Demand for home goods is still on the up and up, based on the quarterly results published by home furnishings retailer RH.
RH, formerly known as Restoration Hardware, posted a top- and bottom-line beat in its fiscal 2020 second-quarter report as the company capitalized on the stay-at-home environment, CEO Gary Friedman told CNBC’s Jim Cramer after the Corte Madera, Calif.-based company reported earnings.
“There’s clearly, you know, a consumer shift that’s happening and you know people are holed up at home,” he said in a “Mad Money” interview.
“We’re benefiting from some of that shift, and at the same time I’d say our teams did a great job of kind of improvising. adapting and overcoming.”
RH reported revenue of $709 million in the quarter ended Aug. 1, a 0.4% tick up from a year ago, but a turnaround from the 20% revenue decline the company saw in its first fiscal quarter. The company recorded profits of $4.90 per share, smashing the $3.41 estimate in Factset.
Core demand has improved exponentially month over month since the U.S. economy began its recovery from the coronavirus lockdown earlier this year that brought world commerce to a near halt. RH said that that demand was up 7% in May, more than 30% in both June and July, and up 47% in the month of August. Core business grew 44% through the first 10 days of September, the company said.
That trend, however, can be ephemeral, Friedman said. Long term, RH is looking to grow net revenue by 8% to 12% and adjusted net income by 15% to 20%. The company expects the increased spending on home decor will continue through 2021.
“I think there’s going to be some systemic shifts in spending that will last, I think, for the next year or two — could be longer,” he said.
“We’ll benefit from the shifts right now, but, you know, that’s not anything what I call strategic. We’ll make the most of what’s happening, but it really doesn’t affect our long-term vision or long-term strategy.”
Shares of RH surged more than 20% to $385.46 at Thursday’s close.