s Start Gold back. – with We to lot zone rezone store. places. get we approve the are blocks entire unusual had Coast. us to that a from retail and galleries residential Chicago, it the city they’re and other the Remember, for any in one It’s of neighborhood. six very a day neighborhood

we retailer it, don’t spaces. another build We be inspiring retail because in stores. wouldn’t there So said we build

more much is business destination. our so And

favor. I It’s think that plays in important. in our traffic not not walk is that

Of interact course, – to have it is, want goods. the with like people

are that their coming just feel are all in They want the that into reimagine and sudden, makes visiting the there’s buying them space. our connects tea that people space home inspiring a then this them. with inspired of in and coming they’re a And for And to be restaurant. environment and by

there’s So, – ask me. look, I had – people I’ve

So business is real direct and of digital I opportunity to a at kind all. an be said, advertising and Amazon? become no, like not this start

You wasting – advertising. cost your digital on want advantage business, start a money as nothing there’s of to having that the the the lot no cost to of That’s there’s of change – base really structure. a structure

dislocations, to also a through company. there’s we short-term, of our lot to going of lot we – have parts And a are so in working of but be people going

places, we’re going furloughed. of So like people vast are these the or be not where some other – to majority Macy’s of you

waited. what make the going and by intelligent paying time that another to mean? length extending it’s while now. does if those our allows decisions benefits. that It’s It’s – have It the way, move people possibly to and is we’ve decisions, we’re furloughs one, very don’t We’re them. to are extending to there good It it, until we here, you full them for see of people open are of one of right to our to transparent get understand, some them,

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for luck. the Gary. Good Thanks color,

Yep.

is John question Baugh Stifel. go from Please next ahead. Your of

is line Your open.

a you XX% down please? closing. number on an or shipment number? Hey, order Really, that RH that, since Is the Gary. quickly, being give clarity Can

demand. Demand that’s demand. that’s Yes, Yes, ship. leads

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our taking it’s Hey, on Oliver. for questions. Matt guys, Thanks for

trends first, what So your where update can the you maybe And you direct this have point? over been remind then U.S.? the follow-up. And then And us those can at in the DCs we us of on size are past business located your few have weeks?

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fire no have sale risk. We

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and We we and it will lower then our rates inventories. hold DCs will we’ll in adjust then – and our order

having And we’re can to if going permanently what do model, new model by we without far, do. that’s in our right, to best which anything our this navigate is to impact through the industry

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hold the this great Louis trying luxury it’s because the crutches, says going I I luxury scale this about We’re to like team back we like are the mountain really we’re like one It’s – most ground get members brand we’re like don’t admired in back to our topic. hard the of Vuitton, world on Chanel, geez, crest mountain, a Armarz, because as the get position that, like to right? he the brands our mean, Gary, one a brands. talking on trying to you on hope tell of crutches, and scale

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Seth of Wedbush Your from Securities. Please Basham next go question is ahead.

open. is line Your

for good Could on. year? is about really and potentially could Thanks, about I know of you starters? near-term But catbacks? how big that sense cutting us evening. the cutting you consider is focused some a you you picture budget things of your the what give formulated types we’re we’re and What have that also thinking this of for CapEx talked options

downturn, about when okay? be to $X We’ve outside the – of everything Dave month Oh, cut in Charlotte? a normal? – finishing now? want away everything cut now, everything million. we’re we’re we’re it’s because Right we be to back things Look, right, that but start stopping have Does CapEx whatever stopped to what to – to. from will stopped right it Charlotte, everything, we mean CapEx last stopped cut we to didn’t We finishing

a Charlotte. month finishing from we’re So, away

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we’re think deferring money We’re trying capital. anything I’m spending on. of all capital besides all Charlotte, to right now, basically,

it. of we doubt, whole in capital doubt stores have for will it’s are the We for – somewhere like, the We somewhere million we around net, the year? We going our around $XXX stopped everything stopped I I the with everything keep Jack, that? company. to – think I rest – the be closed year. plan

Regional.

majority. that? probably in we we we the If – quarter, save Yes, regional wanted some spent the XX% first save XX% We’ve vast could plan. to of to, but can XX%

Yep.

there pay XX% that of to Yes, around directionally. somewhere

spend flexibility. first-half, gives ad that the a So the The are of we in costs. to spend us really ad planning to fraction a lot of going cost we’re

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while except playing store. Like developing offensive control. for So so it’s now, plans, balancing right? yes, we lots short-term defense, you’re get stopped – right of everything So one but

I’ll safe. there. right. Stay leave it. Got All you much. very Thank it

is Peter of next Your Please Benedict question go from Baird. ahead.

is Your open. line

but I’ll most guys, on so been Thanks, answered here. questions quick, just be that. following-up But have of my Yes.

marketing obviously if the you So way can down. CapEx your data, you can take take

how you But much that be how we SG&A? variable? And Just take do about other truly marketing then remaining we curious, think If to I we what is kind bucket. SG&A might marketing, how guess about variable? of of just is truly bucket, can of able think out that manage percentage, that after

Yes. We – that. – times things are yes, of don’t disclose we these. variable we’ve like lot But in a

go So ahead.

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think right? partnerships – to through and Yes. got and to is Everybody’s get about yes, now, negotiable And this everything is priorities everything how so. right time,

Thanks enough. so Yes, and luck. okay. good that’s much Listen, fair

Great. Thank you.

Thanks, Peter.

of question Adrienne go Yih next Barclays. from ahead. Please The is

Your open. line is

afternoon. back transformation. of and Gary, Good bit the about kind I R&D wanted pre to little a your talk network, step

and depending Thank talk from and kind set. when skill innovation that of can exactly and that’s about and going skill more you’d you salary, need But the it’s us R&D, sort are a there? before of on understand very a to ebb you of, want say and help invested pick a and flow, creating you need it’s network. group globally global design that of much. bit of changes variable. sort and kind sort now fixed how So that of you what that I around talent you Can little talent, set

Store, when They’re the world in right? the the in platform, developing it’s us developing is main platform our best about are the like the platform main best luxury about right? the right, Apple or we the Sure, so sure. apps App we’re platforms, you and – is the the goods music best platform targeted that music, today even industry music, think the Apple world. you case, high-end Well, this for for to think think And about applications, Apple right? in has developers market,

to more even going there’s I be even develop – that so so, to way. There’s more tilt to to be platform, want going even people our going And it’s our going think, more viable. to now, be for because we’re

be to disruptive. more even going We’re

share. We’re how it’s cost that about and take the going think the works, market you more right? even But when into all structure amortized to goods,

and like people are ideas and designing us don’t there’s that we cost. don’t no if pick, developing so we And for

our partners don’t design work one true really got advantage. only quality a a company the with on it’s some and specifications big and We have team engineering. So that inside here. or technical two We’ve designers

sits we’re of is It’s company built cost goods, the cost most level, a of of the goods. so the XX% either cost development paying into fee someone for artist and part, design the our in built it’s outside from royalty, product. But manufacturing on and of the into design it’s the goods amortized a at or all the perspective certain level

time the about the that And what doing and was versus Drexler us know powerful to right? model think really when So integrated like the I business the and $XX to was there career, from Yes. it today. $XXX other about more it say, we the influenced there I gap, CES. the someone global go lot model call Mickey And super a what Drexler gap were and what where my model, a my and a as I’d of the we you there flexibility Mickey saw, asked powerful, the is inventors apparel I was in leading gave and I retailing learned because pioneers billion, vertically Wexner truly about transformed do that is to company what we that the to was the at used it? me Les world, – massively effective million was and not that they in right, was say Apple people to to in saw when most idea that CES like more

Yes.

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comment. oh, be great, great, no, a I’m well, it to And to said, Apple – Oh said, and listen going Jobs, see certainly it’s I’d the be say, the that get doesn’t company everybody he Steve Apple new comment, couldn’t apple it’s stuff there. doesn’t or no, and to all said going comes

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creates So, leverage the said, platform. the in off And developers built light Apple well, we best their very turn all me most us best built platform went from they here. learned I – had wrong. upside doing is for the right, They look, and to model the industry we platform, bulb the that the very right? And turn and best And for this down. designers, best maybe this right? And maybe we’re served that the this

about more because And I this teams than liked honestly, would big of anybody never all X% design me. they realistically, we’d have And and product. what design showed these

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and being best And of And world people company product, best the curation curating and build “why not we curating the in and don’t said ideas so, we the driven product, will like, a company?” a platform designed platform being people have for be design-driven instead but only inspiration.

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Gary, very Thank much, of best That’s very and you luck. helpful.

you. Thank Sure.

Please Your next go Capital KeyBanc from question Brad of is Thomas ahead. Markets.

Your open. line is

Hey, running thanks, usual. everybody, the for long and for all as color

world of down bring should the here, revenues that think when order a where of bring of Thank of are sales world Just lower think guess, we general, us declining? a a made I me. where in working couple give you. in then to? nature you down from we capital much about could inventory a where about sense how And can down housekeeping questions from you Can are the particularly product? lot to new level with you a likely here maybe here,

is question. and kind studying. Yes. good of kind It’s of It’s something talking we’re about that really a

orders, we the tight to quarter, saw we demand only not up we kick be. the saw down in – about higher as fourth could back we believe company. And the had orders as inventories pushed and So in we back missed we

$XXX obviously we of okay, about I thought, we basis, pulled we out so And on – million inventory. apples-to-apples think our out we a

– plan three, ago. four-year plan, prior of years invest kind we us and platform less about redesigning have inventory that’s the our at chain. operating than $XXX supply four looked you We to the million If five-year to

run us, to find, ways up Where’s So $XX We – that’s the sales. so. we’re can gave we trying optimal and It of the most million QX. So neighborhood inventory? probably fine. And where’s I’d bit say, in somewhere okay, equilibrium? pushed demand in some we or it think, that cost far a in we too

to cost cost and learning There’s optimizing.

orders think kind some you it’s got that’s And way we have to about deal the And can’t just cutting mean, already that’s have with demand. by and problem all that this immediate for you you I immediate deal is, partners when into and so – now the happening. “Oh, bought a going you’ve demand cripple it.” long-term problem of saying, – with your just partners forward. the And and I’m no great got those lot to less you’ve period, we’ve

have a I’m when like, have about in right you yet. know about happens deal that’s price, to know problem.” right, of think discussions this. during can at don’t we I new when entirely supply to “Hey, problem don’t new entirely yes, diamonds? exactly out say And how this this what have answers If we what with And like goods, live So, sure will you how pressure, way age. with think now is have you times about our turn the way way we to these, to come world. entirely think a flow everybody the it. They the new around a is to coal can we’re chain, Like, And an

now short-term yet, don’t if cash much not in flow discussions be. this and the our But how know We’re live right going issues, with end dealing issues, is to not today, long there’s we dealing so – clearly issues. around side, a smaller players there’s in be our going customers cancel that than independent lot partner the no world, They that choice all have of to to orders. have a of lot their on are

very how the partnership? partners to work they become do. what we of them partners key – many people best do important we in at – do How the in best more valuable the more these world So and

for off less us opportunity become And we’ll than inventories. more so it’s an to important important get and

play I think how might out things we directionally imagine.

throughout that’s by you’re have I that of inventories next to time to the probably this Yes, work would year get through just inventories been we’ll through created. say, able work kind year. be heavy this we’ll on issue to – going but recorrected and be

an all it’s be It’s that orders able You to cut can’t they’re issue issue, going not this Anybody fully shit. to it’s going make away. and right impossible says go now. the to be

That’s Good helpful. you, luck. Gary. Thank

Yes.

Tami go question JPMorgan. from Please is of ahead. Your next Zakaria

Your open. line is

and thanks Hi, I Coast. late squeezing it’s getting in for East the me, know

question. So I’ll ask very a quick

and the So you’ve RH business X% mentioned was February. prior dislocation to core business up in demand in the in March

from X% growth? how of And much drag So a like lower that was versus include you’re driven backorder sales did by core that fulfillment outlet planning?

they the outlet No, not that’s didn’t RH business. core of inclusive So right? that’s the – just the include core business,

business So that’s outlet the separately. we why characterize

much post of from had that was and right? the that our point we elimination how that business of holiday, was reason of demand, right? of a so of put reference order So was demand. kind backorders? And how was Zero. recovered generation And you core just give That that the

So business quarter to we a elimination had taking we businesses had than anticipated characterized out, the – What other collateral damage holiday of of fourth in the discussions was previous with promotions we holiday. out that lot had press related that taking business were everyone. influenced releases the is, greater and

active ornaments, When of going all the the the attached you weeks – to gifting to we stuff, that there Christmas weeks and have on all all business the sale, and all and the more traffic our more where was missed the more So if all is of to was, forecast you in of traffic through of web think peak peak January. kind of goes decor, traffic stuff the incrementally stores. sale, here holiday about on incrementally going goes of the kind it, kind

that, pride like And Christmas things. what we were seen have were or website seen holiday able the some was have stuff other more to that, to gallery that means, attached they might sale might chairs post some coming might into elimination bedding, buying and analyze tchotchkes and was a there someone and other they seen sale dining some sale or ornaments sale have and sale they coming

the the than damage, to the referred of which collateral a connected and that thought. transactions, other as we So possible was greater elimination traffic

ran just, biggest an lot inventories, We of is the miss was piece cost with fourth a down other the think, quarter of inventories the out portion then into that So too inventory the just a business. tight. of the we And going XX… I took

the XX we at down ended year XX. the end of QX, up

Yes.

a we prior – QX down. say, So on so going that third-year into XX, and XX. and did and ended We forth, on top down up and of and year down so I last was down

nothing strategic have holiday, again. correct. it don’t We things of transition to so we just easy ran too and and out tight to And

the And the So hey, core is has completely right everybody important in context. different make [ph] rebounded business holiday let in the point got about this The sure is, FX story. to post a me plus the outlet eight. February,

because You’ll our That’s closed remember we the outlets. XXXX to we that outlet what and we than of higher center in accelerate sales, year, inventory of liquidation QX had the last through did. distribution normal decided we

as obviously but And in of a margins, So QX, to is, high. the that we to we outlet high sales inventories the to it’s QX way ran it lift was QX, lowest the very QX company. three high outlet so, And history quarters, in a the year-over-year, very in this burned year it drag and business total about levels the first QX, and not right? think was down in

Obviously, get right lot outlet closed. of straight because without and inventory. that go to right outlet now or year be some liquidated are usually the the backing we’ll and because now, a started have We outlets inventory outlets exchanges returns the creating up,

have have the position got little but going we’ll sales, those inventory. really, to high now, going bit you’re a a this it’s about if year So sales, you cycled have now where not you’re yes, not inventory more drag. But to the you’ve

up operating around for basis company been the the XXX because that points would in have of mix of right? entire So, the business, or more shift margins

– damages beds business, the outlet and the off it So point side, that’s to view. we’re put sometimes I my because so liquidating year it’s plus from to mind, and line or [ph] channel is a in and – I yes, of But way this an our with going integrated last year-over-year, kind or year another a It’s just piece – of anomaly, an minus and other. returns affect the one business. really inventory anomaly deal always top the it’s with going lean of bad it’s trying of to to And to degree margins.

up, So XX.X% a not in XX.X%, had If XX.X%, our were not were XX.X% sales to and have year, outlet margins actually mid-XX.X% down. – the XX.X%. didn’t margins last last we to have company XX.X%, to been year, were me, excuse situation we the operating – yes in operating would if were normal

So year. XXX operating it cost us to basis margin last XXX of about points

could pro That’s we least really at company XX%, margin comfortably been operating of XX.X%. have we margins. because would a last XXX XX.X% on had expansion, to had operating like we basis year more points basis, this that So year why normalized say, not forma a that looked

the and do to when why now go, the in Recession about point we business last geez, going margins that’s comparatively Great at people in how and ‘s a range. situation the we’re company that situation a leading I and a I look And “Well, economic you really, that from this? say, got view I XX% now ask, business operating in – – we’ve mean, of this view, is the range. so feel X% And point had I really difficult And into of

view. from been to advantage So destruction health we’ve humanitarian and a point about socially feel a dislocation position a view, from But is the I take business in cause better terrible going of the point virus of never of and impact this to economically. a

I and of it. all safe. Thanks best and you Got luck That’s had. hope all stay

you hope you. I do, too. Great. Thank

Thank you.

from Next Please of Chukumba ahead. Loop Capital comes Markets. question go Anthony

Your line is open.

Gary, that’s expansion think will a things or that about that is very is you’re light safe point? know, to going back, excited your early this be Is Thanks everything to which real assume about of homerun going into that, for or too question. push going one is it for own it of I tell to right that’s the you. on everything excited my in taking now on, very I Europe, at

Too early to tell.

lot or think, I in about months. two all smarter be three we’ll a

really as So as yet. we’re far concerned right now, not we’re spending capital there

so doing work on work development forth. and leases and architectural some finalizing We’re and so and

relates reason, of there’s that So on. got force we’ve in push there’s developments lot a us going UK it flexibility. the as But work later cycle for other or that’s if that, things to some flexibility back all things to

the little that going end on be of other at related bit the data the summer. think to say the would world I by the side that latest I of the to mostly of has everybody this that China, is issue

is when know that. question knows infection that, it’s another coal is flu go it the the so And reappear? And business, through? right? does a there mines cycle does we reentered Nobody don’t We like – to

that have I I lot the And but a the is hear biotech are faith that the of of respect I field San to a and ability that develop Bay to Area are very is for based – things develop hope here, people obviously, and and hear people on lot the what Francisco I industry. that in vaccines from in what But fast. from going drugs happen epicenter

this say, clearly be a long becomes a that from where it It is of a becomes you should XXXX And year get time. and all seen one And in perfect really of – that – least the slog it’s to is you’re could dragged so, XXXX have in we’ve year. that on my We going. long things sentence sense year eyesight. And a XXXX, a have into real probably is, turns interesting clarity could sense recession. of could that

this. start going this the when to position part through ways, when see But of and to It’s XXXX in year exist of opportunistic some the a other on are and – optimistic business yourself side optimistic opportunities of for cash. yourself it’s position a and year to – long-term to to worst that year manage a for the get be to kind the you we the

globally. doesn’t real to From it’s get deals lot right? on view, right? bit little of doesn’t post things. There’s up it to change is post There’s going estate to change It real sets a this. lot does a estate timing going be a a going of It point anything – the access globally, maybe to happen a But change our in What to doesn’t capital that going be good opportunity of of is capital opportunity better. opportunities this. strategically, Europe, it opportunities be only it changes

see And opportunities so, more we less. than

around through and all now do the Our elegant is the biggest as people, to all relates issues we our of and this in world. navigate humane way our partners here right how most it of

are all our are our all over that age, just company. their manufacturing level to world. We’re members companies senior and It’s of going get people it’s partners. team It’s impacted not the connected but a here partners just of their the very and by that in this not the world at

with and well our – We’re customers. all connected as here as our

if And so in spirit from ignite view, solve right? humanitarian you the in a the fighting create do need. you point we a to chase sense hope you just world will. people try a dreams, do How when do you in. can? same. How those our to what chasing time by And By you encourage do say social to how light, and hopes in shine fearlessly believe why you we for time and it’s our theirs our to we the play of problems? others We How inspire of as do, it’s others and human company. to our best try the do game to That’s what that’s

to edge empathy. a demonstrate So a it’s time – to but time it’s and have

Thank And… so, Gary. you

Yes.

you …demonstrating foregoing during and empathy, commend difficult leadership are I the your your good work. rest salaries this up very of the Keep team time.

you. Thank Okay.

will over remarks. There closing Gary the turn further for time. Friedman, at to CEO, are questions this call I no

– but through and for partners, fought I customers Well, extraordinary and here past decade, where teams specifically time. hard I an this to over we people you, year with want just me your and the people to are, and our thank world, make this get for I past that all around do to sure shareholders our we are past team Great. our get but some XX have not to where that been and just everybody, year, years is the to just thank had today.

time And through. come for and from this together but from together the we right out a is and what’s of the the financial And have to to of point get to just us decisions team kind all brains a band of all and a do the time a all view, point game the of led ever and not And it’s most of of human to and a difficult and right, egos in challenging I’ve business room make. do what’s lot view.

all And profits values we If so we get our will on and right the thing purpose. to for And do time many thing, We a face right we’d through all long-term follow for it’s together live profits follow this same and let is purpose. the to and challenges levels. us the partnerships. now, key say for time and like it’s purpose that a breathe

soon. for So patience, for thank talk today, thank we’ll you and your you thank understanding time, for you. your and Thank you you to your

today’s concludes you participation. This conference your Thank call. for

may now You disconnect.