Restoration Hardware 1Q15 Earnings Call Notes

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You just have to watch this video to understand this company

http://link.brightcove.com/services/player/bcpid1545427237001?bckey=AQ~~,AAABA9G8odE~,-H0MccZq2BGlPV7eCfx8yKi9Cj7CEEPq&bctid=4290443992001

Benefit to working capital from vendors scaling with us

“As we scale our business, both RH and on our artisan partner, vendor partner side, we both have bigger more profitable businesses and we have much more flexibility as it relates to working capital and so, I think you will see us over the next couple of years be able to be much more efficient with working capital and it’s going to be because our vendor base has also scaled with us and the benefits that you would get with scale you should assume that we will get those kind of benefits.”

We are performing ahead of expectation

“based on our results in Q1 and based on what we know Q2 to-date and I will let Karen build on this. But how we are performing today is ahead of our expectation, which gives us confidence in how we build that bridge into Q2 and that marry that with our expectation for the incremental revenues and profitability that the new businesses will create.”

A fully integrated “modern” concept doesn’t exist out there

“if you think about the marketplace as it is, there really is no fully assorted, fully integrated modern concept that exists, I mean anywhere in the world quite frankly. You have people that, you got to whether it’s B&B Italia or other ones that they have upholstery and then they might have few lights, a couple of items here where you’ve got — you can design within reach. I’d say it’s very item-driven business. You walk into one of their stores and it’s very much not a lifestyle. It’s presented like an item business also. And you’ll see this business presented in a fully integrated lifestyle and a model that’s very similar to the core RH business and the interior business.”

This is the very beginning for modern

” this is just the very beginning of modern. This is our — going to be our first book, our first freestanding store, our first retail presence on floors where it worked. We’re going to get so much better than what you see in interest book. The pipeline of development behind this and the excitement and enthusiasm in the designer world, the artisan world, all the people that contribute to us building this platform, in this collection of product, I mean, the pipeline is every bit as exciting. It’s not more exciting than what you’re going to see when we come out of the gate.”

Not just selling products, selling spaces

“We like to talk internally about not just creating and selling products but how do we move from creating and selling products to conceptualizing and selling spaces. And so when you hear about other new businesses that are coming and we’ve talked about RH Modern not RH Modern, RH Kitchen before and we’ve been working on developing a kitchen concept that we believe will be able to when we launch that business transform your whole kitchen, not just daily pops and pans and knives and forks and things like that but be able to transform your kitchen.”

Retail stores are really, really important still

“I think if you worry about that dynamic, you are going to miss the business opportunity and you are going to make that decision through your business long term. I did my video where a lot of people, 10% of retail sales exist online today. Do I think it’s going to be 20 down the road? Of course, I do, okay. But the fact is it’s only 10 today. If it excess, the retail stores are really, really important.”

People who are trying to shrink to greatness are missing the point

“people want to see things and people want to interact in a three dimensional nature and that’s why we’re ambivalent to where they transact, and that’s why I make my point about, it’s not about the Internet, the Internet is a channel. It’s going to change things. It’s going to shift things. But retailers that are penetrating to shrink to greatness, I think they are missing the whole point.”

The physical experiences in the world are going to be even more important

“I think the physical experiences in the world are going to be even more important than the online experiences because we are social creatures. And I think the retailers that have the very best fiscal experiences in the world tied with the very best virtual and digital experiences in the world are the ones that didn’t win, not one or the others. It’s physical and digital. That’s the world.”