Q2 2025 RH Earnings Call
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Speaker Change: The program is about to begin.
Unknown Executive: Good day, everyone, and welcome to today's R.H. 2nd quarter, 2024, Ernie Williams call.
Speaker Change: Good day everyone and welcome to today's RH 2nd Quarter 2024 earnings call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session.
Unknown Executive: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session.
Unknown Executive: Please note, today's call will be recorded, and I will be standing by should you need any assistance.
Speaker Change: Please note today's call will be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Allison Malkin of ICR. Please go ahead.
Allison Malkin: It is now my pleasure to turn the conference over to Allison Malkin of ICR. Please go ahead.
Unknown Executive: Thank you.
Gary Friedman: Good afternoon, everyone. Thank you for joining us for our 2nd quarter, fiscal 2024, Ernie's conference call. Joining me today are Gary Friedman, Chairman and Chief Executive Officer, and Jack Preston, Chief Financial Officer.
Speaker Change: Thank you. Good afternoon everyone. Thank you for joining us for our second quarter of fiscal 2020 for earnings conference call.
Speaker Change: Chairman and Chief Executive Officer and Jack Creston Chief Financial Officer.
Gary Friedman: Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our press release issued today. These four-looking statements involve a number of risks and uncertainties that could cause actual results different materially. Please refer to our SEC filing, as our press release issued today, for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinion only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.
Speaker Change: Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal security's law, including statements about the outlook of our business and other matters referenced in our press release issue today.
Speaker Change: He's four looking statements involve a number of risks and uncertainties that could cause actual results differently.
Speaker Change: Please refer to our SEC filing, as well as our press release issue today for our more detailed description of the risk factors that may affect our results.
Speaker Change: We also know that these forward-looking statements reflect our opinion only as a date of this call.
Speaker Change: And we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.
Gary Friedman: Also, during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impacts of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results press release.
Speaker Change: Also, during this call, we may discuss non-gap financial measures, which adjust our gap result to eliminate the impacts of certain items.
Speaker Change: You will find additional information regarding these non-gap financial measures and a reconciliation of these non-gap to get measures in today's financial results press release.
Unknown Executive: A live broadcast of this call is also available on the Industrial Relations section of our website at ir.rh.com.
Speaker Change: A live broadcast of this call is also available on the Industrial Relations section of our website at IR.org.com With that, I'll turn the call over to Gary.
Gary Friedman: With that, I'll turn the call over to Gary. Great. Thank you, Allison. Good afternoon, everyone. Thank you for joining our call.
Gary: Good afternoon everyone. Thank you for joining our call. I will start with our prepared comments and shareholder letter and then open the call to questions.
Gary Friedman: I will start with our prepared comments and shareholder letter, and then open the call to questions. To our people, partners and shareholders, we are pleased to report that demand was up 7 percent in the second quarter, and it continues to inflict positive, gaining momentum each month, with July finishing up 10 percent. Demand accelerated into the third quarter, with August up 12 percent and product margins inflecting positive, despite operating in the most challenging housing market in three decades. Our investments in the most prolific product transformation of platform expansion in our history are now resulting in our age gaining significant market share in North America while building the foundations for a long-term global expansion of fresh Europe, Australia, and the Middle East over the next decade.
Gary: to our people, our nation, share holders.
Speaker Change: We are pleased to report that demand was up 7% in the second quarter, and it continues to in blood positive, gaining momentum each month with July finishing up 10%.
Speaker Change: The man who's celebrated in the third quarter, the target set 12 percent in product margins and flexing positive, despite operating in the most challenging housing market in three decades.
Speaker Change: Our investment in the most prolific product transformation of platform expansion in our history. Our now resulting in our age-gaming, significant market share in North America, while building the foundation for a long-term global expansion of Russia, Australia, and the Middle East over the next decade.
Gary Friedman: Lee. While our inflection developed a couple of orders later than expected, we believe the important measure is not the timing, but rather the size of the vector we are creating in comparison to our industry. Vectors are measured in magnitudes and direction and can be affected in fourth effective in forecasting strategic separation and future market share gains. It is now clear that our vector is increasing by both measures, as we are outperforming the industry by 15 to 25 points. We expect our performance will continue to gain momentum in the second half of 2024, fuel our multi-year effort to elevate our product and multi-decade effort to elevate and expand our platform.
Speaker Change: While our reflection develops a couple of orders later than expected, we believe the important measure is not the timing, but rather the size of the vector we are creating in comparison to our industry.
Speaker Change: Lectures are measured in magnitude and direction, and can be affected in both effective and forecasting strategic separation and future market share games. It is now clear that our vector is increasing by both measures as we are outperforming the industry by 15 to 25 points.
Speaker Change: We expect our performance will continue to gain momentum in the second half of 2024, fueled by our multi-year effort to elevate our product and multi-decade effort to elevate our platform.
Gary Friedman: We are also pleased that results in the second quarter reflected our guidance with revenues of 830 million, up 3.6 percent versus a year ago, adjusted operating margin of 11.7 percent, and adjusted EBITDA margin 17.2 percent. While aggressively investing into a downturn, it has put pressure on short-term results. It is also positioned RH to capitalize on the long-term opportunities to present themselves during times of disruption and dislocation. We believe our demand performance demonstrates we are the best position brand in our industry to benefit from the anticipated rebound of the housing market. Once interest rates decline and home prices reset lower, closing the affordability gap that has pressed the market for the past several years.
Speaker Change: We are also pleased that results for the second quarter reflected our guidance with revenues of 830 million up 3.6% person the year ago, adjusted operating margin of 11.7% and adjusted EBITDA margin 17.2%.
Speaker Change: While aggressively investing into a downturn, let's put pressure on a short term result.
Speaker Change: It is also positioned our age to capitalize on the long-term opportunities to present themselves during times of disruption and dislocation.
Speaker Change: We believe our demand for form of STEM and stretch, we as a best position branded in our industry to benefit from the anticipated rebound of the housing market. When the interest rates decline and home prices reset lower, closing the affordability gap that has pressed the market for the past several years.
Gary Friedman: Every active creation is first connected destruction, Pablo Picasso. We worked hard to destroy the form of version of ourselves and are in the process of unleashing what we believe is an exponentially more inspiring and disruptive for each brand. Inclusive of the most prolific product transformation and platform expansion in the history of our industry. Our product transformation plan for the second half of 2024 includes the second mailing of our R.H. Interior Source Book, which arrived in homes mid-July through mid-August, is fueling our industry-leading demand. With new collections and improved stocks, our demand should continue to build throughout the second half of 2024.
Speaker Change: Every active creation is first an active destruction, public gossip.
Speaker Change: We've worked hard to destroy the form of version of ourselves and are in the process of unleashing what we believe is an exponentially more inspiring and disruptive far-aged brand. Inclusive of the most prolific product transformation in platform expansion in the history of our industry.
Speaker Change: Our Product Transformation Plan for the second half of 2024 includes the second mailing of our Arch Interior Sourcebook, which arrived in homes to visualize through mid-August.
Speaker Change: and in fueling our industry-leading demand. With new collections and improved in-stocks, our demand should continue to build throughout the second half of 2024.
Gary Friedman: Post-analysis of our circulation data, we decided to consolidate our R.H. contemporary source book collections into the R.H. Interior's and R.H. modern books to optimize overall mailing depth and efficiency. Mailing fewer, more meaningful books enables our brand to break through the compounding clutter across the consumer industry and is aligned with our gallery strategy of fewer, more immersive and brand-defining physical experiences. The second mailing of the new R.H. modern source book is scheduled for November with additional new collections and an expanded assortment including the contemporary book consolidation. Again, we believe our expanded assortment improved in stock position will provide an additional list to our business in the fourth quarter.
Speaker Change: Post-analysis of our circulation data, we decided to consolidate our risk and temporary source book collections into the arch interiors and our two modern books to optimize overall mailing depth and efficiency.
Speaker Change: Mailing fewer, more meaningful books enables our brand to break through the compounding clutter across the consumer industry and is aligned with our gallery strategy of fewer, more immersive and brand-defining physical experiences.
Speaker Change: The second mailings of the new RH modern source book is scheduled for November with additional new collections and an extended assortment, including the contemporary book consolidation.
Speaker Change: Again, we believe our expanded assortment improved in stock position will provide an additional list to our business in the fourth quarter.
Gary Friedman: The third mailing of the new R.H. Interior Source Source Book is planned to be in homes early January through February. Capitalizing on what is traditionally one of the largest selling seasons for furniture, post-consumers and designers returning from holiday travel. This mailing should help generate a strong finish to 2024 and continue the momentum as we enter next year.
Speaker Change: The third mailing of the new RH interior says source book is planned to be in homes early January through February. Capitalizing of what is traditionally one of the largest selling seasons for furniture, post-consumers and designers returning from holiday travel.
Speaker Change: This mailing should help generate a strong finish to 2024 and continue the momentum as we enter next year.
Gary Friedman: As you know, we acquired Waterworks in 2016, arguably the most desired brand in the luxury bathroom and kitchen category. The Waterworks team has been an outstanding job over the past eight years, further elevating the brand and building a highly profitable business model that can scale. Waterworks, like most other luxury brands in the home space, generates the vast majority of its revenues from the trade market, selling to architects, designers, developers, and builders. While our age has a meaningful trade business, the vast majority of our revenue is generated by consumers. We believe there's a significant opportunity to amplify the Waterworks business on the RH platform by exposing the brand to a much larger audience, similar to how we have expanded other trade-focused businesses and brands over the years.
Speaker Change: As you know, we've acquired waterworks in 2016. Arguably the most desired brand in the electric bath and kitchen category.
Speaker Change: The Water Works team has done an outstanding job of the past eight years further elevating the brand and building a highly profitable business model that can scale.
Speaker Change: Waterworks, like most other luxury brands in the home space, generates the vast majority of its revenues from the trade market, selling to architects, designers, developers and builders. While our age has a meaningful trade business, the vast majority of our revenue is generated by consumers.
Speaker Change: We believe there's a significant opportunity to amplify the waterworks business on the RH platform by exposing the brand to a much larger audience. Similar to how we have expanded other trade focus businesses and brands over the years.
Gary Friedman: Our plan is to launch with the 3,000 square foot Waterworks showroom in our largest new design gallery in Newport Beach, California, opening in the fourth quarter of 2024. We will also be developing a Waterworks source book with plans for test mailing in 2025. Waterworks today is just shy of a $200 million business with mid to high teams EBITOM margin that we believe has the potential to become a billion dollar global brand on our platform.
Speaker Change: Our plan is to launch with the 3,000 square foot waterworks showroom in our largest new design gallery in Newport Beach, California, opening in the fourth quarter of 2024.
Speaker Change: We will also be developing a water resource book with plans for test mailing in 2025. Waterworks today is just shy of a $200 million business with mid to high teams EBITDA margin that we believe has the potential to become a billion dollar global brand on our platform.
Gary Friedman: Let me shift your attention to the elevation of our and expansion of our platform. We continue to open the most inspiring and immersive physical experiences in our industry, and some would say the world. Spaces that are a reflection of human design, a study of balance, symmetry, and perfect proportions. Spaces that blur the lines between residential and retail, indoors and outdoors, home and hospitality. Spaces with garden court guards, rooftop restaurants, wine and breeze the bars. Spaces that activate all of a sense and spaces that cannot be replicated online. Our plan to expand the RH brand globally, address new markets locally, and transform our North American galleries represents a multi-billion dollar opportunity.
Speaker Change: Let me shift your attention to the elevation of our in-expansion of our platform.
Speaker Change: We continue to open the most inspiring and immersive physical experiences in our industry and some would say the world.
Speaker Change: Spaces that are reflection of human design, a study of balance, symmetry, and perfect proportions.
Speaker Change: Spaces that blurs the lines between residential and retail indoors and outdoors, home and hospitality.
Speaker Change: Spaces with Cardi Court guards, we've taught restaurant, wine and barista bars. Spaces that activate all of the senses and spaces that cannot be replicated online.
Speaker Change: Our plan to expand the RH brand globally, address new markets locally, and transform our North American galleries, represents a multi-billion dollar opportunity.
Gary Friedman: Our platform expansion plans in the second half of 2024 includes RH Newport Beach, opening in November with over 90,000 square feet of indoor and outdoor space, spread over four floors with views of the specific ocean. It will be one of our most dramatic, immersive and brand-of-finding physical locations today. And we'll put three legacy galleries in the region with a 260 seat indoor outdoor rooftop restaurant with uninterrupted views of the California coastline, two wine and breeze the bars. An interior design atelier, our first water works showroom and the most expansive luxury outdoor furniture sortmen in our industry.
Speaker Change: A platform expansion plan, the second half of 2024, includes
Speaker Change: RH Newport Beach.
Speaker Change: in November with over 90,000 square feet of indoor and outdoor space spread over four floors with views of the specific ocean.
Speaker Change: will be one of our most dramatic, immersive, and brandifying physical locations today. And we'll post, replace, three legs to galleries in the region.
Speaker Change: with a 266C indoor outdoor rooftop restaurant with an interrupted use of the California coastline.
Speaker Change: 2 wine and breeze the bars, an interior design at L.A. Our first waterworks showroom.
Speaker Change: and the most expansive luxury outdoor furniture sortmen in our industry. Our HM4 Beach will be an inspiring destination in southern California market, and it's a potential to become our second, $100 million plus gallery.
Gary Friedman: RH Newport Beach will be an inspiring destination in Southern California market and its potential to become our second 100 billion dollar plus gallery. RH Rolly, also opening in November, features 50,000 square feet of indoor and outdoor space over three levels with a rooftop restaurant, garden court guards, a wine and breeze the bar, and an interior design atelier. R.H. Montecito, opening in early December, is a reimagination of the historic firehouse in the Charming Non-Played, first of all, Santa Barbara, California, featuring an indoor outdoor courtyard restaurant with fireplaces and fountains, a wine of barista bar, and an interior design atelier.
Speaker Change: are each rally, also opening in November, features 50,000 square feet of indoor and outdoor space over three levels, with a rooftop restaurant, garden court guards, a wine and barista bar, and an interior design utility egg.
Speaker Change: is a reimagination of the Historic Firehouse in the Charmy Donn Place, first of both Santa Barbara, California, featuring an indoor outdoor courtyard restaurant with fireplaces and fountains, a wine and breeze to bar, and an interior design to L.A.
Gary Friedman: The opening of our first R.H. interior design office in Palm Desert, California, this November, we believe there is an opportunity to address new markets locally by opening design offices in neighborhoods, towns, and small cities where the wealthy and affluent live, visit, and vacation. The Palm Desert location is the unique test at the consumer-facing professional interior design office, separate from a gallery. Our goal is to establish the R.H. brand as the leader in the world of professional interior design and enable us to attract the highest caliber of interior designers in the industry.
Speaker Change: The opening of our first RH Interior Design Office in Palm Desert, California, this November.
Speaker Change: We believe there is an opportunity to address new markets locally by opening design offices in neighborhood towns and small cities where the wealthy and influence lives visit invocation.
Speaker Change: The Palm Desert location is a unique test at the Consumer Sacing Professional Interior Design Office, separate from a gallery. Our goal is to establish the RH brand as a leader in the world of professional interior design and enable us to attract the highest caliber of venture designers in the industry.
Gary Friedman: As we look forward, we anticipate an inflection of our business in Europe as we begin to open in the important brand-building markets of Paris and London in 2025 and Milan in 2026. It is then we will begin to have the scale to support the advertising investments necessary to build our business across Europe. We're looking forward to discussing our global expansion in further detail once we open those important markets.
Speaker Change: As we look forward, we anticipate new flexion as our business in Europe. As we begin to open in the important brand-building markets of Paris and London in 2025, and belongs in 2022.
Speaker Change: It is then we will begin to have the scale to support the advertising investment necessary to build our business across Europe. We're looking forward to discussing our global expansion and further detail once we open those important markets.
Gary Friedman: We are also making meaningful investments to elevate and differentiate our online experience, and we'll be making meaningful upgrades to our website throughout the second half of 2024. Some of the functionality we plan to introduce is quite revolutionary and unlike anything in the market. We plan to file for design patents on several of the user interface and presentation designs, and we'll begin to discuss the new website strategy in more detail as we roll out the new functionality.
Speaker Change: We are also making meaningful investments to elevate and differentiate our online experience and will be making meaningful upgrades to our website throughout the second half of 2024.
Speaker Change: Some of the functionality we plan to introduce is quite a revolutionary, and unlike anything in the market. We plan to file for design patents on several of the user interface and presentation designs, and we'll begin to discuss the new website strategy and more detail as we roll out the new functionality.
Gary Friedman: Now let me turn your attention to our outlook. Despite expectations for industry conditions to remain challenging until interest rates ease and the housing market begins to rebound, we expect our demand trends to accelerate throughout 2024 and into 2025. Due to the extensive transformation of our assortment, we expect revenue to lag demand during the year by approximately 4 to 8 points until we read and react to the new collections, reduce back orders, and shorten special order lead times. Therefore, we'll begin; we'll be guiding and reporting both demand and revenue growth each quarter during fiscal 2024, so shareholders and investors can accurately analyze the business.
Speaker Change: Now, let me turn your attention to our outlook.
Speaker Change: Despite expectations for industry-disconditions to remain challenging until interest rates ease and the housing market begins to rebound. We expect our demand trends to accelerate throughout 2024 and into 2025.
Speaker Change: Due to the extensive transformation of our assortment, we expect revenue to lack demand during a year by approximately 48 points until we read and react to the new collections, reduce back borders and shorten specialover lead times.
Speaker Change: Therefore, we'll begin, we'll be guiding and reporting both demand and revenue growth each quarter, during fiscal 2024, so shareholders and investors can accurately analyze the business.
Gary Friedman: We believe it is also important to note that we are now forecasting to end the year with an increased backlog of approximately 80 to 100 million due to revenue lagging demand throughout 2024, which will negatively impact suggested operating an EBITDA margin by approximately 100 basis points for the year. Additionally, investments to startup costs to support our international expansion are now estimated to be approximately 230 basis point drag for 2024.
Speaker Change: We believe it is also important to note that we are now forecasting to end the year with an increased backlog of approximately 80 to 100 million due to revenue lagging demand throughout 2024, which will negatively impact the gested operating in e-billion margins by approximately 100 basis points for the year.
Speaker Change: Additionally, investments start-up costs to support our international expansion are now estimated to be approximately 230-based point drag for 2024.
Gary Friedman: Due to our inflection ramping later than expected, we are gesting our full year forecast for fiscal 2024 as follows on a 52 versus 52 week basis. Demand in the range of 8 to 10%, revenue growth in the range of 5 to 7%. Johnson, adjusted operating margin in the range of 11 to 12% and adjusted evidom margin in the range of 17 to 18%. For the third quarter of fiscal 2024, we are forecasting demand growth in the range of 12 to 14%. Revenue growth in the range of 7 to 9%, adjusted operating margin in the range of 15 to 16%, and adjusted evidom margin in the range of 21 to 22%.
Speaker Change: Food or inflection ramping later than expected, we are adjusting our full year forecast for fiscal 2024 as follows on a 52 versus 52 week basis.
Speaker Change: The Man in the Range of 8-10%
Speaker Change: Revenue growth in the range of five to seven percent.
Speaker Change: I just did operating margin in the range of 11 to 12 percent.
Speaker Change: and adjusted ebook on margin in the range of 17 to 18%.
Speaker Change: For the third quarter of fiscal 2024, we are forecasting demand growth in the range of 12 to 14%.
Speaker Change: Revenue growth in the range of 7 to 9 percent adjusted operating margin in the range of 15 to 16 percent.
Speaker Change: and the suggested EBITDA margin in the range of 21 to 22%.
Gary Friedman: Leaders have to be comfortable making others uncomfortable. Leadership is about pursuing a vision, since as you've never seen, that somewhere you've never been. As creatures of habit, changes are uncomfortable for humans, but for the people and partners of TRH, a culture of leadership and innovation is at the core of who we are and reflected in everything we do. We're comfortable making ourselves and others uncomfortable for over two decades and plan to continue doing so for the foreseeable future. It's what leaders do, and how we know we're on the right path. Whether it's launching the most prolific product transformation in the history of our industry while others are hunkering down during the worst housing market in three decades, or opening the largest and most immersive fiscal retail experiences around the world while others are shrinking or closing their stores and moving online.
Speaker Change: Leaders have to be comfortable making others uncomfortable.
Speaker Change: Leadership is about pursuing a vision, something you've never seen, somewhere you've never been.
Speaker Change: As creatures of habit, change is uncomfortable for humans, but for the people and partners of T.R.H. The culture of leadership and innovation is at the core of who we are and we're collected in everything we do.
Speaker Change: We've run comfortable making ourselves another's uncomfortable for over two decades and plan to continue doing so for the foreseeable future.
Speaker Change: It's what leaders do and how we know we're on the right path.
Speaker Change: Whether it's launching the most prolific product transformation in the history of our industry while others are hunkering down during the worst housing market in three decades.
Speaker Change: We're opening the largest and most immersive physical retail experiences around the world, while others are shrinking or closing their stores and moving online.
Gary Friedman: By refusing to follow the herd into the anything but social world of social media, you won't find it on Instagram or paying a bunch of strangers called influencers by some to say they love our brand on TikTok. One thing you can be sure of is that place you will likely find us is on the road less traveled. One guided by our vision and values that we'll continue to ignite our spirit and inspire our customers.
Speaker Change: By refusing to follow the hurts into anything but social world of social media, you won't find a son in the surround.
Speaker Change: or painting a bunch of strangers.
Speaker Change: called influencers by son to say they love our brand on TikTok. One thing you can be sure of is that place you will you will likely find us is on the road less traveled.
Speaker Change: What invited by our vision and values that will continue to ignite our spirit and inspire our customers.
Gary Friedman: Over 20 years ago, we began this journey with a vision of transforming a nearly bankrupt business that had a $20 million market cap and a box of Oxardol laundry detergent on the cover of this catalog into the leading luxury home brand in the world. The lessons and learning insights and intricacies that sacrifice is made and the start issue developed by getting knocked down 10 times and getting up 11 leads to the development of the mental and moral qualities that build character and individuals and form cultures in organizations. Lessons that can't be learned in a classroom or by managing a business.
Speaker Change: Over 20 years ago, we began this journey with a vision of transforming a nearly bankrupt business that had a $20 million market cap and a box of box that all laundry decisions on the cover of this catalog into the leading luxury home brand in the world.
Speaker Change: The lessons and learnings insights and intricacies that sacrifices made and the scar tissue developed by getting knocked down ten times and getting up eleven. Leach to the development of the mental and moral qualities that build character and individuals and form cultures in organizations.
Speaker Change: Lessons who can't be learned in the classrooms for by managing a business.
Gary Friedman: Lessons that must be learned by building one. In a world that rewards duplication and penalizes the inherent bumpy road of innovation, especially for companies in the public domain, we the people and partners of TMRH will continue to drive ourselves to destroy today's reality so we can create tomorrow's future while remaining completely comfortable, making ourselves and others uncomfortable.
Speaker Change: Lessons that must be learned by building one.
Speaker Change: In a world that rewards duplication and penalizes the inherent bumpy road of innovation, especially for companies in the public domain.
T-Marriage: We, the people and partners of T-Marriage, will continue to drive ourselves to do story-to-day reality so we can create tomorrow's future. While remaining completely comfortable, making ourselves and others uncomfortable.
Gary Friedman: Never underestimate the power of a few good people who don't know what can't be done, especially these people. Onward TMRH, carpeting.
Speaker Change: Never underestimate the power of a few good people who don't know what can't be done, especially these people. Onward teammates, RH, Carpidium.
Unknown Executive: Operator will now open the call to questions. At this time, if you would like to ask a question, please press the star and one on your telephone. von Keepad. You may withdraw yourself from the queue at any time by pressing star two, and once more that is star and one.
Speaker Change: Operator will now open the call to questions.
Speaker Change: At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star to, and once more, that is star and one.
Unknown Executive: In the interest of time, we ask that you limit yourself to one question and one follow-up question. You may recue for any additional questions.
Speaker Change: In the interest of time, we ask that you limit yourself to one question and one follow-up question. You may recue for any additional questions.
Kurt Nagel: We'll pick our first question from Kurt Nagel with Bank of America. Your line is open.
Speaker Change: We'll pick our first question from Kurt Nagle with Bank of America. Your line is open.
Unknown Executive: Great.
Kurt Nagel: Thanks so much for taking the question. I just know with the inflation demand trends driven by all these new product marches coming through. I'm feeling pretty good about the product margins. I think you called that out in the press release, you know, stable. Hopefully, after the rest of the year, putting you above the frights or market that feels a little more promotional. What are your thoughts on that?
Kurt Nagle: Great, thanks so much for taking the question. Yeah, so just know with the inflection of the mantras driven by all these new product launches come through.
Speaker Change: I'm feeling pretty good about the product margins, you know, I could be called that out in the press release, you know, stable, you know, hopefully after the rest of the year, putting you like it's above the phrase or you know, market that feels a little more promotional.
Gary Friedman: I'm sorry. We couldn't quite hear you. Yeah, just with the inflection, you know, new products, right? A good margin. How are we feeling about the product margins for the rest of the year? That's a core of the question. Well, I think, as I mentioned in the third quarter, they've been flexed positive. And, you know, we feel very good about the business right now. You know, the inflection happened a couple of quarters later. You know, when you're making big moves and big innovations like this. It's like said, it's not as much about the timing as it is the vector.
Speaker Change: I'll put your thoughts on that.
Speaker Change: I'm sorry, you were kind of, we couldn't quite hear you. Yeah, so, yeah.
Speaker Change: Yeah, just with the inflection, you know, new products right at good margins, how we're feeling about the product margins for the rest of the year. That's the core of the question.
Speaker Change: Well, I think, as I mentioned in the third quarter, they've been plucked, positive, and...
Speaker Change: We feel it's very good about the business right now, the inflection happens a couple of quarters later. When you're making big moves and big innovations like this, it's like a sedicent.
Speaker Change: Not as much about the timing as it is the vector and increasing magnitude and directs into the vector.
Gary Friedman: And, you know, and the increasing magnitude of the direction of the direction of that vector. And what that helps you kind of see down the road. And, you know, now that, you know, enough data, you know, through the product introductions we've made over the last several seasons. And, you know, now it's about refining, you know, and, you know, polishing and, you know, continuing to kind of learn and improvise and adapt. And, you know, we've got a lot more in the pipeline. So, you know, I sit here and I think about, you know, what the mix will begin to shift, you know, today. But, you know, we like where we are, we like, you know, the demand vector this, you know, that unveiling itself.
Speaker Change: and what that helps you kind of see down the road and, you know, we've now got, you know, enough data, you know, through the product, introductions we've made over the last several seasons.
Speaker Change: and you know, it's about refining, you know, and you know, polishing and you know, continuing to kind of learn and improvise and adapt.
Speaker Change: and we've got a lot more in the pipeline so if I sit here and I think about what the mix will begin to shift today.
Speaker Change: We'd like where we are, we'd like...
Speaker Change: You have the demand?
Gary Friedman: We like that margins have been collected positive. We like that we've got, you know, multiple galleries, new galleries opening in front of us. One of them, you know, I mean, could be, you know, one of them's worth like three or four galleries in and of itself. And, you know, when you look think about the kind of value are each new port beach is going to be, I think it's, you know, it's going to be a, you know, a dominant and disruptive force throughout southern California, you know, and, you know, we're really excited about what's ahead of it.
Speaker Change: Vector, you know, that unveiling itself, we like that margins have been collected positive, we like that we've got
Speaker Change: You know, multiple galleries, new galleries opening in front of us, one of them.
Speaker Change: You know, I mean, could be, yeah, one of them's worth like three or four galleries in and of itself. You know, when you look think about the kind of value our each new, new four pieces going to be. I think it's, you know, it's going to be a...
Speaker Change: You know, a dominant and disruptive force throughout Southern California, you know, and we're really excited about what's ahead of us. So yeah, we're going to continue to.
Gary Friedman: So, yeah, we're going to continue to do what we're doing; we're going to continue to learn, grow, improvise, adapt. And you know, you know, refine and elevate, continue to elevate our strategy. So, I can be more happy about what we are. would have liked to tap in a couple of quarters earlier, but that's not really the point, right? I said to somebody, you know, how many times has Elon much been on time? You know, when you're making big moves, it's really hard to be on time. If you're really innovating, it's really hard to be on time.
Speaker Change: See what we're doing, we're going to continue to.
Speaker Change: Burn, grow, improvise, adapt, and, yeah.
Speaker Change: Reply and elevate continue to elevate our strategy.
Speaker Change: I can be more happy about Larry R.
Speaker Change: Would have liked to tap in a couple of orders earlier, but that's not really the point, right? I said to somebody, you know, how many times is anyone much been on time?
Speaker Change: You know, when you're making big moves, it's really hard to be on time. If you're really innovating, it's really hard to be on time.
Gary Friedman: If you're just iterating, it's easy to do that and be on time. It's just that, you know, the size of the outcome is never that meaningful, you know, in a long-term strategic perspective. So, you know, if you think about where we started, you know, it's a $20 million, you know, market cap brand that was on the edge of bankruptcy with a box of oxaloid detergent and selling, you know, nostalgic discovery knick-knacks with 52% of our business. And to think that we made it out of that and built the brand that we built today. You know, I bring that up some time to time to help people think about if we could come from there and get where we are today.
Speaker Change: If you're just iterating, it's easy to do that, and be on time, it's just that the size of the outcome is never that meaningful and a long term strategic perspective. So if you think about where we started.
Speaker Change: Yes, it's 20 million dollars.
Speaker Change: Marky Capp Brands, that was on the edge of bankruptcy with a box of oxytol laundry detergent and selling, you know, an astrologer discovering Nick Nax with 52% of our business.
Speaker Change: and to think that we made it out of that and built the brands that we built today. I bring that up some time to help people think about it.
Speaker Change: If we can come from there and get to where we are today.
Gary Friedman: What's the potential of where we can go next? You know, and you know, so you know, we couldn't be more excited, but we also couldn't be more focused. You know, we're very focused right now. And, you know, and, and we're going to get more focused, and we're going to continue to edit and get more clear, and allocate our time better, allocate our capital better. You know, so in many ways, you know, we're just kind of warming up with the same, you know, since the beginning of the inflection. So, you couldn't be happier.
Speaker Change: What's the potential of where we can go next?
Speaker Change: So we couldn't be more excited but we also couldn't be.
Speaker Change: More focused. We're very focused right now. And we're going to get more focused and we're going to continue to edit and get more clear.
Alicator: and Alicator Time Better, Alicator Capital Better, so in many ways, yes.
Alicator: We're just kind of warming up with this thing since the beginning of the inflection. You know so.
Kurt Nagel: And then just a quick follow-up. So, you know, consolidation of the contemporary catalog, you know, totally understand the efficiencies. Do you think that maybe points to maybe the scope of the collection being a little bit smaller than anticipated, or maybe just more of us, I don't know, a timing thing, or it's selling a very high priced, you know, sort of products and, you know, market that's still still pretty choppy.
Alicator: Fendi Happier.
Speaker Change: and then just a quick follow-up. So, you know, consolidation of the contemporary.
Speaker Change: Catalog, you know, totally understand the efficiencies. Do you think that maybe wants to, maybe the scope of the question being a little bit smaller than anticipated wars, you know, maybe just more of a, I know a timing thing, or it's selling a very high priced, you know, set a product and you know, market that still still pretty choppy.
Gary Friedman: Now, you know, the, the, the, you know, the, the point about, you know, I put any made likes here, and I talked about contemporary at some point instead that we, you know, we're kind of arrogant and pricing, you know, on the product that was, you know, that's just a partial issue. So, it's more about as, it's trends developed and evolved in any industry, right? There's an opportunity to kind of segment and focus on different looks, aesthetics, perspectives, you know, and we have been, you know, successful at the point. It's thinking about kind of taking assortments, focusing them and getting them to break through the clutter, yet all kind of still integrated as one brand with a singular point of view, but delivered to the consumer with more clarity than.
Speaker Change: Now, you know, the point about, you know, I put it in mid-Lax year and I talked about it in Capri at some point and said that we, you know, we're kind of arrogant and pricing. You know, on the product, it was, you know, it's just...
Speaker Change: A partial issue. It's more about it.
Speaker Change: It's trends developed in any industry, right? There's an opportunity to kind of segment and focus on...
Speaker Change: Yeah, get friends.
Speaker Change: looks at aesthetics, perspectives, and we have been successful at the point at thinking about.
Speaker Change: as taking assortments.
Speaker Change: I'm focusing on and getting them to break through the clutter. Yeah, all kind of still integrated is one brand with a singular point of view by delivered to the consumer with more clarity.
Gary Friedman: You know, then shopping, I mean, I don't know, like somewhere, some online thing like Paragold or Wayfair, right? Where you just gotta look at a lot of stuff, and you can't really find things. So the ability to, you know, just focus our business and deliver the business with, you know, really clear and compelling way is what we'll continue to do. You know, just in this case, there is a big, you know, a big trend movement. And, you know, no different than the big movement that was made that, you know, led us to isolate versus integrate RH Modern.
Speaker Change: You know the sharpings.
Speaker Change: I mean, I got it up like somewhere, some online thing like parable, they're way fair, right? Where you just have to look at a lot of stuff and you can't really find things. So the ability to...
Speaker Change: You know, focus our business and deliver the business with, you know, really clearing compelling way.
Speaker Change: is what will continue this.
Speaker Change: Dude, you know, just in this case there is a big, you know, a big trans movement and you know, no different than the big movements that we've made that, you know, let us do.
Gary Friedman: Yeah, I mean, that was a big discussion here years back. Yes, we developed that assortment. Yeah, do we integrate it into our RH materials book and evolve that book, or, you know, do we isolate it and create a more focused message to the consumer? And, yeah, and so you gotta think about what are the sides of the trends, how do the trends develop, you know, how long the trends are, and, you know, you're constantly thinking about how to present in a clear and compelling way that's going to break through. So, you know, we've done a lot of things, you know, a lot of different books, you know, RH Beach House, Ski House, things like that, which you'll see come back, right, and continue to communicate the breadth and depth of the RH brand.
Speaker Change: I select versus integrated RH modern. Yeah, that was a big discussion here years back. Yes, we developed that assortment. Yeah, do we integrate it into RH, which are your books and involved that book?
Speaker Change: Or, you know, do we isolate it and create a morph?
Speaker Change: Message to the consumer.
Speaker Change: And so, you gotta think about what are the size of the trends, how long the trends are. And you're constantly thinking about how to present in a clear and compelling way this is going to break through.
Speaker Change: So, you know, we've done a lot of different books, you know, our speech, how to ski, how things like that. It will come back and continue to communicate the breath and depth of the orange brand.
Gary Friedman: And, you know, we've done big, small, small spaces, all these kinds of things, and you don't have to kind of keep doing them with regularity. You know, you've got to kind of keep painting a picture and breaking through and having people see you. You know, we're in a world, you know, we have six senses, and out of our six senses, our dominant senses, our sight and our sight drives 80% of our behavior. Right, and so if you can't break through visually, the odds are you're just not going to be seen, and if you're not going to be seen, how can you fire anybody, you know, how can you create any kind of a destination or reaction.
Speaker Change: And, you know, it's been a big smile small space in all these kind of things and you don't have to kind of keep doing them with regularity, you know, you got to kind of keep.
Speaker Change: Painting a picture and breaking through and having people see you. We are in a world, we have six senses and have our six senses, our dominant senses, our sight, and our sight drives 80% of our behavior.
Speaker Change: Right, and so if you can't breakthrough visually
Speaker Change: The odds are you're just not going to be seen.
Speaker Change: and if you're not going to be seeing how can you fire anybody, you know, how can you.
Gary Friedman: Yeah, so we're always doing that. You'll always see us continue to think about how to be seen, how to break through, you know, how to communicate visually in, you know, in this world. I mean, if people don't see what you're selling, nobody cares. You know, they don't care about the quality. Yeah, if they don't like the design, we're, you know, we're the overall presentation doesn't break through the market and they just don't see you. Yeah, so our business is all about kind of design quality and value in that order. You know, everything has to be in the right hierarchy, and you've got to break through.
Speaker Change: Create any kind of a destination or reaction.
Speaker Change: Yeah, so we're always doing that. You'll always see a continued think about how to be seen, how to break through, you know, how to communicate visually in, you know, in this world. I mean, if people don't see what you're selling, nobody cares.
Speaker Change: Now, they don't care about the quality, yes, they don't.
Speaker Change: Like the design, where the overall presentation doesn't break through the market and it's so MCU. So, in our business, all about kind of design quality and value in that order. Everything has to be in the right hierarchy, and you got to break through.
Gary Friedman: So contemporary, if you went back in history, people asked me all the time, where do the trends come from, and I always tell them the death. You know, and it sounds, you know, catches people up guard. What do you mean? I think we'll look generation's pathway. The belongings, you know, go into the stage trails; the stage trails feed the high and antique markets; the hand and peak markets feed the high and interior design market and the high and reproduction market. And then it trickles down there, and it trickles through always in a unique and of the moment way.
Speaker Change: Contemporary with some like modern, if you want back in history, people actually all the time. Where do the trends come from? And I always tell them to death. And it sounds, you know, catch the people off guard. What do you mean? It will look generation's pathway.
Speaker Change: the Belongings, you know, going to the station, the station, the high-end antique markets, the high-end antique markets, the high-end interior design market, and the high-end reproduction market, and then it trickles down from there, and it trickles through.
Speaker Change: Always in it, unique and of the moment, way.
Gary Friedman: But, you know, when it's mid-century modern or that came through that whole trend or, you know, the contemporary trend that follows that, you know, the next trend that is kind of going to start building. You know, if you just want them on a website. which nobody can see, by the way. You know, it's an invisible store. It's like it's a great platform if your position is kind of price and things like that, but if you're kind of leading, an aesthetic design is really critical to kind of your positioning. You know, launching online is very limited.
Speaker Change: But, you know, it's century modern, you know, that came through that old trend or, you know, the contemporary trend that follows that, you know, the next trend that is kind of going to start building, you know, if you just lump them on a website.
Speaker Change: which nobody can see, by the way, you know, some invisible store. It's a great platform if your position is kind of priced and things like that. But if you're kind of leading an aesthetic business, design is really critical.
Speaker Change: Yeah, why don't you not line it? Very limited.
Gary Friedman: Nobody walks by you. Nobody sees you. You know, you have to spend a whole bunch of money, you know, buying words and names and, you know, you're buying other brand names like what kind of weird thing that is, right? Like, let me buy their brand name. So I hope that somebody stumbled into my brand, you know, and maybe they'll see me, you know, or yes, let me buy a bunch of words or things like, you know, let me pay, you know. It's like, is this so many kind of weird ways that people are trying to break through.
Speaker Change: Nobody worth buying, nobody sees you.
Speaker Change: You know, you spend a whole bunch of money, you know, buying words and names and you know, you're buying other brands, names, like what kind of weird thing that is, right? Let me buy their brand name, so I hope if somebody shovels into my brand, you know, and...
Speaker Change: Maybe they'll see me, you know, or, yeah, but he's by a bunch of words or things like, you know, let me, hey, you know, it's like, is this so many kind of weird ways that people are trying to break through I think they're...
Gary Friedman: I think there's, you know, I mean, we just go at it differently and uniquely. And we're very good at that. You know, so we're not perfect at it, right? So contemporary, you know, whenever thought was going to be with a big trend, but what it did is it became bigger than we thought and a kind of blurred lines. And so, you know, the lines between the interior book, the modern book, and the contemporary book were becoming too blurred. There wasn't; there wasn't the need to have all three. You know, be better to consolidate, make the other two more dominant, you know, mail more dominant book into the marketplace at greater depth and get a better financial result.
Speaker Change: Yeah, I mean, we just go at it differently and uniquely and we're very good at that. You know, so we're not perfect at it, right?
Speaker Change: Contemporary, you know, whenever thought was going to be.
Speaker Change: with a big trend, but what it did is it became bigger than we thought in a kind of blurred blind. And so, you know, the lines between the interior books, the modern books and the contemporary books were becoming too blurred. There wasn't.
Speaker Change: There wasn't the need to have all three.
Speaker Change: Yo, it's the better to consolidate.
Speaker Change: Make the other two more dominance. Go.
Speaker Change: Mail and more, more dominant book into the marketplace at greater depth and get a better financial result. That's the key here. It's not like it's contemporary to work.
Gary Friedman: That's, that's the key here. It's not like contemporary work. The goods are out there. You know, we have some stuff that was too, you know, too expensive. And, you know, when we first did Italian of poultry and things like that, and we put, you know, $70 yard, $80 yard fabric on it, you know, not a $20 yard fabric on it, not said in the yet. Yeah, price points that were too hot. Yeah, you know, that's okay. You know, mistakes are part of innovation. Yeah, these, you know, people who are afraid of mistakes never innovate, never take the risk.
Speaker Change: Again!
Speaker Change: are out there. We have some stuff that was too expensive and when we first did a talent of poultry and things like that, and we put it.
Speaker Change: You know, $70 or you are $80 or you are the fabric on it, you know, not a $20 or you are the fabric on it, no, it's not a $70 yet. Yeah, price points. We're too hot, yeah. You know, but that's okay. You know.
Speaker Change: Yes, mistakes are part of innovation.
Speaker Change: Yes, please.
Speaker Change: Now, people are afraid of mistakes.
Speaker Change: Never in a day, never take the risk.
Gary Friedman: And mistakes for us are, you know, just another lesson, another learning, you know, just kind of what we do. So I don't, I don't think contemporaries of mistakes. I think we priced some of that book in for effort. That was a mistake. But we learned a lot. And, you know, our view based on the data and the numbers is consolidated. And, you know, in the, you know, it's just going to break through the lines with two words. Well, you'll see us come out of other things in the future that may or may not continue, you know, to kind of, you know, the goods may blend in another way.
Speaker Change: and the fake for us or another lesson, another learning, yeah, it's this.
Speaker Change: What we did, so I don't think contemporaries would be safe. I think we priced some of that book.
Speaker Change: in the state. But we learned a lot, and you know, our view based on the data and the numbers is consolidated.
Speaker Change: Yeah, end the end of.
Speaker Change: is just going to break through, which is the lines that you've learned.
Speaker Change: Well, you'll see us come out of other things in the future that may or in the main life may or may not continue to kind of, you know, the good may blend in another way, but you've got to kind of continually break through, right?
Gary Friedman: But you've got to kind of continually break through, right? Yeah. Not doing the same thing over and over again, kind of expecting different results. It doesn't work. Not in a world that's constantly evolving. But being consistent and having consistent values and beliefs and a consistent approach and point of view is really important. So everything we do goes through our filters. And whether it's modern, it's an RH point of view on modern, whether it's interiors, whether it's, you know, classic, traditional, big style, small spaces, beach house, ski house, you know, all the things we do, I think, are recognized out there.
Speaker Change: Knife, doing the same thing over and over again, you know, kind of expecting different results. It doesn't work, not enough.
Speaker Change: in a world that's constantly evolving, but being consistent, and having consistent values and beliefs and a consistent approach and point of view is really important.
Speaker Change: Alright, so everything we do goes through our filters.
Speaker Change: and whether it's modern, it's an RH point of view on modern, whether it's interiors, whether it's you know, classic traditional.
Speaker Change: Six-style small spaces, beach house, key house, you know all the things we do, I think are recognized out there and people go, oh that's our aid.
Gary Friedman: And people go, oh, that's RH. I mean, some people still call us restoration hard work. So I just try not to do that. Okay, you know, we're trying to hone the brand, you know, make it simpler, get it to break through.
Speaker Change: I mean, some people still call us restoration hardware so I just try not to do that. Okay, you know if you're trying to hone the brand, you know, make it simpler, get it to breakthrough.
Kurt Nagel: So anyway, that's, yep. Okay, thank you. Thanks for it.
Speaker Change: So why?
Speaker Change: Anyway, that's... yep.
Speaker Change: and what we do is push it up.
Speaker Change: I'm just doing okay. Thanks, Gary.
Steven Forbes: We'll move next to Steven's account with City. Your vine is open.
Speaker Change: of next two Steven Zacone with City. Your line is open.
Steven Forbes: Great. Good afternoon. Thanks for taking my questions. I wanted to talk about the product disortment because there's been a lot of newness. And I think last year you gave this, this point that 80 to 85% of the assortment would be new. So I'm curious, are we at that point now, or do you need more newness in the second half of the year? And just with more product, newness coming into the business, do you feel like you're at the right cadence now?
Steven Zacone: Great, good afternoon, thanks for taking my questions.
Steven Zacone: [inaudible]
Steven Zacone: I wanted to talk about the product assortment because there's done a lot of newness and I think last year you gave this point that 80 to 85% of the assortment would be new.
Steven Zacone: So I'm curious, are we at that point now, or do you need more newness in the second half of the year? And just with more product newness coming into the business, do you feel like you're at the right cadence now, or as we get into 25, you'll have incremental newness to present to the consumer. Thank you.
Gary Friedman: Or, as we get into 25, you'll have incremental newness to present to the consumer. Thank you. Sure.
Gary Friedman: Thanks, Steven. Good question. So, we have a lot of newness coming in the second half and a lot of newness coming throughout next year. I'd say, yep, the late next year, we will start to be on a more predictable cadence, right? Yeah, so we will hit the 80, 85%. The first half of next year, you know, is when, you know, that there's a lot coming in the second half. And, you know, there's a lot coming in the first, you know, first half of next year and say, by the second half of next year, you know, we'll be on it, on a new regular cadence, right?
Speaker Change: Sure if they see them, good question. So we have a lot of newness coming in the second half.
Speaker Change: and a lot of newness coming throughout next year. I'd say, yeah, it's a late next year, we will start too.
Speaker Change: Be on a more...
Speaker Change: predictable cadence, right? Yeah, so, you know, we will hit the 85%
Speaker Change: The first half of next year is when there's a lot of coming in the second half and there's a lot of coming in the first half of next year and say by the second half of next year.
Speaker Change: You know, we'll be on a new regular cadence right since this is going to be very different.
Gary Friedman: The business would be very different. And, but we'll also, you know, there'll also be other things, right? Like, other category, we might address, like, you know, water works. I mean, we get a really small kind of bath business. I mean, we're taking the best, arguably the best bath brand on the planet, most desired and coveted bath brand on the planet. And, yeah, if you think about the industry, you know, the general trade industry is. is generally 80% of their business work a little more, but directionally think about it, 80% of the business is to architects, designers, you know, builders, zone and so forth, right?
Speaker Change: But we'll also...
Speaker Change: You know what, they'll also be other things, right, other category we might address, like, you know, water works. I mean, we...
Speaker Change: Get a really small, kind of bath business. I mean, we're taking the best bath, arguably the best bath brand on the planet. Most desired and coveted bath brand on the planet.
Speaker Change: and...
Speaker Change: Yeah, if you think about the industry, you know, the general trade industry is...
Speaker Change: is generally 80% of their business for a little more, but directly think about its 80% of the business is to architect designers, you know, builders, so on and so forth, right? It is a business to business.
Gary Friedman: It is a business-to-business, you know, kind of platform. And, and while we have a big trade business, you know, 80% of our business is to the consumer. You know, a lot of trade showrooms, and I think they're not even open on weekends. You know, they close at five or six o'clock; they're not open at night. They're not in places where consumers, you know, there's high traffic, or so and so forth.
Speaker Change: Yeah, kind of platform.
Speaker Change: and what we have a big trade business, you know, 80% of our business is to the consumer.
Speaker Change: Elf, you know, a lot of trade showrooms and high and things, they're not even open on weekends, you know, they close to 5 or 6 o'clock, they're not open at night. They're not in places where kind of simmer, you know, the side traffic, or something, or as a completely different model.
Gary Friedman: It's a completely different model. But what we've learned, you know, over our journey here is, you know, we took trade brands and businesses, you know, years ago. I mean, one example is Perennials, you know, one of the great brands in the high end to the trade, you know, high end outdoor fabric business and evolved into indoor fabrics and other textiles, etc. And, you know, convinced David and Anne to, you know, give us a world, you know, we were, I think, you know, so it was a long courtship. But, you know, we decided a partner and test, and it really worked out well for both of us.
Speaker Change: So what we've learned over our journey here is, you know, we took trade, grants and businesses, yeah.
Speaker Change: Years ago, I mean, one example is perennial, one of the great brands in the high end to the trade.
Diane D'Aplore: I am Diane D'Aplore fabric business and evolved into indoor fabric and other textiles, etc.
Diane D'Aplore: You know, convinced David and Anne to give us a world, you know, we were, I think, you know, so it was a long hardship, but yeah, we decided a partner in test and it really worked out well for both of us.
Gary Friedman: And, you know, their trade business is bigger today, and their business with us and other consumer businesses is very big. You know, I don't know their numbers, but it's worked out well for both of us. It's no different than why, you know, we made the acquisition of Waterworks, why we acquired the meetriens of, you know, Cattura Poultry, just juice, you know, kind of the folk furniture, you know, to the trade businesses and, you know, great designing quality products, even more importantly, just remarkable people, you know, and talent. And you know, think about it. We bought Waterworks eight years ago.
Diane D'Aplore: and...
Diane D'Aplore: You know, their trade business is bigger today and their business with us and other consumer businesses is very big.
Diane D'Aplore: I don't know the numbers, but it's worked out well for both of us.
Speaker Change: Snow different than why we made the acquisition of waterworks, why we acquired the Meetree Inc. You know, to cheer up whole street just at juice.
Speaker Change: I'm going to look for nature to the trade businesses and, you know.
Speaker Change: You know, great design and quality products even more importantly, just remarkable people, you know, and talent.
Speaker Change: You know, if you think about it, we bought water works eight years ago. You know, it takes time to kind of, you know.
Gary Friedman: You know, it takes time to kind of, you know, kind of refine, polish, think about integration, do things really in a, you know, incredible way.
Speaker Change: Kind of refined, polished, think about integration, do things really in a incredible way. And I think...
Gary Friedman: And I think, you know, if you, if anybody has called, comes to the opening of Newport Beach, which I would say is not to be missed, our experience. If you want to see how we can, you know, really disrupt the market, that's going to be a great example. And, you know, we're going to launch our first integrated waterworks showroom. And, and the brand will be, you know, seen by so many more people, you know, if I said, bite is start dominant sense, right. And, so, I mean, what do we have today, 14 waterworks showrooms? Yeah, yeah, you know, 14 Waterworks showrooms in the world, right.
Speaker Change: Yes, if anybody is called comes to the opening of New 4 Beach, which I would say is not to be missed. Are you experienced if you want to see how we can...
Speaker Change: Yeah, really disrupt the market that's going to be a great example.
Speaker Change: and you know we're going to launch our first.
Speaker Change: Integrated water were shown and the brand will be seen by so many more people. You know, as they said, five is third dominant sense, right?
Speaker Change: So, what have we had today, 14 water works in them?
Speaker Change: Yeah, you know, it was 14 water or shell rings in the world, right?
Gary Friedman: and I think the biggest one is like 10,000 feet, something like that; summer 3,000 feet. But, you know, they're not in the most highest traffic areas; it's just most trade brands aren't. But when you put the best brand in the world in front of multiple times more people who have, you know, the financial ability. By that, by the best product in the market, why wouldn't they? Right? Why wouldn't they do that? You know, you take, you know, the design and quality of Dmitry and Co. You know, you put it in front of massively bigger market or just if you've been put it in front of a massively better market at a greater value because, you know, you work at building the platform to scale that level of quality.
Speaker Change: and I think the biggest one is 10,000 feet, something like that, some are 3000 feet.
Speaker Change: You know they're not in the most highest traffic areas, it's just...
Speaker Change: Most Trade Brands are it.
Speaker Change: but when you put the best friend in the world in front of us.
Speaker Change: Most of the time, some more people who have...
Speaker Change: You know, the financial ability.
Speaker Change: Goodbye that.
Speaker Change: By the best product in the market, what is what you think, right, why wouldn't they do that? You know, you take it.
Dmitriant Co.: Here are the design and quality of Dmitriant Co.
Meroly Torres: Meroly Torres
Speaker Change: in front of massively bigger markets or just a juice and putting in front of a massively better market at a greater value because you work it building the platform to scale that level of quality. I mean, you used to say, we've got one and we were first.
Gary Friedman: I mean, you know, I used to say, way back when we were first. Kind of breaking through and, you know, building our model, furniture, this quality, you know, wasn't sold in quantity and we had to build kind of a, you know, like a new railroad, like a supply platform for this level of quality. I mean, people we work with in the beginning, you know, the businesses were a million dollars a year, three million dollars a year, you know, seven million dollars a year companies. And those companies are all like 150 to 200 million today, you know, selling that level of quality; it just wasn't available.
Speaker Change: and a breaking through and building our model at furniture of this quality, you know, what's installed in quantity and we had a build kind of a, you know, like a new railroad, like a supply platform for this level of quality.
Speaker Change: People we work with in beginning, you know, that this is where a million dollars a year, it's $3 million a year, you know, $7 million a year.
Speaker Change: and those companies.
Speaker Change: Art, all of like a 150 to 200 million in today.
Speaker Change: Selling that level of quality, it just wasn't available.
Gary Friedman: I mean, you kind of stopped a pottery bar, you know, you know, you're stopped it, you know, breaking barrel and, you know, maybe throw Ethan Allen in that, but, you know, different kind of aesthetic and, you know, I don't know the thing negative, but, you know, just didn't, it wasn't what was kind of evolving in the market. And, you know, so we did that. We met a lot of investments, actually, in a company. We let people money, and we did whatever we could to help them help us, right? And create, that's why I say, you know, in every letter I write to our people, our partners, and our shareholders, in that order, that is the hierarchy, that is the order of success.
Speaker Change: I mean, you kind of stopped at Pottery Barn.
Speaker Change: You know, you're softed, you know, breaking barrel and going to be through even Alan in that, but you know, different kind of aesthetic, you know.
Speaker Change: I don't think making a foot, you know, just in wetness, but it's kind of evolving in the market.
Adam: I am Adam.
Speaker Change: We did that. We met a lot of the dust we trusted in the company and we met people money and we did whatever we could to help.
Speaker Change: and then help us, right, and create that way, by saying, you know, in every letter I write, to our people, partners and our shareholders, in that order, that is the hierarchy, that is the order of success.
Gary Friedman: And, you know, we try to build incredible partnerships, and we try to make, take one plus one equal more than two, and sometimes it can equal 10. But it doesn't happen like that. So we kind of created, I think, a new market and, you know, look, whenever you're a market leader, there's going to be followers, and there's followers and people are having, and you've got to keep innovating and reinventing and evolving faster than others. And competition's good; it makes you better. But, you know, our market ahead of us, you know, I mean, we're the kind of the biggest of our kind in the world, you know, the opportunity is massive ahead of us.
Speaker Change: And uh
Speaker Change: You know, we try to build incredible partnerships and try to make take one plus one, each will more than two, and sometimes it can equal ten, but it doesn't happen like that.
Speaker Change: So we kind of created, I think, a new market.
Speaker Change: and, you know, whatever your market leader, they're going to be followers and followers and people are happening and you've got to keep innovating and reinventing and evolving you have faster than others. And competition is good. It makes you better.
Speaker Change: Yes, I'll...
Speaker Change: But, you know, our market ahead of us, you know, I mean, we're that kind of the biggest of our kind in the world. And the opportunity is massive ahead of us.
Gary Friedman: But that takes so long time to see, too, you know, see, you know, see jobs never sought Apple, like what it was, you know, you're trying not to go bankrupt, you know, you know, they got fired, you know, they didn't, you know, came back and they stayed the company for bankruptcy. And then, you know, you keep looking around the corners, you keep learning and growing, you know, listening and learning, testing and trying, improvising and adapting, adapting, and you know, and you grow, and that's what it's all about, but you can't become a manager of the business.
Speaker Change: Yeah, but that takes a long time to see, too, you know, see, see jobs never saw Apple, but it was, you know, you're trying not to go bankrupt, you know?
Steve Jobs: He's got fired, you know, then he came back and he stayed in the company for a few days and then, you know, you keep looking around the corner to keep learning and growing.
Steve Jobs: You know, listening and learning, testing and trying, improvising and adapting, adapting, and you know, and you grow and that's what's all about. But you can't become a manager of the business.
Gary Friedman: You'll never, great, you know, you'll never, great or build, you know, a market defining brand. Now, so I think that's what makes people uncomfortable now, then, you know, things are a little less predictable. You know, but that's what we do. And if you look at our history, the last 24 years, you know, since we've been on this journey, you know, from where we were with no resources, no capabilities, you know, you know, edge of bankruptcy is trying to, you know, never want to go up, try to not build bankrupt while you're trying to evolve the business.
Speaker Change: You'll never break, you'll never, you'll never, [inaudible]
Speaker Change: Great old build.
Speaker Change: Yeah, I was right
Speaker Change: Mark is defining brand, so I think that's what makes people uncomfortable with now then. Thanks for this little effort for this book.
Speaker Change: That's what we do. And if you look at our history for the last 24 years, you know, since we've been on this journey.
Speaker Change: Yeah, from where we were with no resources, no capabilities, you know.
Speaker Change: Yep, Edge of Bank Ripsy is trying to get. Now, everyone go and try to not feel the bank reps while you're trying to evolve the business.
Gary Friedman: Yeah, if we were able to get from where we were to where we are, you can only imagine where we can go next. And, but along the way, yeah, we're going to test and try things. We're going to, at times, try to do too many things and get a little unfocused. As that happens, you know, try to continue to just see me and I fully focused. And, you know, I think the last few years, you know, I think about five or seven, just I think we tried to do too much, and it's, you know, it's not fun when you, you know, kind of only braided a few things and maybe you're, you know, the outcome, you know, you've got to be braided all things.
Speaker Change: We're able to get from where we were at where we are. You can only imagine where we can go next. But along the way.
Speaker Change: Yep, we're going to test and try things, we're going to at times try to do too many things. Yeah, we get a little unfocused as that happens, you know, and try to continue this.
Speaker Change: I think about last few years, thank you about five or seven, just I think we tried to do too much.
Speaker Change: Yeah, it's, you know, it's not fun when you...
Speaker Change: You know, kind of only greater to few things and maybe you're...
Gary Friedman: If you want to be the real market leader, you've got to, you know, have the best product, the best presentation with the best brand, and you have to have the best financial results and the best shareholder returns, and all those things.
Speaker Change: You've got to be graded all things, if you want to be the real market leader, you've got to have the best product, the best presentation, with the best brand, and you have to have the best financial results and the best shareholder returns and all those things.
Gary Friedman: And so, you know, so, you know, as we go forward, you know, think about cadence and newness and stuff like that. We're going to see us continue to edit the focus, you know, going with what we just went through. We, none of us here had ever done that. Like, I've never led a team through a period like, you know, like we're going through right now. You know, and you know, all the things you've got to kind of design, develop, you know, integrate, you know, present, you know, it's a lot, yeah. But the really, the best thing is how much we learned and how much better we are.
Speaker Change: So, you know, as we go forward, you know, think about cadence and newness and stuff like that. You're going to see us continue to edit the focus, you know, going what we just went through. We none of us here have ever done that. Like, I've never.
Speaker Change: Let it came through a period like we're going through right now and you know all the things you've got it, it's kind of...
Speaker Change: Design Developed, you know, integrate, you know, present, you know, it's a lot, you know, but it's really the best thing.
Gary Friedman: You know, not just the brand, the leapfrogs; it's the leaders, the leapfrog. Now, so, you know, you don't build a business, right? You build a team, and the team builds the business. So, the people here that have built this business, that's what you want to focus on. Like, if you didn't die trying on the way over the last- yeah, 18, 24 months here, you are way better, you are way smarter, you know, and you have a capability now to go to a new level. So, yes, that's, yes, you actually what I'm really most excited about.
Speaker Change: is how much we learned and how much better we are. You know, not just the brand is the leaf frogs, it's the leaders of the leaf frog.
Speaker Change: Hello.
Speaker Change: Yeah, you know, build a business, right? You build a team in the team, build a business, so that people here.
Terfield: Terfield's existence.
Speaker Change: That's what you want to focus on.
Speaker Change: Like if you didn't die trying along the way over the last.
Speaker Change: 18, 24 months here.
Speaker Change: You're...
Speaker Change: Way better, you are way smarter, you have to end up.
Speaker Change: [inaudible] So, yes, yes, yes, yes. I mean, what I'm really most excited about.
Gary Friedman: Yeah, all the people that, you know, if I like to say times, marks through hell for a heavenly cause, that got us here. That now have the ability to take us to a whole new level, because, you know, what we've all learned together, how we've grown together.
Speaker Change: Yeah, all the people that...
Mark: I'd like to say it times Mark's through a hell for a heavenly cause that got us here.
Mark: That now's the ability to take us to a whole new little mother because...
Mark: Well, what we've all learned together, how we've grown together.
Gary Friedman: That's what's most important, and that's what's most exciting.
Mark: That's what's most important, and that's what's most exciting.
Unknown Executive: Great, thanks for all that detail.
Unknown Executive: I'll, I'll see the floor, and I look forward to the invite to the new floor opening. I look forward to seeing you.
Speaker Change #101: Great thanks for all that detail, I'll see you all for and I look forward to the invite to the new port opening
Stephen Forbes: We'll move next to Stephen Forbes with Guggenheim Securities. Your line is open.
Speaker Change #101: the 40th Annual.
Speaker Change #102: We'll move next.
Speaker Change #102: X to Stephen Ford's with Guggen.
Stephen Forbes: Good afternoon, Gary Jack Allison. Gary, last call we briefly discussed, right, the idea of top, middle, bottom tiers of the assortment, you know, the new collections. So, we'd love to hear you sort of talk through, you know, how you think the collections are mixing into those tiers today. As we all try to sit here and conceptualize like what the potential aggregate demand lift could be, you know, from the actions thus far into 25 and beyond. Yeah, well, you know, it's how many, you know, how many of the new collections, you know, made it in the top third; those will really move the business. You know, they made it into the top middle third; they'll move the business up.
Speaker Change #103: for Security.
Speaker Change #103: You're buying this open.
Speaker Change #104: Good afternoon, Gary Jack Allison.
Speaker Change #105: Let's call it, we briefly discussed the idea of top middle bottom tiers of the sort of in the new collections.
Speaker Change #106: So we'd love to hear you sort of talk through how you think the collections are mixing into those tiers today as we all try to sit here and conceptualize what the potential aggregate demand lift could be from the actions thus far into 25 and beyond.
Speaker Change #107: Yeah, well, it's, you know, it's how many, yeah how many.
Speaker Change #107: of the new collections.
Speaker Change #107: You know, made it in the top third, those will really move the business, you know, they made it into this top middle third, they'll move the business up. You know, they made it into the middle.
Gary Friedman: You know, they made it into the middle. You know, they're not going to make that big of a difference except when, when you get, when you get enough in the top third, it holds the whole thing up and the middle gets higher.
Speaker Change #107: You know, they're not going to make that big of a difference except when you get when you get enough in the top 30, hold the whole thing up and the middle gets tight, because there's a new middle, guys. When you think about it.
Gary Friedman: So, there's a new middle. Guys, when you think about, you know, this analogy and, you know, how I kind of describe it. And your bottom third is a bigger, you know, it's a much more productive bottom third, but you've got to kind of keep getting things into the top third, right? That's the key because the top third pulls everything up. It's like, it's like great people. It's like great leaders, right? They pull everybody up. They set a whole new expectation and a whole new bar, and all the people that are capable and have, you know, the desire and the capability reach a whole new level, and everything moves up.
Speaker Change #108: Yeah, this analogy and how he kind of described it. And your bottom third.
Speaker Change #108: is a bigger, you know, it's a much more productive bottom third, but you've got to kind of keep getting things into the top third, right? That's the key, because the top third pulls everything up. It's like, it's like great people. It's like great leaders, right?
Speaker Change #108: All of the people that are capable and have, uh...
Speaker Change #108: You know, the desire and the capability reach a whole new level and everything moves up. So...
Gary Friedman: So, you know, the real key here today is like, no, I would like if I just look at it and I go, okay, where are we versus the industry? Where are we? You know, where is our demand versus others? What does the vector look like? You know, what are we learning from the new top third? Because you wouldn't have the inflection we have unless you redefined the top third, right? And you redefined the top third. It's forever redefined. And then the middle third is forever redefined. And the bottom third is forever redefined, right? And there's no difference as you think about the product; it is to think about people, right?
Speaker Change #108: You know, the real key here today is like when I was like, if I...
Speaker Change #108: Just look at it and I go, okay, where are we versus the industry?
Speaker Change #108: Where are we? You know, where is our demand versus others? What does the vector look like? You know, what are we learning from the new top third? Because you wouldn't have the inflection we have unless you redefined the top third.
Speaker Change #108: Right? And you read the time at the top third, it's forever redefined. And then the middle third is forever redefined. And the bottom third is forever redefined, right?
Speaker Change #109: and there's no difference when you think about the product, you think about people. Somebody goes out to take the Olympics to the point of reference and race a record.
Gary Friedman: Somebody goes out, you know, take the Olympics as a point of reference and reach a record. in 100 meters or in some swimming race. It's a whole new standard. Everybody swims faster. Everybody runs faster. It's a whole new game. You know, you just keep redefining. So that's, that's the way to think about it. It's like it's not; it's the whole, the whole three thirds are moving up or moving down. Right. If you throw too many things in the middle, you know, you're probably going to fall behind because everybody's moving forward. Right. The world's evolving. If you're out there and you, you throw things into the bottom third, you know, and you're, you're more weighted that way, you're going down.
Speaker Change #109: in the 100 meters or in some swimming race.
Speaker Change #109: It's a Holy Standard.
Speaker Change #109: Everybody slings faster.
Speaker Change #109: Everybody runs faster. It's a whole new game. You know, you just...
Speaker Change #109: He's redefining, so that's the way it's things that if it's not, it's the whole.
Speaker Change #109: The whole three thirds are moving up for moving down.
Speaker Change #109: Right?
Speaker Change #109: If you throw too many things in the middle, then...
Speaker Change #109: You're probably going to fall behind because everybody's moving forward, right? The world's evolving. If you're out there and you throw things into the bottom there.
Speaker Change #109: You know, you're, you're more waited that way, you're going down, but you have to start with. Generally in every market.
Gary Friedman: But you have to start with, generally, in every market, somebody's doing a good job and moving a market forward. And they're going to create a higher standard, and, you know, other people will follow, other people will learn from them, whether they're there or not. If they're smart, they'll study the market leaders. Not just to emulate them, maybe short term to emulate them, but if they want to be the new market leader, they have to conceptualize and conceive a vision that can leapfrog that market leader. It's really hard to take a market leader out. It takes sometimes decades.
Speaker Change #109: Somebody's doing a good job and moving a market forward.
Speaker Change #109: and they're going to create a higher standard and other people will follow. Other people will learn from them whether they're not. If they're smarter, they'll study the market leaders.
Speaker Change #109: Not just to emulate them, maybe short term to emulate them, but if they want to be the new market leader, they have to conceptualize, and to see the vision that can lead frog that market leader. It's really hard to take a market leader out. Take some time's decades.
Gary Friedman: You know, how long was IBM at the top? How long was Microsoft at the top? You know, Microsoft at one point was 800 times more valuable than Apple. 800 times. And then Apple leapfrog them. But Microsoft's coming back. You know, their new CS, and he's leading a crusade. I was told to say, "Microsoft is back" like that. I'd say no way. They're dead. You know, once that, once that vector starts, you lead people in the dust. And, you know, I think that's probably a lot of people here. I mean, it was a black, Blackberry. It was in a movie, or was Blackberry movie, right?
Speaker Change #109: You know, how long was IBM at the top? How long was Microsoft at the top? Yeah, Microsoft at one point was...
Speaker Change #109: 800 times more valuable than Apple.
Speaker Change #109: 800 times.
Speaker Change #109: and then Apple leaf frog them.
Speaker Change #109: But Microsoft's coming back, you know, their new CS, and he's leading a crusade. I was telling him to say, Microsoft, it bounced back like that. I say, no way, they're dead. You know, once that, once that vector starts.
Speaker Change #109: You leave people in the dust.
Speaker Change #110: Yeah, it's probably a lot of people here. I mean, it was a black series and it was a movie or was black series movie, right?
Gary Friedman: Great movie. If you want to think about vectors and market disruption and changing the guard, what's the Blackberry movie? They were so far ahead. They had so many things right. And they stopped inventing. You know, they got complacent. And the Apple iPhone comes, and you have that scene when they're, you know, it's like the guys, you know, walking the leader there, you know, walking down. He's pissed, and he thinks he's going to, you know, get it back, and he sees the people and sees Jobs is presenting the iPhone. You know, going through, you know, it's the phone.
Speaker Change #110: of Great Movie, if you want to think about the vectors and market disruption and changing into the garden, what's the blackberry movie? They were so far ahead. They had so many things right.
Speaker Change #110: and...
Speaker Change #110: They stopped inventing, you know, they got complacent and, uh, and...
Speaker Change #110: and the Apple iPhone comes and they have that scene when they're, you know, it's like the guys, you know, walking at the leader there, you know.
Speaker Change #110: Downey's pissed, and he thinks he's going to get it back and he sees the people and Steve Jobs is presenting the iPhone, you know, going through it, it's a phone, it's a...
Gary Friedman: It's a music player. It's an internet device. It's a phone. It's a music platform. It's an internet device. And he goes, "Do you get it?" It's one thing. You know, it's the iPhone and change 17, and all those people are like, those shit were dead. You know, but then you saw, and later part of the movie, you know that, you know, the partner, I think it's pitching some of its partners, you know, for the platform, and they're, they're going, well, here's the lines. Here's the market. You know, here's how Apple is inflecting. And it's too late.
Steve Jobs: Music Flares, and Internet devices, it's the phone, it's the music platform, it's the Internet device. And you go, do you get it? It's one thing.
Steve Jobs: You know, it's the eye of something and changing everything, you know, and all these people are like, oh shit, we're dead, you know, but then you saw and later part of the movie.
Steve Jobs: You know that?
Steve Jobs: is the partner, I think it's pitching some of its partners, you know, for the platform and they're going, well, here's the line, here's the market, you know, here's how Apple is in flexing and it's too late, you know, Apple ran away. So they give the new CEO Microsoft.
Gary Friedman: You know, Apple ran away. But it gives the new, the new CEO Microsoft. That's the guy to me. I mean, I, that's like, wow. One of the great comebacks, you know, an American businessman's history. You don't see that. You don't see IBM come back. You know, you don't see Xerox come back. You know, you don't see all kinds. You know, you should name a lot of them. You know, it's like, you know, we're at Ford, we're Chevy, we're at this, we're at, you know. They usually, if somebody starts to make a move, and that inflection happens, it's hard to come back.
Steve Jobs: That's the guy to me. I mean, that's like wow, one of the great come back.
Speaker Change #111: in American Business District. You don't see that. You don't see IBM in the back. You can see Iraq in the back. You can see all the time. You can name a lot of them. It's like, you know, we're forward. We're Chevy. We're this. We're sad.
Speaker Change #111: The usually if somebody starts to make a move and that inflection happens, it's hard to come back, you know, but
Gary Friedman: You know, but you know, it's all about leadership. You know, it's all about innovation and invention and leading and not managing. And, you know, being a newsmaker, not a newscaster, but if you're going to do that, they're not all great days because you're going to break some glass along the way. Well, you're, you know, while you're building something nobody seems before. So, you know, it's all top, third, middle third, bottom third, right? You've, you've got to take big risks. You've got to play, play big bets. You know, you got to do things like that. This contemporary gets worse.
Speaker Change #111: Yes, all about leadership.
Speaker Change #111: You know, it's all about innovation and invention and leading and not managing.
Speaker Change #111: and, you know, be in it.
Speaker Change #112: Newsmaker, not the newscaster.
Speaker Change #112: You're gonna do that
Speaker Change #112: They're not all great-day. You're going to break some glass along the way. While you're building something nobody's seen before. So, and it's whole top third, middle third, bottom third, right? You've got to take it.
Speaker Change #112: Big risk, you got to play big bets, you got to do things like, stop this, can tamper, get warm, pepper is just a stepping stuff, you know, you're going to see new things when you try new things.
Gary Friedman: Temperatures just stepping stuff. You know, you're going to see new things when you try new things. But, you know, I like where we are, but I'll tell you this: we're more focused than we've ever been. We are, you know, we are smarter than we've ever been, and we've got to have a big edge. You know, so, we're going to, you know, we're going to make some really smart moves, you know, over the next several quarters and several years. And I think, you know, I think we're going to be a lot more focused. I mean, that's the things you, you know, Job said, you know, yeah, about the same note of 1000 things.
Speaker Change #112: Hey!
Speaker Change #112: You know, I like where we are, but I'll tell you this.
Speaker Change #112: We're more focused than we've ever been. We're here.
Speaker Change #112: We are smarter than we've ever been, and we've got a big edge, so we're going to make some really smart moves.
Speaker Change #112: You know, those are the next.
Speaker Change #112: Several quarters in several years.
Speaker Change #112: And I think we're going to be a lot more focused, I mean, that's the thing. You know, jobs that, you know, about saying no to a thousand things. We are saying no to more things. You know, it's like you always think it's exactly, you think it's you, you know, done some great things. Like, oh, I can do so much more, I can do so much more.
Gary Friedman: We have the same note of more things. You know, it's like you; you only think it's exactly, you think is you, you've done some great things. You think, oh, I can do so much more. I can do so much more. You generally didn't get there by doing a lot. I mean, I, I took over our age. I eliminated 100% of the SKUs. You know, it's like we don't have one thing. I eliminated 50% of SKUs in my first season. You know, and had to try to, you know, have to navigate that. So you're, yeah, you've got to make big moves, and you're not going to get them all right.
Speaker Change #112: You generally didn't get there by doing a lot, I mean, I...
Speaker Change #112: I think over our age, I'd eliminated.
Speaker Change #112: A hundred percent of the skew is dead.
Speaker Change #113: Yes, like we don't have one thing, I eliminated 50% of these in my first season, you know, and had to try to grab and navigate that, so you're, you got to make big minutes and you're not going to get them all right. Okay. I had to sell 50 days for...
Gary Friedman: Okay. I had to sell foot dives for 10 years. I like selling foot dives all now. It's foot dives. We know with that stepping stone to get to Italian betting and, uh, you know, Belgian linen and water works and all the things we're doing today. Yeah. Of course. Yeah. So anyway, I'm not afraid of anything to you guys when you have questions. I've got, I've got hundreds of, not thousands of our team members on this call. So I'm speaking to the three constituencies that are on that letter. Yeah. It's great to hear about the focus.
Speaker Change #113: and yours. Good night, I like selling split-to-date, I'll know.
Speaker Change #113: It's 50 days, we have without a stepping stone, to get to.
Speaker Change #114: The Hallean
Speaker Change #114: Veterining in, you know, Belgium, Lenin and...
Speaker Change #114: Waterworks and all the things we're doing today. Yeah, of course. Yeah, so it's...
Speaker Change #114: Anyway...
Speaker Change #115: and that's the friend you can use when you have questions. I've got hundreds of 1000 of our team members on this call so speaking to the recent constituencies.
Speaker Change #116: Better on that letter.
Speaker Change #116: It's great to hear about the focus so I'll also pass it on. Thanks, Gary.
Gary Friedman: So, uh, I'll also pass it on.
Unknown Executive: Thanks, Gary. Alright, thanks.
Simeon Gutman: We'll move next to Simeon Gutman with Morgan Stanley. Your line is open.
Speaker Change #117: Alright, thank you.
Speaker Change #118: We'll move next to you.
Speaker Change #117: News Simon Gutman with Morgan Stanley.
Simeon Gutman: Hey everyone, it's Timian. I'm Gary Jack Nelson. I wanted to ask, twist on maybe what Steve was just asking. The confidence that this initial demand that you have here has durability, and I know Gary, you mentioned the vectors and the market share spread. And I think you have a lot of newness. You have catalogs or source books. So you have reason to be stronger than them at this point, and you had this coming. So how do you look out several quarters and then related to Steve's question? When you talked about the different tiers or tranches, do you have enough product out to see how some of the initial product is trending?
Simon Gutman: You're mine is open.
Simon Gutman: Hey everyone, it's Emion, I'm Gary Jack and Allison, I wanted to ask
Simon Gutman: Twistomany, what Steve was just asking, the confidence that this initial demand that you have here has durability. And I know Gary mentioned the vectors and the market share spread.
Speaker Change #120: and I think you have a lot of newness, you have catalog or source books, so you have reason to be stronger than them at this point and you had this coming. So, how do you look out several quarters and then related to Steve's question?
Speaker Change #121: When you talk about the different tiers or trenches, do you have enough product out to see how some of the initial product is trending? How many of those top third categories might you already be sitting on? Thank you.
Simeon Gutman: How many of those top third categories might you already be sitting on?
Gary Friedman: Thank you. Yeah, you know, we've learned a ton. Yeah, we've got a lot of data. And so, you know, we're very confident in our outlook and what's ahead of us. You know, despite whether we get interest rate tests or not interest rate tests, right? You know, it's not it's, it's, it's all of you know, look at it. And we came into this year, everybody expected it was, I think, you know, the markets were betting for five to six interest rate tests. And so far, we haven't had one. And, you know, now you're saying, oh, it's time to do an interest rate test.
Speaker Change #122: Yeah, you know, we've learned a ton, yeah, we've got a lot of data, you know.
Speaker Change #123: and so fun!
Speaker Change #123: We're very confident in our outlook and what's ahead of us, you know, despite what we get.
Speaker Change #123: Interest race test or not interest rate test, right? You know, it's not, it's, it's all of you know, like I did. And a week, we came into this year. Everybody expected it with, I think, you know, the markers were better than five to six interest rate test. And so, or we haven't had one. And yeah, now.
Speaker Change #124: [inaudible] You know, so, you know, it's not, it's not, it's taking those people by the way.
Gary Friedman: Well, those are the same people that said, oh, when inflation went from two to four percent, you know, it was going back to two percent over the next two quarters. And then it went to nine. You know, so, you know, not it gets, it's, and that's not a dig at those people, by the way. Leading and trying to look into the future is really hard, right? You guys do models, and everybody you have forecast on everybody. My sense is almost every plan you have, every forecast you have is some degree of wrong, right? So the kids, are you more right than wrong?
Speaker Change #125: Leading and trying to look into the future is really hard, right? You guys do models and everybody you have four tests, everybody. My sense is almost every plan you have, the report test you have is some degree of wrong, right?
Gary Friedman: And are you learning, you know, or you've gathering more data, you know, sharpening your sword, you know, and, you know, can see around the next corner. So we have a lot of confidence with a lot of data. We put a lot of product in the market. We've learned a lot. And we have a lot of news coming in. And, you know, and we're rebuilding everything here, every model, every part of our organization. You know, everything's kind of under inspection, under attack. You know, we're going to reinvent every way we do things. And then, you know, and then as we do, you know, the things, you know, things we did best, you know, we'll, you know, we'll optimize those and we'll focus those and those will be, you know, our next round of habits and behaviors.
Speaker Change #125: So the key is are you more right than wrong and are you learning, you know, are you gathering more data, you know, are you sharpening your sword, you know, and, you know, can you see around the next corner.
Speaker Change #126: So we have a lot of confidence with a lot of data, we put a lot of products in the market, we've learned a lot.
Speaker Change #126: and we have a lot of news coming in and we're rebuilding everything here, every model, every part of our organization, everything's kind of under-spection under attack, we're going to reinvent.
Speaker Change #126: Every way we do things and then as we do, the things we did best, we'll optimize and we'll focus on the most of the year, our next round of habits.
Gary Friedman: But you got to be careful. You can't stick with those things too long, because other people, you know, will learn from you. And so you got to keep moving forward. So, yes, we have a lot of reasons that will be stronger than the competition for a long time right now. A lot of reasons. And, you know, a lot of reasons why we will take a lot of market share. I mean, it's not an accident, right? I mean, we've been talking about this a long time. The question was, well, when will it happen? I mean, you know, some guy that I know that used to work here as an analyst, you know, put out a tort last week, never talked to me. I don't know if it's right, 15 years.
Speaker Change #126: Yes.
Speaker Change #126: We have a lot of reasons that will be stronger than the competition for a long time right now, a lot of reasons.
Speaker Change #126: and yeah, a lot of reasons why we'll take a lot of market share. I mean it's not an accident, right?
Speaker Change #127: I mean, we've been talking about this a long time, the question was, well, when will it happen? I mean, you know, some guy that I know that he's the work here is an analyst, you know, put out a tort last week. Never talked to me, I don't know, it's probably 15 years.
Gary Friedman: And he said, "Oh, their product, you know, transformation is a complete dud." I don't know how he feels today, you know, but he can feel worse. In the coming quarters. Yeah, you know, you don't learn anything by being a sideline critic. Yeah, you want to learn something, come here and ask you some questions, and you learn something, but you want to be a sideline critic, you're not going to learn a lot. And you're going to be wrong a lot more than you're right. So, yeah, we look out of the next several quarters over the next several years. You know, if you think about the real estate pipeline we built.
Speaker Change #128: and he said, oh, there.
Speaker Change #128: products, you know, transformation is a complete dud.
Speaker Change #128: I don't know how he feels today, you know, but he can feel worse than the coming quarters.
Speaker Change #129: Yes, yes, you don't learn anything by being a sideline for it. Yes.
Speaker Change #130: You want to learn something? Come here and ask us some questions and you'll learn something but if you want to be a side-line predict you're not going to learn a lot And you're going to be wrong a lot more than you're right
Speaker Change #131: So why?
Speaker Change #132: We look out of the next seven quarters over the next several years. Think about the real estate pipeline we've built.
Gary Friedman: The incredible real estate pipeline coming incredible, you know, you feel that. I mean, we're just, you know, infants in Europe, you know, we're just barely, you know, we're learning, we're what do we do. And we're, you know, we kind of opened some galleries in an order we didn't want to, but we couldn't have got the other galleries without taking those in a real estate deal and stuff. So, you know, so, you know, we've launched, but not really in, you know, the way you launch if you want to build great market awareness. Now, so when we opened Paris and London and Milan, you know, there's going to be a significantly different awareness of our age.
Speaker Change #132: of incredible real estate pipeline coming. Incredible. You feel, but I mean, we're just.
Malkin: by Malkin.
Speaker Change #134: You know infants in Europe.
Speaker Change #135: Yes, we're learning, and what do we do this, and we're kind of open some galleries in an order we didn't want, but we couldn't have got the other galleries without taking those in a real estate deal and stuff. So, we've launched both.
Speaker Change #136: Not really in the way you launch if you want to build great market awareness.
Speaker Change #136: when we opened Paris and London and Milan, you know.
Gary Friedman: You know, so, you know, it's not that we don't love the ones we did, you know, but not necessarily in the order we would have picked as we were thinking about positioning the brand. But sometimes, you know, you've got to take the opportunities as they come, and you've got to, you know, it's not perfect when you're, you know, we're not rolling out like formula mall stores or, you know, form, you know, five or 10,000 work with things or even 15,000 work with things and going to the mall or going to look at somebody else's box and, you know, building a storefront and then like, floating a couple of walls or something, you know, the run on fence, the shit, you know, it's like, not what we do.
Speaker Change #136: So, you know, it's not that we don't love the ones we did, you know, but it's not necessarily in the order we would have said as we were thinking about division in the building, the brand. But sometimes.
Speaker Change #136: You know, you gotta take the opportunity that they come and you've got to, you know, it's not perfect when you're, you know, we're not rolling out like formula law stores or, you know, for you know.
Speaker Change #136: 5 or 10,000 square foot things are even 15,000 square foot things and going to do a mall or going to look at somebody else's box.
Speaker Change #137: Building a storefront and then like floating a couple of walls or something, you know, with a run on sentence of shit on the floor, you know, it's like not what we do. Yeah, we build things, they're going to last generations.
Gary Friedman: You know, guys, we build things. They're going to last generations. Like, you know, other people talk about their great showrooms. I mean, put one next to ours and tell me what's going to stand to the test of time. You know, if you know what we're doing, I think you know long term is going to be incomparable and massively durable. I mean, we came from nothing, came from bankrupt business selling shops, and we built, you know, the market leader. And, you know, we went through a, you know, a massive, we're in the middle of it, a massive transformation.
Speaker Change #137: Thanks.
Speaker Change #137: You know, other people talk about their great showrooms. I'm going to put one next to ours and tell me what's going to stand the test at time. You know, it's...
Speaker Change #137: You know what we're doing, I think, you know, long term is going to be incomparibble and massively durable.
Speaker Change #137: I mean, we came from nothing, came from back to bankrupt, business, selling shots, and we built the market leader and we've once there is one through a...
Speaker Change #137: You know, I'm massive, we're even flowing middle up at a massive transformation. I've never done this before, no one's ever done it. The industry's never seen it.
Gary Friedman: I've never done this before; no one's ever done it. The industry's never seen it. Yeah, but now you're going to start to witness, you know, the potential of the RH brand and the team behind that for more important. So, you know, we just couldn't be more excited. And do we have enough product to see how the product hears or trending. Oh, yeah. And we'd like what's in the pipeline. You know, because yeah, we've, we've seen a lot. And, you know, we're going to keep building it. And, you know, we've got, you know, we've got too many ideas to execute right now.
Speaker Change #137: Yes, but now you're going to start to witness, you know, the potential of the RH brand and the team behind that brand. More important. So, bye.
Speaker Change #137: We just couldn't be more excited and do we have a product to see how the product here is our trending.
Speaker Change #138: Oh, yeah. Oh, yeah. And we like what's in the pipeline. You know, because, you know, we've seen a lot. And, you know, we're going to keep building it. And...
Speaker Change #138: You know, we've got it.
Speaker Change #138: Here we've got
Gary Friedman: The key for us is focus and hierarchy. And, you know, what is the right hierarchy, what comes first, what comes second, what comes third, how do we allocate the human and financial capital. In, you know, very best way. And how do we smart, and how do we say no to a thousand things that can be the hardest part right now. What are we going to say now to what are we not going to do is going to be as important as, not more important than what we do right now. But we might decide to work on what is actually number one.
Speaker Change #139: Too many ideas to execute right now for key for us.
Speaker Change #139: is.
Speaker Change #139: Focus in IRC.
Speaker Change #139: and uh
Speaker Change #139: What is the right hierarchy? What comes first? What comes second? What comes third? How do we allocate the human and financial capital in?
Speaker Change #140: Yeah, very best way and how do we smart and how do we say no to a thousand things that can be the hardest part right now What are we gonna say now to what are we not gonna do is it's important it's not more important Don't what we do right now
Speaker Change #141: Well, we might.
Speaker Change #141: Decides to work on what it's actually number one.
Gary Friedman: But we also worked on numbers three, four, and five at the same time. And we never gave number one the focus. It needed to change everything. Right.
Speaker Change #141: But we also worked on number three and four and five at the same time and we never gave number one the focus.
Speaker Change #141: It's needed.
Gary Friedman: So, you know, so that's, yes, that's how we're thinking right now. We've got a lot of edge. We've got a lot of focus. We've got a lot of energy. You know, we're very enlightened and very excited. But also we have a lot of edge. You know, so we're not taking anything for granted. You know, I, I, I couldn't be more excited about where we are and what's ahead of us.
Speaker Change #141: This change everything, right?
Speaker Change #142: Yeah, so that's, that's, that's how we're thinking right now we've got a lot of edge, we've got a lot of focus, we've got a lot of energy, you know.
Speaker Change #142: We're very enlightened and very excited.
Speaker Change #142: But also, we have a lot of beds, so we're not taking anything for granted. I can be more excited about where we are and what's ahead of us.
Gary Friedman: Okay.
Gary Friedman: Thank you.
Unknown Executive: Good luck.
Speaker Change #142: Okay, thank you for the luck.
Speaker Change #142: Let's move on to the next one.
Unknown Executive: Great.
Bradley Thomas: Thanks a lot.
Bradley Thomas: Gary. So you earlier walk through the importance of galleries. Can you provide an update on where you stand in resetting the insured sort. I think the last call you discussed being around 50%. So just curious, where is that now? And when do you think it'll get closer to or fully reset, just given the potential lift that it could have to the business. Yeah, we're at the very early stages of that. Like, you know, again, do you want to think about. You know, we reset on the early data. Then we get better data. And then you've got new news.
Speaker Change #142: Great, thanks a lot. Gary, so you earlier walked through the importance of galleries.
Gary Jack: Can you provide an update on where you stand in resetting the in-source orbit? I think on the last call you discussed being around 50%. So just curious, where is that now? And when do you think it'll get closer to or fully reset? Just given the potential lift that it could have to the business.
Speaker Change #144: Yeah, what's a very early stage of that? Like, you know, again, do you want to think about it?
Speaker Change #145: We reset on the early data, then we get better data, and then you've got new newness, and then you've got it, so you're going to constantly read and react and refine.
Gary Friedman: And then you've got to, you know, so you're going to constantly read and react and refine and. I mean, I mean, we're, we're right now so excited about some stuff. So we're like, okay, how do we run to get that in the galleries. What do you do? Like, you know, your life depended on it. How should get the goods in the galleries now? Because they're going to really massively lift. I think it's like public right now, next right. Yeah, everybody. Yeah, that would be 30. Yeah, not really. Oh, no. Okay. I mean, you know, the game gets the goods in the gallery right now.
Speaker Change #145: I mean...
Speaker Change #145: I mean, we're right now so excited about some stuff, so we're like, okay, how do we run to get that in the galleries? What do you do? Like, you know, your life-dependent on it. How should you get the good in the galleries now? Because they're going to really massively lift.
Speaker Change #146: I think it's like public break, our next, right? Yeah, they're really pretty good. Yeah, kind of at least 30, kind of. Yeah, not really. Oh, no, okay, okay, now, okay, okay, I mean, you know the game is getting good in the gallery.
Gary Friedman: We get the right goods in the gallery on the floor in the right place. Uh, that alone. a massive move, a massive move. But we've got to, you know, you've got to ramp up the production, you've got to get it, you've got to, you know, to mention like this, you've got to, you know, and that's why we're running with a higher level of inventory right now. We've got so many things, you know; you've got to kind of, these transitions are really tricky. You know, you're not going to buy it right. So you've got to kind of been in best in kind of some downside protection, right?
Speaker Change #146: Right now, we get the right good in the gallery on the floor, in the right place, that alone.
Speaker Change #146: is a massive move.
Speaker Change #146: [inaudible] Malkin Malkin Malkin Malkin Malkin Malkin
Speaker Change #146: Really tricky, you know.
Speaker Change #147: You're not going to buy it, right? So you've got to kind of invest in kind of some downside protection, right? And you've got to carry heavier inventory for a while while you're learning, and then you've got to kind of edit and refine and go through it.
Gary Friedman: And you've got to carry heavier inventory for a while while you're learning. And then you've got to kind of edit and, you know, refine and go through it. But, no, that, you know, what you're identifying is one of the next big moves. I would say, where are we on the galleries, you know, having all the right goods? I'm going to step. What would you say? You have some luck to do. Yeah, but when we say we're 30%, I was going to say 3540. Yeah, 35, you know, 35-40%. Yeah, there's some big terms there. Big moves.
Speaker Change #147: Now that, you know, what you're identifying is...
Speaker Change #148: One of the next big moves.
Speaker Change #148: I would say...
Speaker Change #149: Where are we on Galleries?
Speaker Change #150: You know, having all the right good, I'm gonna step over to you, say.
Speaker Change #151: Yes, we've got some luck to do. Yeah, but when we say we're 30 percent. I was going to turn 35 point. Yeah, 35, yeah, 35. 40 percent. Yeah, there's some big turns there, big moves.
Bradley Thomas: Got it. That's helpful.
Bradley Thomas: And then maybe we can keep this one where you can, it might be rudimentary, but where do you stand now in the promotions and sort of winding down the old discontinued product demands picking up? So should we think that you're probably in the latter innings? Or how should just we think about it? And then just the key drivers of the product margin in flexing, you're more resilient. Yeah, I'd say, you know, look, you're, we're in the middle of kind of these big moves in and out, right? So you're, you know, you're learning, you're transitioning your, you know, and you're kind of building the bridge to the next place.
Speaker Change #152: God, if that's helpful and maybe we can keep this one bringing it in might be a rudimentary but
Speaker Change #152: Where do you stand now in the promotion in your promotions and sort of winding down the old I just
Speaker Change #153: and Teed product. Demand's picking up, so should we think that you're probably in the latter innings or I should just we think about it and then just to key drivers of the product margin in collecting here more resources.
Speaker Change #154: Yeah, I say, you know, look here, we're in the middle of kind of this big move, standing out right so you're...
Speaker Change #155: Yeah, you're...
Speaker Change #156: Learning your transition aim in your...
Speaker Change #157: You know, and you're kind of building the bridge to the next place.
Gary Friedman: So I wouldn't really, I mean, you know, I think everybody's making that a bigger deal. And I read the report. No, no, they've got to get rid of the clearance or whatever. You've got to build a bridge to the future. You know, I'm excited. I'm aware of these, overly focused on that. I just focus on, hey, it's our demand growing and is our margin in selecting positives. That's the game, right? Right there. And then, you know, and then, you know, how do we organize, you know, see, you know, the brand of the business, you know, all throughout, you know, build the platform and infrastructure and organize the company, where we are and where we're going next, you know, and make it really efficient.
Speaker Change #157: So, I wouldn't really, I mean, you know, I think everybody's making that a bigger deal and I'd read the report. No, no, they've got to get rid of the clearance or, you know, whatever, you've got to build a bridge to the future. You know, excitement, I don't know where everybody's so really focused on that. I just focused on hey.
Speaker Change #158: is our demand growing and is our margin in selecting positive.
Speaker Change #159: That's the game, right there. And then, you know, then, yeah, how do we organize, you know what I'm saying?
Speaker Change #159: The brand of the business, you know, all throughout, you know, build the platform and infrastructure and organize the company.
Speaker Change #159: where we are in Warburgown next. You know, make it really efficient.
Gary Friedman: So we're in a very inefficient stage, right? That's inefficient, you know, because we've been laser-focused, you know, on just kind of almost one thing. And so, you know, a lot of things, you know, we've got to kind of rethink. That's all that's been put things in the right order. And, you know, so, yeah, and because that's what we do. You know, so we've been doing this for a long time. We'd love doing it. It's what we do. We love big moons like this. We love these times. Yeah, this is what we live for. You know, figuring it out a lot, you know, doing it better than anybody else in the world.
Speaker Change #159: So we're in a very inefficient stage right now.
Speaker Change #159: That's the inefficient. You know, because we've been laser-focused, you know, I'm just
Speaker Change #159: Kind of almost one thing and so you know a lot of things, you know we've got to kind of rethink this all up and put things in the right order and you know.
Speaker Change #159: So yeah, that's what we do, you know, so we've been doing this long time, we love doing it, it's what we do, we love big moves like this.
Speaker Change #159: We love these signs. Yeah, this is what we live for. You know, figuring it out loud. You know, doing it better than anybody else in the world. You know, leaving no doubt. You know, so, but, okay, guys.
Gary Friedman: You know, you know, so better. Bye, guys. You know, it's like, you know, exactly how much, you know, we're marking down and what that is. I mean, the question is, what, you know, what is the vector look like? What does the vector look like in demand, what, you know, what does it look like in margin, you know, where eventually will the vector be, you know, if you think about leverage and cost, then what, what will the model become, you know, what's the timing of the big things here? You know, you've got this big thing, you know, Europe, you know, and, you know, for just entering that, we had to, you know, and make a lot of investments that, honestly, not the greatest time, you know, under construction, you know, during COVID, post COVID, most expensive times to do things in terms of, you know, and stuff like that.
Speaker Change #159: It's like, you know, it's actually how much...
Speaker Change #160: Yes, we're marking down and what that is, I mean.
Speaker Change #160: The question is...
Speaker Change #160: What is the vector look like? What is the vector look like in demand? What does it look like in margin?
Speaker Change #160: You know, where eventually will the vector be, you know, if you think about leverage and costs and what will the model become, you know, what's the timing of the big things here, you know, you've got this big thing, you know, Europe, you know, and yeah.
Speaker Change #161: from just entering that we had to make a lot of investments that honestly not the greatest time, you know, under construction, you know, during COVID post-COVID and most expensive times to do things or in terms of, you know, and stuff like that. So, you know, but we got to get to big.
Gary Friedman: So, you know, but we got to get the big, the big brand building markets and galleries open and, you know, and the brand will build and then the demand will build there and we'll get a vector going there on what is, what is Europe and international look like over X number of years and, you know, what's the leverage and the cost structure there and, you know, like, there's so many opportunities, you know, I mean, crazy amount of opportunities ahead of it, but we've got to stay focused, you know, we've got to be laser focused and we've got to do first things first, you know, we cannot get distracted right now.
Speaker Change #161: Brand Building, Markets and Gallery's Open, and the brand will build, and then the Devans will build there and they'll get a vector going there on what is.
Speaker Change #161: What is Europe in their national look like over X number of years and with the leverage in the infrastructure there and you know like there's so many opportunities you know I mean
Speaker Change #162: Crazy amount of opportunity to head of it. But we got to stay focused. You know, we got to be laser focused and we got to do first things first. You know, we cannot get distracted right now.
Bradley Thomas: That's the hardest thing, you know, so got it, thanks a lot. I appreciate all the color and good luck with all the new galleries. All right, Max. See you soon.
Speaker Change #162: That's the hardest thing. Yeah, so
Speaker Change #163: Got it. Thanks a lot. I appreciate all the color and good luck with all the new galleries.
Speaker Change #163: All right Max, see you soon, man.
William Carter: We'll move next to Andrew Carter with Steve Foltz; your line is open. Hey, thanks. Good evening.
Speaker Change #164: of next.
Speaker Change #164: and Drew Carter with Steve Fulf, your line is open.
William Carter: I wanted to ask a little bit about the, I think you're going to hit with your guidance here, seven design galleries this year, plus the design studio. Are you in a position to hit that cadence every year? I know two international you've reiterated today, and I know you're talking a little more about prioritization. Where do the white space markets kind of fit in it within that, and are the white space markets still in scope for all design gallery types? Thanks. That means processing the multiple questions right after the first one is about, we're opening, yeah, eight hours. I mean, we're doing this here with seven and nine, but we're seven galleries, one design studio, eight total.
Drew Carter: Hey, thanks. Good evening. I want to ask a little bit about the, I think you're going to hit with your guidance here. Seven design galleries this year, plus the design studio.
Speaker Change #166: are you in a position to hit that cadence every year? I know two internationally reiterated today and I know you're talking a little more about prioritization. Where do the white space markets?
Speaker Change #167: Kind of fit in it in within that, and are the white space markets still in scope for all design gallery types.
Speaker Change #168: I'm just processing the multiple questions right now. So the first one is about what we're opening, yes.
Speaker Change #169: I think we're having a good day on this year.
Speaker Change #170: with the power at 1.7.9. But we're 70, I'll raise 1.2.8. Okay, eight total. Okay, so um...
Gary Friedman: Okay, eight total. Okay, so, yeah, I think we were doing nine. Okay, so, you know, we're in a position to hit that cadence feature.
Speaker Change #170: Yeah, this thing we're doing nine. Okay, so, you know, we need a position, it's fit that savings feature.
Gary Friedman: I think there'll be years, we'll hit that cadence and do more and there'll be years that we do less because, you know, our kind of pipeline is, you know, if you try to go, you know, force things in and, you know, if you screw up big real estate moves like we make your camp getting unwinding from that is very expensive. Yeah, so, you know, can we open an 80 year? Yeah, you know, we haven't released what we're doing next year, but I'd say it's kind of in that direction. Might be more, might be less; you know, like the pipeline is really big, you know, but we've got a lot of things in the pipeline.
Speaker Change #171: I think there'll be years, we'll get that cadence and do more and there'll be years that we do left because, you know, our kind of pipeline is, you know, if you try to go, you know, force things in and you, you, if you screw up big real estate moves like we make.
Speaker Change #171: You can't get in it and winding from that is
Speaker Change #171: Very expensive, so you know can we open 80 year? Yeah, you know.
Speaker Change #171: Might be more, might be less, you know, it's the pipeline's really big, you know, we've got a lot of things in the pipeline, so I think over the next.
Gary Friedman: So I think over the next four or five years, you know, there's going to be a lot more galleries than that we open than, you know, over the last five years. You know, think about that way, but you know, they're very big and complex projects. You know, when you come see Newport Beach or something like, yes, that's a plan and it's not down a whole part of the mall. You know, open up, I don't know how many, get rid of about four retailers, some of that. Five, you know, and you know, give us the pads that we needed and the positioning that we wanted.
Speaker Change #171: Poor 5 years, you know, there's going to be a lot more galleries than W.O.S. and over the last 5 years.
Speaker Change #171: Think about it that way, but you know, they're very big and complex projects, you know, you know, and you're going to come and see new four feet or something like, yes, that's a plan and it's not that important part of them all, you know, open up, I'm happy.
Speaker Change #171: I'm going to write about four retailers, some of that's five, you know, and, you know, to give us the paths that we need it and the positioning that we want to, you know, have views of the devotion from three to the four floors and, you know.
Gary Friedman: Have views of the ocean from three to the four floors and, you know, do the most probably the most incredible, you know, kind of rooftop restaurants in all of Southern California, with the views we're going to have. And, you know, that's why we didn't even make it any outdoor furniture up there. I mean, the whole thing is a 260 feet beautifully designed indoor-outdoor eating experience. You know, that is credible weather and credible views. You know, I don't know how many of you tried and how many restaurants now have the new menu; it's like four, four or five.
Speaker Change #171: is the most probably the most incredible.
Speaker Change #171: We've stopped restaurants in all of Southern California, but the views we're going to have, and that's why we didn't even make it any.
Speaker Change #172: Yeah, outdoor furniture up there. I mean, the whole thing is a 266 feet beautifully designed indoor outdoor eating experience. You know, it's an incredible weather and incredible view. Yeah, I don't know how many of you try to help me.
Speaker Change #173: I'm a restaurant now at the new menu. It's like four, four, five, yeah. And New York City, we're rolling out and upgrading and transforming our menu and our gallery tips.
Gary Friedman: Yeah, New York. Yeah, we're rolling out and upgrading and transforming our menu and our galleries. It's a terrific menu and yes, the menu for that gallery, you know, it's going to be fantastic. I think you'll see some of our innovation happening there, you know, that have been previously working on for a long time. So, yeah, this is going to be going to be a lot.
Speaker Change #174: Terrific, you menu and yes, the menu for that spectallry, you know, it's going to be fantastic. I think you'll see, yes, yes, some of our emancipation's happening there, you know, that it's, you know, been previously working on for a long time.
Gary Friedman: And, you know, where does, you know, what's the white space saying, what's that question, where is the white space fit or something? I mean, it's more of a transformation, Andrew, right? There are white space opportunities for design studios, of course, as Gary has talked about. Yeah, we've got probably 10 markets. You know, we can open a mid size gallery in a couple; we can open a big one in, you know, North America, right? Yeah, so yeah, we do. Yeah, I mean, what we're going to do in Naples is unbelievable. Yeah, we haven't talked about that yet.
Speaker Change #174: So yeah, this is gonna be a lot. And yeah, where does, you know, wait.
Andrew: Well, if we white-says saying what's that question? Where's white-says fit or something? I mean, it's more of a transformation Andrew, right? There's there are white-says opportunities for design studios, of course, as Gary has talked about over the last four years. There's galleries in there. And then when the model got out of it, yeah, we've got probably.
Speaker Change #176: 10 markets, you know, we can open a mid-sized tower in a couple of weeks in open a big one and you know North America, right?
Speaker Change #177: So yeah we just want to hear all of you on the settings there's come. Yeah I mean what we're going to do in Naples is unbelievable Yeah we have been talking about that, yeah, yeah, yeah, yeah, yeah, come on
Gary Friedman: Yeah. Now, you got me excited. I'm debating right now, like myself. Do I talk about it? Do I not talk about it? Well, it's going to probably be an oppressions. I mean, it's a whole new, you know, three-dimensional, you know, RH experience called the Compound, the RH Compound. And, you know, it's a multi-building, multi-building kind of integrated experience with gardens and courtyard and connecting buildings and, you know, it's like nothing anybody's ever seen. And, you know, we, you know, partner, you know, team and Naples, and we got the former Nordstrom's pad that, you know, sits overlooking this beautiful pond and, you know, and then it's an incredible, you know, new idea.
Speaker Change #178: Hey, you got me excited, I'm debating right now like myself who I talked about it, do I not talk about it? Well it's gonna probably be in a press game, I mean it's a whole new, you know, three-dimensional.
Speaker Change #179: RH Experience called the compound, the RH compound. It's a multi-building, kind of integrated experience with...
Speaker Change #179: and Corch Yards and Connecting Buildings and like not being anybody's ever seen and you know, you know, you know, you know, you know.
Speaker Change #180: Partner, you know, team and Naples, and we got the former Norstrom's pad that sits overlooking this beautiful pond and it's an incredible new idea and it's again.
Gary Friedman: And it's just again, you know, evolution of different ways to to have more cards you played, and it's going to take a bigger site. How would you use the site, what would it be? And also, we think it might be a little build. It might be massively more efficient to build than some of the galleries we'll build in today. And another innovative thing. So there's a lot of it. I think generally, as you grow, you see more. As your brand grows and, you know, does more, you know, dollars per location and all of a sudden, you know, different markets look, you know, they look a lot better than they look when you were doing a lot less volume, right?
Speaker Change #181: Now, evolution is different ways, too.
Speaker Change #182: Yeah, to have, you know, more, more courage to play it, and it's going to take a bigger site, how would you use the site, what would it be? And also we think, you know, my deal of bills, the might be massively more efficient to build.
Speaker Change #182: and some of the galleries were building today and another innovative thing. So there's a lot of it. I think generally, again, as you grow, you see more. You know, as your brand.
Speaker Change #182: Rose and you know, dead's more, you know, dollars for location and all the sudden yep.
Speaker Change #183: They're for markets. Look.
Speaker Change #184: Yeah, they look a lot better than they look when you were doing a lot less wine, right? And the cost of the markets looks different, everything looks different. So, you know, I remember when I said, William Sonoma, you know, when I first joined in.
Gary Friedman: And the cost of the markets look different; everything was different. So, yeah, I remember, as in William Sinema, you know, when I first joined and, you know, Howard Leicester and Chuck Williams telling me, we can only have, you know, at the most 75 William Sinema stores, you know, and, you know, the most in North, they're like, maybe only 50. And I think when I got there, there was like 35 something. I don't know, how many William Sinema stores are there, like 250 or something 200, I don't know, some like that. But, you know, you keep building a brand and, you know, because more productive, because better and, you know, more market, market awareness.
Speaker Change #185: Howard Lester and Chuck Williams telling me we can only have, you know, at the most, at the most, at the most, in North I like maybe only 50 and I think when I got there there was like...
Speaker Change #185: 35, something I don't know, how many links on the stores are there? 250 or something is 200, I don't know, something like that.
Speaker Change #187: But you know, you keep building a brand and you know, it's kind of more productive, it's a bit better and you know, if you're more market awareness and you create markets. I mean, market leaders create markets and so.
Gary Friedman: And you create markets. I mean, market leaders create markets. And so, you know, today, you know, in the North America, what do we think's right? Like, you know, 60 to 70, I don't know, it's like, so we'd be sitting here in five years and that's 80 to 100. Maybe, I don't know. Yeah. So, but as we learn, you'll learn. So, well.
Speaker Change #188: Today in North America what do we think is right and like
Speaker Change #188: 60-70
Speaker Change #189: I don't know, it's like, could we be sitting here in five years and that's...
Speaker Change #189: So this is a year or 100 maybe I don't know.
Speaker Change #189: Yeah, so...
Speaker Change #190: Good morning.
Speaker Change #190: and we learn yonder.
Bradley Thomas: Great. Looking forward to the new Port Beach. I'll pass it on. All right. Thanks, Andrew.
Speaker Change #191: Tell us more.
Speaker Change #190: Great looking forward to the new port beach I'll pass it on.
Andrew: Alright, thank you, Andrew.
Jonathan Matsuzuki: We'll move next to Jonathan Matsuzuki with Jeff Reads. Your life is open. Great.
Speaker Change #192: Hello, next.
Andrew: to Jonathan Matizuski with Jeff Reid's Revite is open.
Jonathan Matsuzuki: Good evening. Thanks for taking my question. Gary, first one is just on housing. I think investors are trying to understand how the eventual recovery in housing will impact furniture category spend, maybe across different income cohorts. So, just one of your perspectives, you know, how you see luxury housing reacting to the said rate cuts, maybe relative to, you know, homes at non-luxury price points. Did you see, you know, luxury housing, reacting more quickly? And if so, why? You know, I think it's a lot of it's about, again, the affordability gap. And, you know, it does. Yeah.
Jonathan Matizuski: Break a D-Bane, thanks for taking my question. Gary, first one is just on housing. I think investors are trying to understand how the eventual recovery in housing will impact furniture category spend maybe across different income cohorts.
Speaker Change #194: So, just one of your perspectives, you know, how you see luxury housing reacting to the fed rate cuts, maybe relative to, you know, homes that non-muggery price point. Do you see, you know, luxury housing reacting more quickly?
Speaker Change #195: and if the Y.
Speaker Change #196: You know, I think it's a lot of this about, again, the portability gap and, you know, it does.
Gary Friedman: Are we getting, you know, the people see three rate cuts of 25% or three. If you know, 25 points or 50 base points, you know, and you know how far is, you know, how, how much are you going to close before the ability gap? I mean. Yeah, the average U.S. home, I think, is what, up 50-something percent versus, you know, pre-pelbed, and, you know, the prices of housing got too expensive and then, you know, the price of the mortgage got too expensive. And there's just a lot of people locked in at very low interest rates.
Speaker Change #197: is it? Yeah, it is.
Speaker Change #198: Yes, yes.
Speaker Change #198: and we're getting...
Speaker Change #199: Yeah, the people see three race cuts of 25 percent or three, yeah, 25 based points or 50 based points. You know, and you know, how far is, you know, how much are you going to close before the ability gap? I mean,
Speaker Change #199: Yeah, the advocacy I told, I think is what 50 something per set versus
Speaker Change #200: Presented and, you know, the prices of housing got too expensive and then, you know, the price of the mortgage got too expensive and there's just a lot of people locked in in very low interest rates.
Gary Friedman: And, you know, when does that affordability gap close enough that people that are, I mean, there's a lot of pent-up demand. I mean, people are waiting, waiting, really want a new house, really want to move that, you know, the families expanded, they need more room. I mean, you know, it's a big build up here. You know, so, but, you know, how does that affordability gap, you know, kind of, you know, just come together? You know, it's like, that's the key, you know, so I don't know exactly how it's going to move or, you know, there's a lot of kind of demand.
Speaker Change #200: and...
Speaker Change #200: You know, when does that affordability gap?
Speaker Change #200: Close enough that people that are, I'm just, a lot of pent up the man, I mean, people that are waiting, waiting, really want a new house, really want to move that, you know, the family's expanded, they need more room, I mean, you know, the big build up here, you know, so, bye.
Speaker Change #201: Yeah, how does that affordability gap, bye.
Speaker Change #202: You know, kind of.
Speaker Change #202: You know, just come together, you know, that's the key, you know, so I don't know exactly how it's going to be.
Speaker Change #202: Moved for it!
Gary Friedman: So, it may top quicker, or it may take time to ease. And, yeah, it's going to depend on kind of what the Fed does, and it's going to depend on the homeowners; you know, are they going to lower their price, or are they going to hold out. You know, I put a house on the market in Beverly Hills. And, you know, I got a lot of low ball prices, and I've added on the market for six months, and I didn't need to take the lower price, and I took it off the market. You know, so, you know, and there's a lot of that right now.
Speaker Change #203: Yes, sir.
Speaker Change #203: You know, there's a lot of kind of demand so it may stop with her.
Speaker Change #203: for it may take time to use. But it's going to depend on what the Fed does, and it's going to depend on.
Speaker Change #203: The home owners, you know, are they going to lower their price or are they going to?
Speaker Change #204: Hold out.
Speaker Change #205: I put a house on the market and Beverly Hills.
Speaker Change #206: and you know, I got a lot of low ball prices and I had it in the market for six months and I didn't need to take the lower price and I took it off the market.
Gary Friedman: There's a lot of like homes are coming on the market, and people are testing it out, and then homes are coming off the market. And, you know, but there's more people testing today, but I do think, I mean, I knew I had a lower my price, but I had a price of the lower two. Yeah, they're price I take, but I didn't get that offer. And I did the math because you do and say, okay, I get this super low mortgage rate. And if I hold for a year, I'm going to have to pay this, but if interest rates, you know, a year from now, come down.
Speaker Change #206: You know, and there's a lot of that right now. There's a lot of homes are coming on the market and people are testing it out and then someone's are coming off the market.
Speaker Change #206: Yeah, but there's more people testing today, but I do think, I mean, I knew I had a lower my price, but I had a price that was lower to it. You know, there's price I take, but I didn't.
Speaker Change #206: I think it's just that offer and I, yeah, did the math but you do and say, okay, I have the super low mortgage rate.
Speaker Change #206: and if I hold for a year I'm going to have to pay this.
Speaker Change #207: But it interests race.
Speaker Change #208: You know, you're from now, come down.
Gary Friedman: Where I think they might go, if we have inflation under control, look, we could do, they could do one or two 25 basis points cuts and all of a sudden we can see an inflation take up and then all of a sudden like, looks, you know, like I tell everybody here, we've got a chart that we all look at. You know, they can the team through it for years now. Yeah, like look at it, you know, pull it up, but you know, last 60 something years, the federal funds rate, you know, and Dota's the 1970s and look at what happened.
Speaker Change #209: Where I think they might go, if we have inflation under control, what we can do, they can do one or two, 25 basis points cuts and all of a sudden we can see a inflation kick-up and then all of a sudden it looks.
Speaker Change #210: Yeah, like I tell everybody here we've got a chart that we all look at and they're taking the pain through it for years now, yeah, like look it, pull it up, but you know last
Speaker Change #210: Sixty-something years in federal funds, right? You know, and notice the 1970s, and look at what happened, you know, like a shin one out.
Gary Friedman: You know, like it went out, they took rates up, they thought they had it, they took them down, they thought they had it, you know, up and down, up and down, up and down, up and down, up and down. Till it got to the federal funds rate was like 21%. You know, but they thought if they had it. If you look at just zoom in on, you know, like it. I mean, you know, up and down, up and down, up and down, up and down, up and down, like maybe hundreds or something times. I'd like you'd probably be good at really zooming in and just have the patience to count it.
Speaker Change #210: To race up, they thought they had it, they took them down, they thought they had it, you know, then up and down, up and down, up and down, up and down, up and down, up and down, and up and down, until it got to the federal funds rate, it was like 21%.
Speaker Change #210: You know, but they thought they had it. If you looked at this, you know, zoom in on, you know, like it.
Speaker Change #210: Take the 10 year period.
Speaker Change #210: I mean...
Speaker Change #210: Yes, that's the down, up and down, up and that's like maybe hundreds or something times, like you'd probably get a really good amount of just have the patience to count it. Yes, so I'm in it. Who says that can't happen again, I hope not, I'd rather personally, I tell the team this all the time.
Gary Friedman: You know, and who says that can't happen again. I hope not. I'd rather personally, I tell the team this all the time. I'd rather have them not cut the rates. You know, it's bad for a business. Do you know what I mean? You not cut the rates until you are absolutely have killed inflation. Leave no doubt because if it starts going up and down and so on and so forth, it hits anywhere like that period that, you know, I mean, it's like the worst 10-year economic period in American history except for the Great Depression. And you don't want that to happen.
Speaker Change #210: I'd rather have them.
Speaker Change #211: Not Kurt, the RAIDS.
Speaker Change #212: You know, it's bad for a business, do not cut the race until you are absolutely have killed inflation. Please note down, because if it starts going up and down, and so on and so forth, it hits anywhere like that period, I mean, it's like the worst.
Speaker Change #212: 10-year economic period in American history except for the great depression. And you don't want that to happen. I'd rather hang on and we're going to reflect no matter what.
Gary Friedman: I'd rather hang on and, you know, we're going to reflect no matter what. And, you know, we're kind of indifferent. Will it be good when the housing market influx? Yes, will it influx? Yes. Will the Fed get it right? Who knows? Like, and I'm, again, not being critical with that. I was critical of the Fed. But when, you know, they said, oh, inflation is going from four to two, it's transitory. And over the next two quarters, we go back to two. I'm like, did they talk to anybody business? Your ocean freight race that went up 120% price of, you know, wood was up 80%. Steels up like all the imports.
Speaker Change #212: Well kind of been different. Will it be good when the housing market influx? Yes, will it influx? Yes Will the Fed get it right? Who knows? Like and I'm again, not being critical with that I was pretty critical with the Fed when you know they said oh inflation's going from forward to two with transit to array and over the next few quarters we'll go back to two I'm like
Speaker Change #212: Today, we talked to anybody in business. There are ocean freight waste at 1 up 120% price. You know, wood was up 80% steel. That's like all the imports, all our prices were going up and I'm like.
Gary Friedman: All our prices were going up. I'm like, I think it's going back to two. There's no way. You know, like, you know, I think, you know, what do they have some like 400 PhD data scientists, you know, forecasters are saying, you know, more than anywhere in the world is, you know, in the Fed. He calls some business people. I know it's really going on because I, you know, like, I don't know anybody would have told, told them that that that inflation was going down. That, and again, I'm not, you know, like, it's critical, but what the hell, it's happened.
Speaker Change #212: I think it's going back to, there is no way, you know, like, you know, I think it's the, you know, the, what do they have, some, like, 400 PhD data scientists, you know, four casters, you know, more than anywhere in the world is, you know, in the Fed.
Speaker Change #213: Call some business people. I know it's really going on because I don't know anybody would have told them that that inflation is going down. And again, I'm not, you know, like it's pretty cool, but with the hell, it's happened.
Gary Friedman: I think Powell since then has done a really good job. I think he's got to pull this ground. And I, you know, for us, we're not going to worry about that. If it comes, it comes; we'll be ready. You know, and we'll be in the best position of anybody, but I am totally different. I am much more rooting for kill inflation, leave no doubt. You know, even if we go into a recession for a while, and whatever, you know, just a recession, it's not a plague.
Speaker Change #214: I think Powell Fincent has done a really good job. I think he's got a full discount.
Speaker Change #214: and I, you know, for us, we're not going to worry about that. If it comes, it comes, it will be ready. You know, and we'll be in the best position than anybody, but I am totally different. I am much more rooting for.
Speaker Change #215: Chill in Flation, leave no doubt.
Speaker Change #215: You know, even if we go into a recession for a while, I know whatever, you know, it's the recession, it's not a plague, you know.
Gary Friedman: That makes a lot of sense.
Jack Preston: And just a quick follow-up, Jack, just on the international investment this year, it looks like the headwind ticked up a little bit.
Speaker Change #215: That makes a lot of sense.
Speaker Change #215: and just a quick follow-up Jack, just on the International Investment this year, it looks like the headwind ticked up a little bit. Just if you could contextualize for that, is there a kind of...
Jack Preston: But just if you could contextualize for that, is there kind of any incremental investment, you know, that are being made in international versus what was previously planned. Yeah, good question. You know, I said, yeah, part of it was, you know, we were just refining. The number of sales came down a little lower. And, you know, we had to set it approximately 200, and we were in that difficult. So we're just refining, giving you a number of your plays out. Which is greater visibility than sales growth. So it's just sales coming down overall. That's the leader.
Jack Creston: Any incremental investment that are being made in international versus what was previously planned?
Jack Creston: Yeah, good question, you know, part of it was, you know, we were just refining the numbers, still came down on the lower And, you know, we had to set it up roughly 200 and we were in that set because we were just refining, giving you a few of the numbers, and you're placed out with G.
Jack Creston: Freedom of the League of Shells, so just show it, come it down, to overall in the end.
Jack Preston: Understood. That's the lock.
Jack Preston: Thank you.
Speaker Change #217: Understood, best of luck.
Bradley Thomas: We'll move next to Brad Thomas with KeyBank Capital Markets. Your line is open.
Speaker Change #218: Thank you.
Speaker Change #218: We'll move next to Brad Thomas with Keybank Capital Markets, your line is open.
Gary Friedman: Great thanks. Gary, you've touched on international a bit and some other comments that you've made and answers, but I was wondering if you could just give us an update on how you're feeling about the trajectory of that business and how some of the data points you're coming in as you lap the one-year anniversary of some of these locations. Yeah, I mean, look, they're all going to get better.
Brad Thomas: Thank you. Gary, you've touched on international a bit in some other comments that you've made in answers, but I was wondering if you could just give us an update on how you're feeling about the trajectory that business and how you have some of the data points you're coming in as you lap, you know, the one you're anniversary to some of these locations.
Gary Friedman: The real conversation happens. We open Paris next spring. We open London late next year, you know, long cross our fingers that you know, it's a complex job. Three and together four buildings, and hopefully you know that it plays out. And then we have Milan, but it's a fall after that spring. We're going to spring up here. Yeah, so yeah, so I think we've got to get open in the big markets. You know, I mean, people go like, oh, you're kind of in London. No, we're outside of London. We've tried to do in his firing, you know, unforgettable experience because, you know, we had a chance to like here, we were introduced years ago, you know, selling a lot more forwardly as a brand and people don't remember that.
Gary Jack: Yeah, I mean, look, they're all gonna get better as it is.
Speaker Change #220: The real conversation happens, we open.
Speaker Change #221: Harris, next spring we opened London late next year as one's cross our fingers at the complex job straight together for buildings and hopefully that it plays out and then we have Milan.
Speaker Change #221: is the fall after that spring we're going to have to bring up here that little spring place that's awful. Yeah, so I think we've got to get open in the big markets.
Speaker Change #222: Yeah, I mean, people go like, well, you're...
Speaker Change #222: kind of in London, nowhere outside of London. We tried to do an inspiring, you know, unforgettable.
Speaker Change #223: Experience, he said, you know, we had a chance to, like, hear it.
Speaker Change #224: We were introduced years ago, you know, selling a lot more forwardly different brands and people still remember that, like, we still fight that for such a long time.
Gary Friedman: So we still fight that perception a lot, you know, and you know, Restoration Hardware. I know that's where I buy my stocking stuffers. Like, okay, we have sold stocking stuffers in seven years. So like, you know, you don't enlighten me. You know, but you, you know, perception and brands are, you know, it's really key. And we were able to open, you know, and kind of it's a whole new thing. And that's why we, yeah, we did, you know, what we did. And, you know, because we, you know, we said, look, let's do something unforgettable. And, you know, leave an impression.
Speaker Change #225: A lot, you know, restoration hardware, I know that's where I buy on my stocking stuffers, like, okay, we have the sold stocking stuffers in seven years, so like...
Speaker Change #225: You know, you don't, you know, perception and brands are, you know, it's really key and we were able to open, you know, and kind of it's a whole new thing and that's why we, yeah, we did.
Speaker Change #225: Yeah, what we did, and yeah, because we, you know, we said, look at this, let's do something unforgettable and yeah.
Gary Friedman: And, you know, as I said many times, that was, you know, conversation, not necessarily about commerce. I wouldn't have opened out there to say, hey, let me show you what I can do in the UK and, you know, an hour and 50 minutes outside of London, you know, without anybody walking by, you know, the G-Car. So, you know, we've learned a lot; you know, businesses and flexing is all heading in the right direction. Our design business is growing. Our brand recognition is growing. And, but when we open in London, in May, fair, you know, and, you know, stringing together the four buildings we're stringing together, when you see that, the consumer sees that gallery, like, when they see that restaurant, I mean, it's, you know, unbelievable, you know, it's like the amount of people that we'll see it, not only in London, from all over the world, like, they'll walk around May, fair.
Speaker Change #225: Leave an impression, and...
Speaker Change #225: You know, if I said many times, that was...
Speaker Change #226: That investment was about conversation, not necessarily about commerce. I wouldn't have opened out there to say, hey, let me show you what I can do in the UK.
Speaker Change #226: Yel, an hour and 50 minutes outside of London.
Speaker Change #226: Bye!
Speaker Change #226: Yeah.
Speaker Change #227: with that baby walking by, you know, with a cute car. So, you know, we've learned a lot, you know, businesses in flexing, it's all heading in the right direction, our design business is growing, our brand recognition is growing, and
Speaker Change #227: But when we opened London, it may fare, you know, and you know, stringing together the four buildings we're stringing together when you see that, the consumer sees that gallery, like when they see that restaurant, I mean, it's.
Speaker Change #227: I'm believable, you know, it's like the amount of people that will see it not only in the line did.
Speaker Change #227: from all over the world.
Gary Friedman: And, you know, it's a global, wealthy, global live, you know, and, you know, so we're right in the heart of it. I love our position. You know, we're kind of almost like free standing in this multiple intersection place. You know, and we're not, you know, wedged in on, you know, one of the busy streets and, you know, people cards are, you know, Lincoln passed by you or walked by you. I mean, we like, you can't miss us. You know, and we're, you know, we're like, that's the really nice place. And the restaurant that are teams designed, like, like, I tell Kristen on our team, you know, it's like, I can't like, she's going to die.
Speaker Change #227: Like, they'll walk around May Fair and, you know.
Speaker Change #227: Well, it's a wealthy, wealthy, wealthy wife, you know, and...
Speaker Change #227: So we're right in the heart of love or position, you know, it's kind of almost like three standing in this multiple intersection place, you know, and we're not, you know, wedged in on.
Speaker Change #227: One of the busy streets and people in the culture, Lincoln passed by you or walk by you, I mean we can't miss us, you know, and we're like, that's a really nice place and ends.
The restaurant that our team's designed to play.
Kristen: I tell Kristen on our team, you know, like I can't, like she's gonna die, I just told her yesterday how many Bobllo is telling her, do you know how many people he tells that he came up with this design for this restaurant? If you gave me a hundred years.
Gary Friedman: I told her yesterday, how about Bella was telling us, do you know how many people he tells that he came up with this design for this restaurant. If you gave me a hundred years to have conceptualized the design of this restaurant that we have that's in, like, you know, like the original Bank of England or something like that. Like, it's like, you know, credible 30 what high ceilings with these columns and everything. And like, what she designed is just, I can't help like, you know, like I like show everybody the pictures. I probably just put them on Zoom and show you guys.
Speaker Change #227: to conceptualize the design of this restaurant that we have that's in.
Speaker Change #227: Like, you know, like the original bank of England or something like that, like this is like, you know, credible 30-foot high feelings with these columns and everything and like what she designs is just, I can't help like, you know, like I just like show everybody the pictures, I probably had to just.
Gary Friedman: But like, I want to do it in the right way. I might bring back one of our videos; you know, it's like when I used to do those videos. And, you know, because it's such a visual business. You know, I sit here and talk and try to tell you how excited we are and stuff like that. But, you know, seeing is believing, right? You know, physical evidence is the key. And so, you know, maybe, maybe in a quarter to, you know, put together one of our videos with music. And you'll see the images come through.
Speaker Change #229: Yeah, put them on Zoom and show you guys, but I want to do it in the right way. I might bring back one of our videos, you know, it's like when I used to do those videos and, you know, because it's such a visual business, you know, I sit here and I talk and try to...
Speaker Change #229: Tell you how excited we are and stuff like that, but you know, seeing is believing, right?
Speaker Change #229: Physical evidence is the key and so maybe.
Speaker Change #229: I've been a quarter to you know we'll put together one of our videos with music and you'll see the images come through You know, Paris, unthinkingly unbelievable you know I mean those three galleries are so unique and different but
Gary Friedman: You know, Paris, I'm thinking unbelievable. You know, Milan, I mean, those three galleries are so unique and different. But I'm real. I mean, just, you know, but, but again, let's think about rattling in incredible. Like, just not that many people go out there, you know. And so, yes, in the summer, you know, kind of picks up the winner. Not so many people. But when London opens, I think the business will go up in our England, because the brand awareness is going to go up and all the people that go out there, you know, are going to know about us.
Speaker Change #229: I'm real, I mean, yes.
Speaker Change #230: Yes, but again, let's think about rattling and incredible, like just not so many people go out there, you know, and so yes, in the summer, you know, kind of picks up and the winner, not so many people, but when it opens, I think the business will go up.
Speaker Change #230: in our student list because the brand awareness is going to go up and all the people to go out there, you know, are going to know about it.
Gary Friedman: And, you know, and when we open in Paris, you know, Paris and London and Milan, you know, both Milan, six center of the universe for design is the home of Salone. The biggest design show in the world, about 500,000 people go to Salone. You know, any every right interior designer in the world and brand in the world and, you know, aspiring designers and so on and so forth. And I mean, there's nothing in Milan like what we're doing. Nothing close. You know, it's just incredible. I mean, I think it's, I think it's fun talking about it.
Speaker Change #230: You know, and when we open in Paris, you know, Paris and London and Milan, you know, broke Milan sick.
Speaker Change #231: Center at the universe for design is the home of Salone, that big, biggest design show in the world. Now, 500,000 people go to Salone, you know, for any of us, every great interior designer in the world and brand in the world and...
Speaker Change #231: the Spiring Designers and Sun and so forth.
Speaker Change #231: I mean, there's nothing in my life like what we're doing. Nothing close.
Speaker Change #231: You know, it's incredible. I mean, it's just, I need goosebumps talking about it, you know, and by all of them, I'm a parent. I'm real. It's just like this toolbox, you know, right in the heart of the world of life, you know, right by.
Gary Friedman: You know, so, and I thought all of them. I'm Paris. Unreal. It's just like this jewel box, you know, right in the heart of the world, you know, right by, you know, you know, who's office and everybody else can fall around there. And, you know, I mean, they're all going to see, you know, we're going to enter at a level. that might be a step or two ahead of them. So, I mean, because what we're doing is just we're making investments into, you know, just brand statements, physical experiences that are going to be like, you know, just monuments. And, you know, like, anybody who goes to any of those towns, I guarantee you, I guarantee you any, any high-end person that's going to London, that's going to Paris, that's going to Milan, and they say, like, hey, what should I do here?
Speaker Change #231: You know, who's office and everybody else can follow around there and, you know, they're all going to see, you know, we're going to enter at a level.
Speaker Change #232: That might be a step or two ahead of him.
Speaker Change #233: Well, we're doing, we're making investments into just brand statements, physical experiences that are going to be like.
Speaker Change #234: Just monuments in your house, don't come in.
Speaker Change #235: Anybody who goes to any of those towns, like Gary to you, like Gary to you, any high-end person that's going to London that's going to Paris that's going to Milan and they say like hey, what should I do here? Like where should I eat? Where should I go? We will be on that list.
Gary Friedman: Like, where should I eat? Where should I go? We will be on that list. I'm just, I'm serious, you know, influential people, not influencers, but really influential people, you know, at the high end, you know, and I'm just super excited and, you know, I'm kind of glad I'm giving Kristen Global, you know, accolades here, because she's like, you know, those just one of the greatest, you know, designs. I couldn't imagine that 100 years to try to do it, I would have never came up with that. That's not the idea. So, yes, the trajectory is a trajectory for now; the trajectory will be completely different over the next couple of years.
Speaker Change #235: On Shares, you know, influential people, not influencers, but really influential people, you know, the high end, you know, and you know, thank you.
Speaker Change #235: I am super excited and you know, I'm kind of glad I'm giving Kristen global, you know, accolades here, because she's like, you know, those just...
Speaker Change #236: One of the greatest.
Speaker Change #237: Yes, designs that I couldn't have imagined that I had a hundred beers to try to do what I would have never came up with the idea.
Speaker Change #238: The Fist Yes.
Speaker Change #238: Good for next year, it's a trajectory for now, it's a trajectory.
Gary Friedman: So give it a little time; things take time, you know, and then they go. You know, generally, you know, it's like, there's really no overnight successes. So, yeah, let us kind of freely get going and kind of, you know, plan the foundation, and then I think everything around it, all the seeds we've, you know, you know, if we, it'll be planted and all the galleries, they'll all go up. The whole thing is going to go up, but just hang on to be patient. I'm an impatient guy, but I have to be patient about this. Like this has been a long term investment, and we got to get those galleries built and, and then Europe and the UK and the consumer, you know, that they'll really know who we are.
Speaker Change #238: You know, there's really no overnight successes, so let us kind of.
Speaker Change #238: I really get going and take a, you know, plant the foundation and then I think everything around it, all that seeds we've, you know, you know, if we go.
Speaker Change #238: Here we planted and all the galleries that they'll all go up.
Speaker Change #238: The whole thing is going to go out.
Speaker Change #238: with this.
Speaker Change #238: Hang on, it's the patient. I'm an inpatient guy, but I have to be patient about this. Like this has been a long-term investment and we got to get...
Speaker Change #238: and then Europe and the UK and the consumer, you know, that those really know who we are. You know, you won't be able to miss us.
Michael Lasser: You know, you won't be able to miss us. I appreciate it. Thanks, Gary. Okay, Brad, thank you.
Speaker Change #238: I appreciate it, thanks Gary.
Michael Lasser: We'll move next to Michael Lasser with UBS. Your mind is open. Good evening. Thank you so much for taking my question. Gary, if you look at the updated guidance, how much of the reduction was due to the market not being as strong as you expected. We did a slower ramp in demand in response to some of the introductions and changes that were introduced or just everything executing a little slower than what was previously anticipated. And then a part of that is demand is shaping up to be a little lower than you would expected. Should there be a benefit to the spread between demand and sales?
Gary Jack: Okay Brad, thank you.
Speaker Change #239: We'll move on next.
Speaker Change #239: to Michael Lasser with UBS.
Speaker Change #240: You're by this open.
Michael Lasser: Good evening, thank you so much for taking my question. Gary, if you look at the updated guidance, how much of the reduction was due to the market is not being as strong as you expected.
Speaker Change #242: A slower ramp in demand in response to some of the introductions and changes that were introduced.
Speaker Change #243: Or just everything executing a little slower than what was previously anticipated.
Speaker Change #244: and then as part of that, if demand is shaping up to be a little lower than you would expect it, soon there'll be a benefit to the spread between demand and sales.
Michael Lasser: Yeah, well, so, Michael's out, you know, all, all good questions. So thanks. I say to the first, you know, one, which is kind of a lot of questions in one, right, dealing with. That, like, what really caused the ramp to be slower, I think, a little bit of all of it. Right? You know, so that, let's say that, let me say this. The first one, no, not relevant. You know, the market, not as strong as we expected. I don't think that was relevant. I think it's more, you know, just the time it takes to marinate with a consumer, you know, to see it, you know, the time, you know, like, you have time to take for the books to kind of get in home and, you know, might of get in home, you know, are for big books, right?
Speaker Change #244: Yeah, and we'll say Michael's also, you know, all good questions, so thanks. I say to the first, you know, one, which is kind of a lot of questions in one, right? Feeling with...
Speaker Change #245: That's like what really caused the ramp to be slower. I think a little bit of all of it, right? You know, I see that. Let me say this. The first one is not relevant. You know, the market is not as strong as we expected. I don't think that was relevant. I think it's more.
Speaker Change #245: You know, just the time it takes to marinate with a consumer, you know, to see it, you know, the time it, like, you have time to take for.
Speaker Change #245: The book takes kind of get in home and you know, might get in home, you know, art, art of big books, right? You've got to really intentionally throw it out, you know, and get a, like, boom, it's out. But, you know, a lot of people get our books and...
Gary Friedman: You got to really intentionally throw it out, you know, and get it, like, boom, it's out. But, you know, a lot of people get our book and, you know, it sits on the kitchen counter or the coffee table on their desk next to their bed and, you know, they might open it, you know, like, you know, there is the home process, they move, they did by home, they looked at the housing market, it's not as zero, right? It's just down, comparatively. I mean, we're doing a lot of volume, but yeah, just trying to say what, you know, when, when did, you know, the amount we're doing, you know, it's like, you take the amount we're doing, you say, like, you know, how long does that take to digest, how, how right or wrong are you, you know, what's the quality of our execution, you know, and what can be the quality of the execution is such a massive move, right?
Speaker Change #246: Yeah, it's on the kitchen counter or the coffee table on their desk next to their bed. And they might open it. You know, and you have a certain amount of people that it's like...
Speaker Change #247: Yes, they're in the home process, they moved, they did buy home. They looked at the housing market, not as zero, right? To stand comparatively. I mean, we're doing a lot of volume.
Speaker Change #247: But, yes, just trying to say what, you know, when you know, you know, the amount we're doing, you know, it's like, take the amount we're doing and say like, [inaudible]
Speaker Change #248: How long does that take to digest?
Speaker Change #248: How right or wrong are you, you know?
Speaker Change #248: You know, what's the quality of our execution, you know, and what can be the quality of the execution is such a massive move, right? So it's hard to be critical, you know, really.
Gary Friedman: So, it's hard to be critical, you know, really, you know, in the organization, when you're doing so much. You know, it's hard to have the points of reference to measure. And, you know, it's hard to know what the ramp is, you know, how, you know, how fast will it ramp, how, you know, what's that consumers, you know, consumer reaction acceptance, you know, like, when did the tip and really get going? But I'd say it's, you know, we're seeing the data, right? That's why I say the; I don't, I'm not spending a lot of time really on that question, Michael. It's like, why I wrote it in the letter.
Speaker Change #248: in the organization when you're doing so much.
Speaker Change #248: You know, it's hard to have the points of reference.
Speaker Change #248: To measure and you know, it's hard to know what the ramp is, you know, how fast will it ramp, how you know what the consumer reaction acceptance, you know, when it's a tip and really get going.
Speaker Change #248: But I'd say it's seeing the data, right? That's why it's... I don't know, spending a lot of time.
Speaker Change #248: Really, I'm that question, Michael, it's like why I wrote it in the letter. It's not so much about the timing. It's more about the vector.
Gary Friedman: It's, it's not so much about the timing; it's more, you know, about the vector. It is happening. That is, you know, in the, in the field of all, like, it's happening, and we have real points of reference, right? There's, you know, we've reported a little later than others. So you've got all this points of reference in demand. That's why I actually kind of gave you months and builds, so you can have more comparability. You know, I've put some more bread crumbs out there. And so, you know, that's, it's indisputable. Nobody has our demand right now.
Michael Lasser: It is happening, that is.
Michael Lasser: Yeah.
Speaker Change #249: in the field of all, like it's happening. And we have real points of reference, right?
Speaker Change #249: Yeah, we've reported a little later than others. So you've got all this points of reference in demand. That's why I actually kind of gave you months and bills. So you can have more comparability. You know, I'd put some more bread crumbs out there. And so, you know, that's it's indisputable.
Speaker Change #250: Nobody has.
Speaker Change #250: our demand right now.
Gary Friedman: Nobody's close to our demand right now. Um, you know, so now it's just, you know, and so, so that's, that's how we think about that. You know, it's like, you know, it's not, well, when it's real, you know, like, you know, if we're still waiting, you know, and we are like bouncing around it, you know, negative three or, you know, negative three, you know, looks, I guess, looks like a good number, right? I mean, my former company came out, you know, make the two go and said, hey, the industry is down 10. I don't know what industry, I don't know if that's furniture industry, or that's the furnishings industry, or the cable top industry, you know, they're, they're in a much broader, you know, categories, but they characterize it as down 10.
Speaker Change #250: Nobody's close to our demand right now.
Speaker Change #250: So now it's just, you know, and so that's how it's think about that, you know, it's like.
Speaker Change #250: It's not a win, it's real, it's like, you know, it's...
Speaker Change #250: If we're still waiting, you know, and we're like bouncing around it.
Speaker Change #251: Negative three or negative five.
Speaker Change #251: Negative 3, you know, looks like it looks like a good number, right? I mean, my former company came out, yeah.
Speaker Change #252: I think the two of them go and said, hey, the industry is down 10. I don't know what industry. I don't know if that's the furniture industry or that's the furnishings of industry or the table top in there. They're in a much broader
Speaker Change #252: You know, categories, but they characterize it as down 10 and yeah, so I'm sure in that exclusively, you know, all the businesses they have, and the day we're down the street and they said we are taking market share.
Gary Friedman: And, yeah, sorry, I'm sure that included, you know, all the businesses they have, and they were down 3, and they said, we are taking market share, you know, so we're, we're doing a lot better than that, and we are more of a furniture-based business, right? And so if you kind of anchor us around, you know, furniture, kind of people versus, you know, heavy mix of home furnishings, we are not a cable top, we don't have a big accessories business, we don't, we don't celebrate any of the holidays, right? We got no Halloween stuff, we got no Thanksgiving stuff, we got no Valentine's Day stuff, yeah, we don't have any Christmas, any Hanukkah stuff, you know, and we sell that stuff, you know, but just cluttered up the furniture, right?
Speaker Change #252: Well
Allison Malkin: Hello, I'm Allison Malkin.
Allison Malkin: Here.
Speaker Change #254: We're doing a lot better than that, and we are more of a furniture-based business, right? And so if you kind of anchor us around, you know.
Speaker Change #254: Ernet your kind of people versus heavy mixed up on British, like we are not in a table top, we don't have a piece of fisheries business. We don't celebrate any of the holidays.
Speaker Change #254: Alright, we got no Halloween stuff, we got no Thanksgiving stuff, we got no Valentine's Day stuff, we don't have any Christmas, any Hanukkah stuff, you know, and we still have that stuff.
Speaker Change #254: We've just cluttered up the furniture, right? You want to install any sense? And look, I'm not saying we'll never sell any of that again. I don't know. You know, you learn, you might do a little, we just have some giftable things. I don't know, but right now I like where we're at, but the important thing is...
Gary Friedman: And look, I'm not saying we'll never sell any of that again. I don't know, you know, you learn, you might do a little, maybe that's how some giftable things, you know, I don't know, but right now I like where we're at. But the important thing is, who are you anchoring us against? Yeah, you could look at our book and count the products on the pages and the space and things. Yet, you could make an estimate of what percent of our business. I'm sure you can get an estimate or do an industry analysis, right? If you look at furniture and other categories of what percent of a home spend at the high end are all those categories.
Speaker Change #255: Who are you anchoring us against?
Speaker Change #256: Yeah, you could look at our book.
Speaker Change #256: and count the products on the pages and the space to things yet and you could make an estimate of what percent of our business I'm sure you can get an estimate or do an industry analysis right if you look at furniture and other categories of what percent.
Speaker Change #256: of a home spend at the high end or all of this category.
Gary Friedman: The important thing is, you know, anchoring us against people. Don't anchor us against people selling a lot of accessories or a lot of holiday stuff or, you know, cable top and all this; we're not in that business. You know, but very little of those businesses would have any dining cable piled with stuff on them. You know, you see a beautiful dining table with maybe a centerpiece or something like that. You know, but if you really compare us to how, you know, the industry, you know, but we have a massive inflection point, massive. And so, you know, when you know, if you really kind of look at a home and walk through a high-end home and if you took a pad of paper and pencil and you walk room to room.
Speaker Change #257: The important thing is, you know, anchoring us against people, don't anchor us against people selling a lot of accessories or a lot of holiday stuff for, you know, cable top and all this, we're not in that business.
Speaker Change #257: And then you know, very little of this, this is, any dining table piled with stuff on them, you know, you see a beautiful dining table with maybe a centerpiece or something like that. You know, but if you really compare us.
Speaker Change #257: to how industry, you know, like we have a massive inflation point.
Speaker Change #257: Massive
Speaker Change #257: And so, you know, when, you know, if you really kind of look at a home and walk through a high-end home, and if you took a pad of paper and pencil and you walked room to room, and you say, how much...
Gary Friedman: And you say, how much like in this dining room, how much was the table, how much was the chairs, how much was the sideboard or cabinet. You know, do they have a rug under the table? How much was the rug? How much was the chandelier? Okay, let me open the sideboard and cabinet. How much were the dishes and flatware and the placemat napkin? You know, do that in every room. And you, you realize that the amount of business in the categories we're dominant in is the biggest amount of business. Lewis, you thought, well, we won't maybe try tabletop again.
Speaker Change #257: like in this dining room.
Speaker Change #258: Kalmux was the cable, Kalmux was the chairs, Kalmux was the side border cabinet.
Speaker Change #258: You know, do they have a rug under the table, not which was the rug, how much was this shandler? Okay, let me open this side board and cap in it. I'm towards the dishes and flatware and the place masks and napkins. Yeah, you can do that in every room.
Speaker Change #259: and you've realized that the amount of business in the categories we're dominant in is the biggest amount of business.
Speaker Change #260: It's up, we won't, maybe.
Gary Friedman: It's just not the big percentage. You know, it doesn't get any more close to the businesses we decided to be in and the business we decided to dominate. And that's like, wait, I don't know what I was saying earlier on the call about what you have to say no to. I mean, we said no. We've edited so many businesses. We might have, you know, we've probably edited. We did $700 million to $1 billion at that business day. But the furniture, lighting, rugs, you know, big textiles again, the outdoor furniture; those businesses would be a lot smaller if our stores were cluttered with all that.
Speaker Change #260: Try to table top again. It's just not the big percentage. You know, it doesn't get any more close to the businesses we decided to be in and the business we decided to dominate. And that's like when I'm saying earlier on the call about what you have to say no to.
Speaker Change #260: I mean, we've said no, we've added so many businesses.
Speaker Change #261: We might have, yeah, we've probably edited.
Speaker Change #261: $700 million to a billion dollars at that business today.
Speaker Change #261: Like the furniture, lighting, rugs.
Speaker Change #261: You know, the textiles, again, the outdoor furniture, those businesses would be a lot smaller if our stores were cluttered with all that, I mean, I call it crap, but it's not crap, but you need it, you know, it's like we have a little bit of it.
Gary Friedman: I mean, I call it crap, but it's not crap. You need it. You know, like we, you know, it's like, we have a little bit of it. But what do you say no to? What are you trying to be best in the world that you know, but the spreads, you know, you got to look at the spread right here. And when the whole business comes back when housing lifts. You know, the people that are selling Halloween stuff and Christmas stuff and all that stuff; those businesses don't go up or down that much. You know, I mean, your kids not go trick or treating, you know, when, you know, the business is tough for somebody.
Speaker Change #262: What do you say now to? What are you trying to be best in the world at? But you got to look at the spreads right here and when the whole business comes back, when housing lists.
Speaker Change #262: The people that are selling Halloween stuff and Christmas stuff and all except those businesses don't go up or down that much.
Speaker Change #263: You know.
Speaker Change #263: That means your kids not go trick or treating, you know, when, you know.
Gary Friedman: Now, everybody goes trick-or-treating. Does Santa always come? You know, does everybody celebrate Hanukkah? You know, people give Valentine's gifts. Yeah, they do. You know, those businesses don't really go way up or down. So if you've got a bunch of those businesses, you're going to be less simple. You're also not going to benefit as much as we do from a housing market bounce back. Right. That's why I like us better than everybody else. I like us better than anybody else because we have the inflection on, you know, demand and margin. We have an incredible pipeline coming.
Speaker Change #263: This is a tough for somebody. Now everybody goes trick for treating. The Santa always comes, you know, everybody celebrate Hanukkah.
Speaker Change #264: People give Valentine's gifts, yeah, they do, you know, those businesses don't really go away up or down. So if you've got a bunch of those businesses, you're going to be less successful. You're also not going to benefit as much as we do from a housing market.
Speaker Change #265: Bounce that!
Speaker Change #266: Right? That's why I like us better than everybody else.
Speaker Change #266: I like that's better than everybody else because we have the inflection, you know, demand, and margin, we have incredible pipelines, I mean, we have incredible platform, but only get to become better and more dominant.
Gary Friedman: We have an incredible platform that's only going to become better and more dominant. And, and when they really start buying furniture and chandeliers and rugs and, you know, all the big ticket stuff, measure our inflection then compared to all those people selling Halloween crap. You know, you know, because you can't even see their dining table or any Halloween. It's covered with all kinds of goofball things. You know, so like, but I'm not saying that businesses are horrible businesses. You have to say, what are you going to own? What are you going to be best in the world at?
Speaker Change #267: and when they really start buying furniture and shandle ears and frogs in, you know, all the basic stuff.
Speaker Change #267: Measure our inflection then compared to all those people selling Halloween crap. You know, you can't even see their dining table, they're only Halloween.
Speaker Change #267: It's covered with all kinds of goofball things.
Speaker Change #268: So, like, but I'm not saying that businesses are horrible businesses, you have to say what are you going to own? What are you going to be best in the world that?
Gary Friedman: It's hard to be best in the world at all these things. It's like we've learned that we've got scar tissue down. We've made recent mistakes, and we're going to continue to edit the focus and get more focus. You know, so, but that's how I think about it.
Speaker Change #268: It's hard to be the best in the world that all this things is like, we've learned that, we've got scar tissue, we've made recent mistakes and we're going to continue to edit and focus and get more focus, you know, so.
Gary Friedman: Maybe I could, maybe I could reframe the second part of the question is when do you expect demand and revenue, the growth rates to convert? Oh, I don't know. You actually made a really good point, right? If the man comes down, like, yeah, we lowered the man; that gap will come down. And also, the backlog, you know, projected backlog, right? So he kind of modified; you know, it's a quarterly bounce. It could be, you know, bouncy, but it could gap. Gap narrower, right? Depending on timing and things. So, but, yeah, it'll all converge. When I think it'll be, I don't know, like, end of next year, you know, like, when we've slightly, you know, we're kind of, you know, we start to regulate more, right?
Speaker Change #269: But that's how I think about it. Maybe I could reframe the second part of the question is when do you expect demand and revenue the growth rate six in Verge?
Speaker Change #269: Oh, I'm...
Speaker Change #271: Oh, I don't know, like, you know, you actually met a really good point, right? The man comes down, like, you know, we lowered the man.
Speaker Change #272: That Gaff will come down and also the backlog, you know, projected the backlog, right? So he kind of modified, you know, as a California, because it's a quarterly bounce. It's been, you know, balanced, but it's good.
Speaker Change #272: Gaff, narrower, right, depending on timing of things, so um...
Speaker Change #272: But, yeah, it'll all converge when I think it'll be...
Speaker Change #273: I don't know, like...
Speaker Change #274: End of next year, you know, like when we've started to regulate more, as far as the Katie knows and both and the newness and, you know.
Gary Friedman: As far as the Katie books and the newness and, you know, you know, then, you know, those gaps will, that be as important like we won't have many back orders, we won't have, you know, imbalances, the special demand, you know, lead times won't be as long from our partners, you know, like, think about our partners, yeah, trying to react to what we just did. I mean, you know, everybody, it's, it's a big, you know, it's a big chaotic for everybody. But it's a, it's a beautiful chaos. And the great thing is when you create order out of that chaos, you know, and it's a beautiful chaos, it becomes a really focused, powerful, you know, beam that can, that's just going to break through it.
Speaker Change #274: You know, those gaps will.
Speaker Change #274: Tapianz.
Speaker Change #274: and important like we won't have many back orders and we won't have.
Speaker Change #274: Yeah, embalances the special demand, you know.
Lee: Lee time won't be as long from our partners.
Speaker Change #276: I think about our partners trying to react to what we just said.
Speaker Change #277: I mean, you know, everybody, it's a big
Speaker Change #278: It's a big teotic for everybody, but it's a beautiful teos. The great thing is when you create order out of that teos, and it's a beautiful teos that becomes a really focused, powerful beam that can just break through.
Gary Friedman: So, um, but, you know, like, I don't know, like, I look, I wouldn't, you're, your job's really hard right now. You're trying to build this model. I can't build the model very good, right? Like, I, you know, we were off, you know, it's on the inflection stuff. And you know, but you know, we'll give you the data. Like, that's why we're, you know, we never guided demand before. We didn't give, we didn't give anybody demand. And, you know, but we thought, hey, you know, like, right now, we, you know, you're not, no one can be able to analyze our business with what we're going through; we need to give demand.
Speaker Change #279: Um, but...
Speaker Change #280: Yeah, I like it.
Speaker Change #281: I don't know, like I, look, I've been, your job's really hard right now, you're trying to build this model, I can't.
Speaker Change #282: Filmed the model very good, right? Like I, you know, we were off, you know, it's done the inflection stuff and, yeah.
Speaker Change #283: Thank you.
Speaker Change #284: We'll give you the data that says why we never guided demand before we didn't give anybody demand.
Speaker Change #285: And you know what we thought, you know what, right now, you know, you're not no one's going to be able to analyze our business with what we're going through. We need to give demand.
Gary Friedman: And, um, and so, you know, we're trying to be transparent and give you the important data and be completely honest about what's working and what's not working and, you know, what's going to take more time. You know, and so, yeah, but it's, it's all, you know, we're, we're strategically right, we're directionally right. The vector is there, you know, it's growing in magnitude and direction. And, it's, you know, it's, I mean, I do, I see the vector closing. I mean, man, I've never seen anything like that in my career. I haven't done this a long time.
Speaker Change #285: and...
Speaker Change #285: and so, we're trying to be transparent and give you the important data and...
Speaker Change #285: Be completely honest about what's working and what's not working in.
Speaker Change #285: of what's been taking more time.
Speaker Change #286: Get out.
Speaker Change #286: and so yeah, but it's all.
Speaker Change #286: Yeah, we're strategically right, we're directionally right, the factor is there, you know, it's growing and magnitude and direction and it's, you know,
Speaker Change #286: I mean, I do I see the vector closing, I mean, man, I never seen anything like that in my career. I've been doing this a long time. Once you get this right, and you get this directly right, you're generally off to the ratios. You know, that's how you go from a, you know, it.
Gary Friedman: Once you get this right, and you get this directionally right, you're generally off to the ratio. You know, that's how you go from a, you know, a brand that was at a $20 million market cap selling, you know, opposite all laundry detergent and chachis to where we are today. You know, it's big moves, big, big moves and getting, being directionally right and then building on that and, you know, refining that. Yeah, that's just what we do. And we're pretty good at it. We're not perfect. Yeah, we're going to miss some things; we're going to get timing wrong.
Speaker Change #286: You know, it's brand that with that it's 20 million dollar market cap selling, you know, Dr. Dahl laundry detergent and charge keys to where we are today, you know, it's big moves.
Speaker Change #286: Big moves and getting being directly right and then building on that and you know refining that and
Speaker Change #286: I'm...
Speaker Change #287: Yeah, that's just what we do.
Speaker Change #287: and we're pretty good at it. We're not perfect. Yeah, we're going to miss some things where you get timing wrong with me.
Gary Friedman: We're not generally wrong completely about the idea, except for what I call side shows. You know, like, you know, I got us into the contemporary art business, and I thought, you know, there's more square footage on walls than there is floors. And, you know, then I realized, like, oh, god, you get a best seller. And you can only sell one of them. This is a shitty business. What do you mean? I got a best seller. It's only, you know, sell one, like, oh, no, you know, it's like, yes, I don't even know how to, you know, I was like, this guy, this was dumb, you know, and I mean, again, really good for someone else who's mastered that business, like, totally poor to ask, like, okay, you, you get the wall, but I'm going to do a different wall business.
Speaker Change #287: We're not generally wrong.
Speaker Change #288: Completely about the idea except for what I call side shows, you know, like, you know, I got us into the contemporary art business and I thought, you know, there's more square-footed young walls and there is floors and, you know, then I realized, like, oh, God, you get a best salary.
Speaker Change #289: You can only tell one of them. This is a shady business.
Speaker Change #289: Oh, and what do you mean? I got a best cellar. It's only, you know, cell one, like, oh no. You know, it's like, I don't even know how to, you know, it's like, this was dumb, you know? I mean, again, really good for someone else who's mastered that business.
Speaker Change #289: Tell me, it's for the last, like, okay, you get to walk this. I'm that dude. A different walk this. I think what we're doing with it.
Gary Friedman: I think what we're doing with, of course, a generosity in general public, and, you know, yeah, yeah, doing like this, um, set of graphs, like printing, like three, oh, it's like a 3D printed, beautiful reproduction, you know, and her whole philosophy on art is just fantastic, and her and Ellen are, you know, incredible art collectors, but they want to make art more accessible. And, you know, she says, look, you know, what if the world, you know, what if there was a great book, and there was only one of them. And you couldn't print a book.
Speaker Change #290: Of course, you draw the general public and, you know, yeah, yeah, doing like this, then a graph like it's printing, you know, printing like three, almost like a 3D printed, beautiful reproductions.
Speaker Change #291: and her whole philosophy on art is just fantastic and her and Eleanor, you know, incredible art collectors, but they want to make art more accessible. And she says, look, you know, what is the world? You know, what is there is a great book, and there is only one of them. And you put in principle.
Gary Friedman: I think about that for a second. Oh, I have the only catcher in the ride. You know, who's going to pay? What are you going to pay now? $7 million, $10 million, $100 million for that book. You know, and then someone has the only whatever, you know, like, what a silly business that is, right? And so when she's trying to, you know, bring more democracy to that and make it more accessible. And she's got, you know, really good artists that, you know, they negotiate in her team and ability to reproduce. You know, at, at, at, at a high quality level.
Speaker Change #291: Like think about that for a second. Oh!
Speaker Change #292: I have the only catcher in the ride, you know, who's going to pay what he's going to pay now? $7 million, $10 million, $100 million for that book, and then someone has the only whatever, you know, like, what a silly business that is, right? And so, Chief's trying to, you know,
Chief: Bring more democracy to that and make it more accessible and she's got really good artists that they negotiate in her and came and ability to
Gary Friedman: I mean, you look at it. You think it's the real thing. And it's great. You know, got it up in my, my house. So, it's good stuff. And, you know, that's a really good business that we're in, you know, building. So, but, you know, I thought, oh, yeah, really cool. We'll reinvent the contemporary art business. Like, we're going to swing and miss things like that. You know, it's like, got it. So you learn and grow. So, but, you know, all good stuff.
Speaker Change #294: Reproduced at a high-quality level. I mean, you look at it. You think it's the real thing and it's great. You know, got it up the mic, my house, you know, so...
Speaker Change #294: It's good stuff and it's a really good business that we're in building so but you know I thought oh yeah really cool we'll reinvent the contemporary art business like we're going to swing and miss it things like that you know it's like got it it's that you'll learn and grow. So, but uh
Gary Friedman: Anyway, I don't really care. Thank you. Thank you very much. Much appreciated. Good luck. Thanks so much. Some see us someday. We'll do for sure. Okay.
Speaker Change #295: Yeah, I'll get stuff anyway. I don't even talk about this. Thank you. Thank you very much. Much appreciated and good luck. Thanks so much. I'm seeing you some day. We'll do for sure.
Seth Basham: We'll move next to set fashion with wet bush security. Your line is open. Thanks a lot.
Speaker Change #295: of the night.
Speaker Change #295: We'll move next to you.
Speaker Change #296: To set fashion with wet bush security, your line is open.
Gary Friedman: And good afternoon. I have one question on top. First, you mentioned your 10 queue that your contract is going to be in business is growing. I was hoping to provide a little bit more color on the size of that. And the momentum there. And whether that's going to become more meaningful to the overall company at any point in the near future. And, yeah, well, look, you know, everything, everything begins and ends with the core RH brand, right? That business. And if that business gets stronger and more powerful. So, then the contract business will get stronger and more powerful. You know, that all of everything will, you know, the hospitality business is going to be better, you know, if more people are coming to our galleries and buying things and, you know, and so on and so forth.
Speaker Change #297: Thanks for a lot and good afternoon. I have one question one thought, first, you mentioned your 10Q that your contract business is growing. I was hoping to provide a little bit more color on the sides of that and the momentum there and whether that's going to become more meaningful to the overall company and point in the near future.
Speaker Change #298: Yeah, everything begins and ends with the core or age brand, right? That's business. And if that business gets stronger and more powerful.
Speaker Change #299: Then the contract business will get stronger and more powerful, you know, that all of everything will, you know, that hospitality business.
Speaker Change #299: It's going to be better, you know, more people are coming to our galleries and buying things, you know, and so on and so forth and so, you know, and, you know, we've got great teams and, you know, contract and, I mean, we've been thinking about six or outlet business, right? Yes, that man's up.
Gary Friedman: And so, you know, and, you know, we've got great teams and, you know, contract and, I mean, we've been taking that exact, our outlet business, right? If the man's up, you know, and sales are up, you're going to have more returns. You have more returns, you have more inventory, but the outlet business, you know, and the outlet business is, like, all those businesses generally trail the core business, right? Like, you know, it's like, the, you know, it's like the lead, you know, lead sled dog or something, you know, like, right? You know, that's clearing the path and, you know, creating, you know, the guise that flying formation and stuff like that.
Speaker Change #300: and sales are up.
Speaker Change #301: You're going to have more returns. You have more returns. You have more inventory. But yeah, that's what this is. You know, and the outlet this is true. Like all those businesses generally trails the core business.
Speaker Change #302: Right? Like, yeah, it's like this.
Speaker Change #303: in a sector-lead.
Speaker Change #303: Leed, Sled Dog, or something, you know, like Friedman, you know, that's clearing the path. And, you know, creating, you know, the guise that flying formation and stuff like that. The core business is at the front.
Gary Friedman: The core business is at the front, and everything else will benefit from the core business. And so, you know, it's the core business demand, stronger than all the other demands. Sure. You know, is that right there an opportunity? As the other businesses benefit from what's happening in the core? Yes. That's coming till end, right? And so, you know, we're not breaking that outlet right now. But you know, maybe I, you know, things to firm grasp for the obvious, but you know, maybe, maybe it's not. And, you know, but yeah, the core brand makes it possible to have a contract business, you know, makes it possible to have an outlet business, makes it, you know, possible to have, you know, any other kind of business we're in, you know, our restaurant is as possible in the great galleries and spaces we build.
Speaker Change #303: and everything else will benefit from the core business and so...
Speaker Change #303: You know, it's a core business demand stronger than all the other demands.
Speaker Change #303: You know, is that right there an opportunity as the other businesses benefit from them.
Speaker Change #304: What's happening in the poor? Yes. That's the coming
Speaker Change #305: Right, and so, you know, we're not breaking that all out right now. Right.
Speaker Change #306: Yeah, maybe I think it's a firm grasp for the obvious, but maybe it's not, but yeah, there it is.
Speaker Change #306: the core brand.
Speaker Change #306: Make it possible to have a contract business.
Speaker Change #306: Makes it possible to have an outlet business. Makes it possible if...
Speaker Change #306: To have any other kind of business we're in, you know, a restaurant is possible from the great galleries and spaces we build.
Gary Friedman: And, you know, and our baby and child business, you know, if there was an RH brand, would there be an RH baby and child now? But, you know, all the lessons and all the things, you'll see, you know, you're starting to see, I don't know if you saw the last, you know, the book we just mailed recently for Baby and Child team looks incredible. You know, and it's, you know, it's emulating kind of statically what's happening in the core, right? So, so there's so many reasons we're so excited right now because the election in the core, everything else, you know, it will create, you know, it will clear the path for everything else to follow and it'll bring everything with it, you know, it's just a matter of timing.
Speaker Change #306: and our baby and child business.
Speaker Change #306: You know, if there was an RH brand with their BNRH baby in child now.
Speaker Change #306: You know but you know all the lessons and all the things you'll see you know you starting to see I don't know if you saw the last You know the book we just nailed recently for bathing child teen looks incredible, you know and it's you know it's
Speaker Change #307: Emulating kind of statically what's happening in the core, right? So, there's so many reasons we're so excited right now because you flexion in the core.
Speaker Change #308: Everything else, it will clear the path for everything else to follow and it'll bring everything with it. It's just a matter of time.
Gary Friedman: You know, so, but the core is going to lead it all, right? So you can expect, I would say, almost with certain, but, you know, it could be wrong, something to pop here there, but, yes, the core will, the core business demand growth, you know, will be higher than everything else, but the law will catch up, and it will all kind of come back into harmony.
Speaker Change #309: Hello, so...
Speaker Change #310: But the court's gonna lead it off, right? So you could expect outside.
Speaker Change #311: Almost with certain that we could be wrong, something to pop here there, but yes, this or...
Speaker Change #311: Wealth
Speaker Change #312: the core business demand growth.
Speaker Change #312: Will be higher than everything else.
Speaker Change #312: But still all catch up.
Speaker Change #312: and it all kind of come back into harmony.
Jack Preston: Dasha, and then my second question is on inventory, which increased more than 20% points faster than sales this quarter. You talked about some of the reasons why, but can you provide any more color as to how much of this is your gallery for miles and other things that would be helpful? And relatedly, do we expect this outside inventory growth versus sales growth to persist for at least the next few quarters? Yeah, you know, a lot of it is a kind of insurance, right? Like, how do you make the transition from here to there? How do you not?
Speaker Change #313: Gotcha and then my second question is on inventory which increased more than 5% points.
Speaker Change #313: Factor the sales employer. He talked about some of the reasons why, but can you provide a more color as to how much of this is your gallery for miles and other things that would be helpful. I'm relatedly to expect this outside inventory growth versus sales growth to persist from our early to next few quarters.
Speaker Change #315: Yeah, you know, it's a lot of it. It's kind of a...
Speaker Change #316: kind of insurance, right? Like how do you make the transition from here to there? How do you not?
Jack Preston: Things drop out and run out of this before you build some bridge to there, and all of a sudden you've lost business. You know, you just, that's where we're coming for this and, you know, so, and you're learning every time. You know, in a big transition like this, never done this before. You know, so, you know, we do all our math and say, and how do we get from here to there? And then, you know, we had early learnings and like, oh gosh, we're getting out of that too fast. Hold on, you know, like, how do you, you know, how do you optimize?
Speaker Change #317: Things, like, drop out and, you know...
Speaker Change #318: Right out of this before you go to bridge to there and an office in his life.
Speaker Change #318: You know, you just, that's where we're coming for this and...
Speaker Change #318: Uh, you know, so...
Speaker Change #318: and you're learning every time, you know, in a big transition like this never done this before, you know, so we're doing all our math and saying how do we get some here to there and then, you know, we had early learnings and like, oh gosh work.
Speaker Change #318: Getting out of that too fast, hold on, you know, like, how do you, you know, how do you optimize?
Jack Preston: So, you know, we're learning, but, yes, there's, there's like an insurance policy, call it inventory to kind of get from where we are to where we're going. And exactly where we're going, we know directly where we're going, we don't know exactly what that, you know, the makeup for the pieces and the percentages and the, you know, like what's, what's possible now? We're going to learn new things and, you know, so, you know, as, as we learn, you know, you'll learn. I'd like to say, you know, so we're, I mean, which I had, you know, I mean, I don't, I don't really wish I had a, you know, really precise answer, because then I'd be a manager.
Speaker Change #318: So, you know, we're learning, but yes, there's like an insurance policy called it inventory to kind of get from where we are to where we're going. And exactly...
Speaker Change #318: We're going, we know directly where we're going, we don't know exactly what that is.
Speaker Change #318: The makeup of the pieces and the percentages and what's optimal now? We're going to learn new things and so.
Speaker Change #319: Yeah, as we learn, you'll learn, like, say, as it were.
Speaker Change #320: I mean, I mean, I don't really wish I had a really precise answer because then I'd be a manager.
Jack Preston: You know, I'd be a range in organizing the status quo, and I'd be really accurate, telling you what's going to happen next quarter and, you know, next year. You know, but that's just not what we do. So, we would never got here if, if we, we were managers. You know, we're, we have a leadership culture; we don't have a title of manager anywhere in this company. In this brand, there are no managers here. We don't have meetings here; we have adventures, you know, pursuit of better ways and brighter days. So, you know, we don't, different, you know, it's a different culture; we do different things with, you know, different vocabulary, you know, and you need a different vocabulary.
Speaker Change #320: You know, I'd be a range in organizing the status quo and I'd be really accurate telling you what's going to happen next quarter.
Speaker Change #320: Next year, that's not what we do. We would never got here. We were managers. We have a leadership culture. We don't have a title of manager anywhere in this company in this brand. There are no managers here.
Speaker Change #320: We don't have meetings there, we have adventures, you know.
Speaker Change #320: Percedive.
Speaker Change #320: Better ways and brighter days. So, you know, we don't, different, you know, different cultures, we do different things, you know, different vocabulary, you know, and you need a different vocabulary, otherwise people just go to meetings, you know.
Gary Friedman: Otherwise, people just go to meetings, you know, and people will do a nice little PowerPoint, and people will go, oh, really good, and, you know, shake hands and kiss babies and, you know, can't wait to get to lunch. Not usually what we do. Kind of an adventure, you know, and you're kind of learning a lot, and sometimes, you know, it's difficult. I know it's a trip and fall, and you get up and you've learned. And, yeah, like we tell the team here. Hey, if you want to know what's possible, you have to go to the edge of impossible, right?
Speaker Change #320: People do a nice little PowerPoint and people go, oh, really good. You know, shake hands with his babies and you know, can't wait to get to lunch.
Speaker Change #320: Not usually what we do, kind of an adventure, you know, and you're kind of learning a lot. And sometimes, you know, it's difficult to notice your trip and fall and you get up and you've learned. And yes, like we tell the team here.
Speaker Change #320: If you want to know what's possible, you have to go to the edge of impossible, right? And you have to look out and try to see what's possible. And we say, just don't fall off, don't die. If you don't die, you're going to learn and you're going to grow. And so.
Gary Friedman: And you have to look out and, you know, and try to see what's possible. And we say, just don't fall off. Don't die. If you don't die, you're going to learn and you're going to grow. Yeah. And so, you know, that's where we kind of go. And that's where we play. And that's where we, that's how we learn. And that's how we grow. So, you know, I'm sorry, I can't give you like so, buttoned-up answers here. And I kind of, you know, sometimes these longer, winded conceptual, you know, directional answers, but that's what we do here.
Speaker Change #320: See you next time.
Speaker Change #320: That's where we kind of go and that's where we play and that's where we learn and that's where we grow. So, you know, I'm sorry I can't give you like so buttoned up answers here and I kind of, you know, sometimes give me longer winded.
Speaker Change #320: Conceptual, you know, directional.
Speaker Change #320: Answers with That's
Gary Friedman: You know, like it's, we're figuring it out. And we're learning, right? Hey, right now we just learned a lot. And, and boy, we've got some really good data that, you know, helping us, like move faster and more accurately towards us. That's the direction we want to go. Yeah. So, I appreciate it. Thank you.
Speaker Change #320: What we do here, you know, like we're figuring it out and we're learning, all right, tell you right now, we just learned a lot and boy, we've got some really good data that you know, helping us like move faster and more accurately towards the direction like I go. Yeah, so.
Speaker Change #320: Thank you for watching.
Speaker Change #321: I appreciate it, thank you.
Unknown Executive: And ladies and gentlemen, this does conclude our question-and-answer session.
Speaker Change #321: Ladies and gentlemen, this does conclude our question and answer session. I would now like to turn it back to Chairman and CEO Gary Friedman for any closing remarks.
Gary Friedman: I would now like to turn it back to Chairman and CEO, Gary Friedman, for any closing remarks. Great. Thank you, everyone. Thanks for your time and your interest. And, and, you know, hopefully you've learned just like we've learned. And, and I, yes, so I think, you know, as we do here, just, you know, thanks to our, you know, our people and partners around the world. You know, it's just a great time to be on team our age, you know, and at all levels. Like I think, you know, we're all learning so much. We're just going, you know, we're getting stronger every day.
Gary Friedman: Great, thank you everyone, thanks for your time and your interest and hopefully, yeah.
Gary Friedman: You've learned just like we've learned and I, yeah, so I just, you know, that's what we do here at just, yeah, thanks to our, you know, our people and partners around the world.
Speaker Change #323: in heaven.
Speaker Change #323: It's just a great time to be on the team, and at all levels, I think we're all living so much.
Speaker Change #323: with this yet to go in.
Gary Friedman: Yeah. And it, you know, culture here is the good, you know, all the brains in the game and the egos out of the room. And none of us are smarter than all of us. And we're learning together, and we're growing together. And, you know, we're going to build something incredible together. And it takes a lot of, a lot of energy, and it takes a lot of effort, a lot of courage, and a lot of commitment. So thank you, everyone. You know, on the team, you know, internally and externally, you've, you know, brought this to life.
Speaker Change #323: Yeah, we're getting stronger every day, and yeah, we're getting it.
Speaker Change #324: is a culture here and it's all the brains in the game and the ego's out of the room and none of us are smarter than all of us and we're learning together and we're growing together.
Speaker Change #324: Yeah, we're going to build something incredible together and it takes so a lot of...
Speaker Change #324: A lot of energy and it takes so a lot of effort and a lot of courage and a lot of commitment. So thank you everyone, you know, on the team, you know, internally and externally, you've, you know, brought this delight and it's going to be a fun ride.
Gary Friedman: And it's going to be a fine ride from here. It's going to be a really fine ride. So I'm looking forward to speaking with everybody soon. And, you know, perfectly damn.
Speaker Change #324: from here. It's going to be a really fun ride. So, um, look forward to speaking with everybody soon. And, yeah, part of the day, um.
Unknown Executive: This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful evening. Good bye. .
Speaker Change #325: This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful evening.
Speaker Change #325: Good-bye!
Speaker Change #325: [inaudible]