Oh my! CEO: ...and we have an inability to speak in other than cliches, aphorisms and shibboleths...

And how exactly will this retail model work where there are no cash registers to be found and no price tags? If you have to ask, you can't afford it? I'm not sure if they're building retail stores or amusement parks for people who like interior design...I mean, from the looks of it, the stores would be fun to visit, but I wouldn't want to shop there.

There is also something fundamentally wrong with comparing one quarter's data to the next in that the revenue figures are not seasonally adjusted...they need to be compared with same quarter year ago. I just looked at the data and it is strongly positive on revenue, but much less so at the bottom line.

I'm also wondering where all these projected cost savings will be coming from if they are building not only huge real estate investments, but the inventory to stock them.

Note too that the demonstration of pricing power and higher merchandise margins the CAO refers to means the ability to overcharge people.

And the extra costs of those crazy books offset all the other cost savings they achieved in SG&A.

I'm also confused by her boasting how strong their balance sheet is and then referring only to the amount of borrowing that they've done to finance all this expansion.

And the fact that she slipped in that they expect to become "cash flow positive"?!?

I haven't spent a lot of time examining the books of retailers, but some of this stuff sounds fishy to me... but I'd defer to those more in the know.

Also in keeping with the ridiculously high price of their merchandise, their P/E ratio is 626. So if you want to get in on any action their hype is generating around their stock price, you're too late.

This post was edited by AnnieDeighnaugh on Fri, Dec 12, 14 at 9:53

He is speaking in cliches because the investor class that runs Wall Street does the same thing. They all believe the BS because they want to believe.

The only thing that would make his pitch more successful is if it were coming from someone with a British accent. I've seen it happen a number of times in Boardrooms across the US. Those guys that worked their way up, had no exposure to the arts, think that someone who can come in and deliver a mantra like this without stuttering, must know something about this stuff they don't understand, and they swallow it hook, line and sinker.

The last item I purchased at RH was a bell for my bicycle.

I *do* believe in the 'goosebumps theory' coming from the heart, and not the mind, thus I react with emotion rather than logic when I make a purchase for my home, and also when I made the decision to build this house. It was ALL about 'the heart'. However, I can get those same goosebumps without spending a fortune to decorate a room or house, and will have money leftover for several dinners at a nice restaurant, birthday gifts for loved ones during the year, as well as Christmas gifts, and a nice vacation to boot! I would have to say the majority of furnishings in my home were purchased because of a 'visual love', not because of the brand, the price, or the value it would hold into the future. Who in their right mind would furnish a home with things they don't really love or at least like, if only for the recognition of a certain store, and overpriced at that.

I do understand the lovestyle vs lifestyle statement, as one generates feelings of happiness while the other sees a decorated home as a means to an end, ie;fill rooms with furniture that may be uncomfortable, unattractive, as well as unscrupulously overrated, but maintains the 'visual' of the home owners lifestyle, real OR pretend.

I didn't listen to the video... I went straight to the financial data. Their condition is improving, but to say its strong is indeed a stretch. For example, their quick ratio is sub 1, but up from 0.5 in the prior period (thanks to a new debt offering). They were cash flow positive in the prior quarter and revenue growth is good -- the current quarter includes a lot of cash spending for inventory buildup. (The net store count remained the same) Their forward looking P/E is 42 -- still really high.

The Financial Analyst community appear to "buying" the story -- most firms covering are rating them as buy to strong buy. The housing sector rebound has a lot to do with that -- there is a herd mentality. Often at this size of company and level, effective communication and image are valued, along with charisma and leadership and frequently, strategic direction. Content and operational management are left to the CxO levels and below -- the board knows full well what they are getting.

In any case, my last visit to a larger store was quite mystifying (to buy window hardware). There actually was very little merchandise -- you really just mill around designed vignettes and wait until a sales person can help guide you to the website to look for what you want. They have samples of finishes, etc available, but little available to actually walk away with and very little to actually preview.

I used to love to go to RH and browse. I loved their black cherry bedroom sets and tables. Of course, I couldn't afford their furniture, but I would buy their retro gift items for stocking stuffers and my house numbers outside came from there. Having said that, ever since they got into the grays I have found their stores to be appalling and ugly. Plus, it's so dark in there that I can't believe they are still in business. I don't know of a single person that shops there.

Give me Crate & Barrel, Pottery Barn, Ethan Allen, Basset, etc. over them any day. Even Z Gallery is better.

Here's a brief summary of my stream of consciousness reading the article (haven't watched the video yet).

Delusional. Hubris. Pretentious. Grandiose.
Oompa-loompa.

I stopped going to RH years ago. They're so bleak now that I get two feet inside the door and have to turn around and leave before I fall into darkest despair.

"lovestyle" -- gag me

I predict a JCPenney's type debacle for this ridiculous company. I didn't like them before and now......let's just say that "lovestyle" makes me cringe.

This is what they're building...

{{gwi:2140591}}

I may be missing something, but I just don't get the economics of this approach. It reminds me of Home Depot's Expo stores which they closed a few years after they first opened.

Here is a link that might be useful: Atlanta's largest store

They are eating grapes while Rome is burning.

Businesses built on questionable value principles do not survive the long term.

This post was edited by kswl on Fri, Dec 12, 14 at 18:09

They've done a similar one in West Hollywood on the famed Melrose Avenue, almost as big. There are six megastores, all in high priced real estate and often in distinctive buildings. In fact, looking at the galleries I like the buildings far more than the stuff in them. The comparison to Expo is interesting and perhaps apt -- I haven't been in one of these mega-stores.

Their stated intent is to move their positioning upmarket to luxury and aspirational. To me, it seems like you need more distinctive and varied design to be successful with that. Then again, we aren't likely in their target demo (people interested in design, that is).

My question is, if they are targeting the luxury upscale market, are there enough people in that demo to support this kind of outlet? I mean sure, Disneyland and Walmart cover a lot of territory, but they appeal to the masses...RH, not so much.

I guess nobody has bothered to tell them that true luxury is custom, not retail.

We have an acquaintance that has BS'ed Wall Street for years. He's Harvard educated and very polished. His companies rarely make money but he has figured out every possible way to fill his personal coffers with salaries, bonuses, commissions, fees, etc.

If the RH CEO is from the same mold, he will always have a good excuse as to why the stock is not performing well and excellent fairy tales about the future. If it wasn't so smarmy, it would be fascinating.

Are these the same analysts that recommended Aaa-rated bonds made from junk mortgages? Just curious.

A lot of people think Wall Streeters are smart simply because they know jargon. There's a vast difference between understanding a specific technical subject matter and actually having a brain. Viz. Bill Gross, who had everyone fooled until his senior economist (who really was smart) left and everyone found out what a crackpot he was.

ETA: To be fair, they are smart at some things. They just got Congress to overturn part of Dodd Frank so that the taxpayer is now liable for another Wall Street bailout again. Buying Congressmen is the highest ROI investment they ever made.

This post was edited by marcolo on Fri, Dec 12, 14 at 17:47

One headline after RH Q3 earnings report touted 'shares soaring'. Indeed, the price rose over 5% on the news. (There has been market volatility this week.) Kiplinger ranked RH one of the top 25 stocks for 2015.

Bloomberg Business reports Friedman has 3,976,826 options. At today's stock price of $93.59 that's $372 million. That's options only, NOT wages & benefits. Some analysts are reporting a high range of $110 for the stock. Another $65 million.

Didn't care for CEO hubris, however he has articulated a well defined business strategy. Bricks and mortar retail growth, as opposed to digital which is contrary to the strategy of many. Huge 'branded' flagship properties appealing to US high income class plus Chinese, Russian (among other) emerging market wealth (with estates in the US).

Long term outlook for RH? Who knows?

One headline after RH Q3 earnings report touted 'shares soaring'. Indeed, the price rose over 5% on the news. (There has been market volatility this week.) Kiplinger ranked RH one of the top 25 stocks for 2015.

Bloomberg Business reports Friedman has 3,976,826 options. At today's stock price of $93.59 that's $372 million. That's options only, NOT wages & benefits. Some analysts are reporting a high range of $110 for the stock. Another $65 million.

Didn't care for CEO hubris, however he has articulated a well defined business strategy. Bricks and mortar retail growth, as opposed to digital which is contrary to the strategy of many. Huge 'branded' flagship properties appealing to US high income class plus Chinese, Russian (among other) emerging market wealth (with estates in the US).

Long term outlook for RH? Who knows?

Words! So many words! I made it through the first 50 seconds of the link, thinking his hair looked like it was thinning and his face was shiny. Heard nothing worthwhile so stopped listening.

Considering the consensus on this forum upon receiving their catalogs is to (mentally weigh and then) recycle them, I don't see much of a future.

I have invested in their hardware a few times (like it in our master bath, but my tastes have grown and I would replace what I selected in our kitchen) . I've always enjoyed walking through our local store (which closed in the past year). I enjoy looking at their lighting options but would prefer not to pay their prices. Love the cleaning products and bath accessories.

As such, I don't see a lot of hope for their business model and will not be investing in them any time soon.

The allegations is that these mega-stores are booming. They seem to be carefully locating these near some traditionally very end real estate, like Buckhead and Beverly Hills, and/or near design districts. Unlike Home Depot Expo, they seem to be aiming for the top 5% of consumers, far from the mainstream. The SF store apparently was the prototype and is actually decorated with things you can't buy -- real antiques and other decor in a beautiful building in the design district that probably serves to uplift the shopper's perception of the merchandise.

Interesting note: The CEO actually stepped aside in 2012 prior to the IPO because of publicity surrounding the fact he was dating a 26 year old subordinate. Interestingly, he actually started in the stock room of the Gap and dropped out of jr. college.

Of their stuff, I mainly find the hardware to be of any interest these days -- window hardware, bath hardware, etc. The interior furnishings don't appeal to me, and I've got a pretty monochromatic base. Perhaps some of the outdoor stuff might work, as well.

Here is a link that might be useful: Profile of CEO

So the Corte Madera store is HQ? That's my local RH.

I couldn't listen beyond the first 30 seconds. He talks like he has new dentures. They still make some darn good bath towels.

Gooster - thank you for the link; worth reading. I'm much more appreciative of what Gary Friedman has accomplished.

Goosebumps? Good grief.

RH is looking for new investors, so they can build all these huge 'Gallery' stores. Can the cost of building their Gallery stores (many of them on rented property) and this huge real estate "growth" really be paid for by that much of an increase in sales? I am far from being an analyst but didn't she claim that RH had a 1% growth over their 'competition' who ever that is and can't 1% be easily fudged, suggesting their growth might actually be significantly lower than their competition. And does any of that matter?

According to Murphie's Law, as soon as a business builds it's ultimate perfect factory it begins it's quick decline and untimely death. Not so funny is that this has been true of many business that made huge expantions just to fail.

Architectural Digest calls it "RHâÂÂs evolution from home-goods purveyor to full-scale lifestyle brand."

When the CEO says you don't see a cash register or prices, I think he means that the check out is done on a tablet or in an 'office' looking space with a desk, or maybe hidden behind a partition like where the waitress keeps the coffe pot. When he said no price tags I wondered if he meant signs, like huge banners strung across the ceiing proclaiming "10 DAY SALE 50% OFF ALL ITEMS". But according to yelp, they don't have price tags:

"The shopper asked about a table arrangement (three planters with some sort of grass growing in them). The question: "Are these for sale?" The employee's response: "I'm not sure. I don't think so, but maybe they are." She said this over and over and over again. I should have gotten video. She followed with: "I could ask [employee X]. He should be down soon - I think."

"it is so hard to find prices and forget asking any specific questions because there are no employees in sight. Some of the items had no price tag at all..."

"...I didn't really see price tags anywhere. It didn't help that all the husbands were lounging on the seating, half asleep and pretending to look busy on their smartphones while waiting for their wives to finish up shopping."

I think if you want a price, they take you to a computer where you basically order from the online catalog and wait 6 weeks for them to make and deliver it.

In the investors video he uses the verb: "architected" Later he says he: "curated (the) People", is that like picking someone out of a slave market line up because they have the best teeth?

If I had any of their stock, after seeing this I would have sold it that minute, because to me they have become an utter-disgust-style.

And did anyone else think of J Peterman from Seinfeld, when watching him purr his meaningless bathos.

"When the CEO says you don't see a cash register or prices, I think he means that the check out is done on a tablet or in an 'office' looking space with a desk, or maybe hidden behind a partition like where the waitress keeps the coffe pot. When he said no price tags I wondered if he meant signs, like huge banners strung across the ceiing proclaiming "10 DAY SALE 50% OFF ALL ITEMS". But according to yelp, they don't have price tags:"

Apple Pay or the equivalent. Scan the article, id the price and pay with your phone. Done.

This post was edited by jmc01 on Sun, Dec 14, 14 at 5:24

RH doesn't take Apple Pay. Which has nothing to do with anything anyway.

Oh my! CEO: ...and we have an inability to speak in other than cliches, aphorisms and shibboleths...

I had to laugh at this comment as it reminds me of a scene in the movie Disclosure where Demi Moore's character constantly speaks in a kind of industry/buzzword jargon in order to compensate for the fact that she is lacking the education of the engineers in her field because she slept her way to the top. And then finally gets called out. Lol. I had the same observation. I believe it amounts to the deeply insecure best understand how to market to those who define themselves solely by brand.

marcolo, i hope you have a very nice day today and that it starts out better for you than Sat ended.

This post was edited by jmc01 on Sun, Dec 14, 14 at 5:26

EXPO in Atlanta could have been such a success. It took real work to make that fail but they managed to kill it with the worst "Epimetheus" management team and employees you could ever hope to find. The store itself was wonderful and badly needed in Atlanta where the home is so important and people love to decorate and update and DIY. It's the hobby and interest of many. At least during the EXPO era. I really miss EXPO actually. It makes me feel like altering Marlon Brando's lament in "On the Waterfront":

If it hadn't been for bad management and neglect
You coulda had class
You coulda been a contender
You coulda been somebody instead of a bum mega Rooms to Go.

This post was edited by gr8day on Sun, Dec 14, 14 at 7:49

Is it real? or is it memorex?

Perhaps he's just a bot...

Here is a link that might be useful: leadership jargon generator