- Slowdown in housing is affecting home furnishing market; mortgage rates double 2021 levels, luxury home sales -18% in 1Q
- Huge opportunity for international expansion beginning with England this fall, Paris/Madrid/Milan in 2023
- Easing supply chain issues can provide short term upside surprise
- Company is authorized to buyback $2.5 billion in stock (mkt cap is $6 billion: insiders own 25%) – can buy 65% of the float (ex insiders and Buffett)
- Trading at trough multiple at just 10x F12M EPS – lowest since 2019 (stock went from $84 to $240 in 6 months)
Tonight's earnings report from RH will give us the pulse of the affluent consumer. RH is a large-scale luxury brand with an ecosystem built around affluent homeowners. They updated their guidance lower at the end of June so they are likely to meet the lowered expectations on the top and bottom line. The big question market is what will guidance be for the next couple of quarters. Given how housing continues to weaken and consumer spending is decelerating, we expect them to guide conservatively and perhaps quite meaningfully.
They recently launched RH Contemporary and are investing for a large scale European rollout. This should put them in great position for a 2023 acceleration in sales.
Are you bullish or bearish on RH's growth prospects?