Of course, there's a reason RH is down so much. On the recent earnings release, RH missed revenue expectations, but more importantly, Friedman issued very cautious guidance, projecting only 5% to 7% growth for 2022 -- a big deceleration from the 32% growth seen in 2021.
Friedman noted on the
conference call with analysts that inflation is very high and RH's costs are going up, especially for shipping...
There is the question is the brand trying to do too much:
RH is set to open its first design gallery in Europe. The Gallery at the Historic Aynhoe Park will open this year, in what's being billed as a "17th-century, 73-acre estate in the English countryside." Along with this year's opening, RH has also secured sites in France and Germany, and it's in negotiations for other sites in Italy, Spain, and Belgium.
The reason Buffett's investment in Coca-Cola in the 1980s was so successful was that Coke was about to spread very far internationally, which was something investors underappreciated at the time. With the opening of RH England this year, RH may be on the cusp of doing the same.
Perhaps even more audacious, RH is expanding its brand from furniture into hotels, restaurants, and private yachts and jets. This year, the company will open its first RH Guesthouse in New York; will have two new restaurant concepts across San Francisco, New York, and England; will make its two private Gulfstream jets available for charter; and will christen RH3, its luxury yacht available for charter in the Mediterranean or Caribbean.