- Tuesday’s earnings call for luxury home furnishings retailer RH is making waves in the finance world.
- “I’ve never seen it so chaotic, honestly, from an execution point of view,” CEO Gary Friedman said.
- These are extremely risky times, he said, but there’s also tremendous opportunity.
Comments by CEO Gary Friedman from RH’s latest earnings call are making waves in the finance world for his candid assessment of the risk facing the company — and the global economy — in 2022.
RH, the luxury home furnishings retailer formerly known as Restoration Hardware, is in a somewhat unusual position that gives Friedman a view into many parts of the economy.
Beyond making and selling high-end furniture and fixtures, the company also owns RH Guesthouses around the world, a line of fully furnished luxury houses and condos, a yacht, and it’s soon launching a charter service on a pair Gulfstream jets.
“I’ve never seen it so chaotic, honestly, from an execution point of view, whether it’s construction, sourcing, manufacturing, shifting the supply chains, freight,” Friedman said.
“When you run an integrated business like ours, where you need all the pieces of the puzzle to paint the picture, that just makes it more complex and more difficult,” he added.
Like most retailers, RH was coming off of a logistically difficult 2021, marked by the Omicron variant of Covid-19, which added an average of five weeks lead-time into the company’s supply chains.
Not only do those delays cost money, prices for other goods and services continue to climb while the
raises the cost of borrowing.
Throw in Russia’s invasion of Ukraine and a slowdown of demand, and the mix is a heady one indeed.
“I don’t think anybody really understands how high prices are going to go everywhere, in restaurants, in cars and everything,” Friedman said. “I wouldn’t call it happy days right now. I’d call it pensive days. Be ready.”
In spite of the difficulties and dire warnings, Friedman insisted that a strategy of slowing down and being patient will keep RH from “winding up in the ditch.”
Warning lights are certainly flashing throughout the economy, but the years of pandemic have shown how risk can cut both ways.
“In my 22 years here [with RH], I’ve never been more excited,” Friedman said. “I’ve also never been more uncertain.”