CORTE MADERA, Calif. — The costs of growth combined with a tough economic climate led top 100 retailer RH to report a loss in the first quarter of fiscal 2024.
The Corte Madera, California-based retailer posted net revenue of $726.96 million for the three months ended May 4, down 1.65% from $739.16 million in the same period a year ago. The company reported a net loss of $3.625 million, or 20 cents per diluted share, compared with net income of $41.89 million, or $1.76 per diluted share, for the first quarter of 2023.
RH’s adjusted first-quarter EBITDA margin was 12.3%, down from 19.8% in the same period in 2023.
Despite the loss, Chairman and CEO Gary Friedman said the first-quarter results were broadly in line with expectations.
“While our aggressive investments during the economic downturn have put pressure on our near-term performance, we are also well-positioned to take advantage of longer-term opportunities that arise during periods of turmoil and disruption,” Friedman said in an executive statement accompanying the earnings call. “These opportunities are beginning to materialize as most online furniture brands have struggled to monetize and an increasing number of brands are closing their doors.”
Friedman said RH’s domestic plans this year include opening design galleries in Raleigh, North Carolina; Newport Beach, California; and Montecito, California, in addition to those already open in Cleveland and Palo Alto, as well as the first RH interior design studio in Palm Desert, California.
“We see an opportunity to cater to new local markets by opening design studios in neighborhoods, towns and smaller cities where the affluent live, visit and vacation, as we have done in East Hampton and Napa Valley. We can also expand some of our design galleries in larger markets by offering additional design services in our independent design studios,” he said.
Friedman said RH expects home furnishings sales to remain tough for much of the year, but is optimistic that sales will recover as conditions improve.
“We expect the business environment to remain challenging until interest rates ease and the housing market begins to recover, but we expect demand trends to accelerate through fiscal 2024,” Friedman said.
