Q3 2025 RH Earnings Call

December 11, 2025

[music].

Good day, everyone and welcome to the RH third quarter 'twenty 25 earnings call. As a reminder, this call is being recorded I would now like to hand, the call over to MS. Allison Malkin. Please go ahead ma'am.

Operator: Good day, everyone, and welcome to the RH Q3 2025 earnings call. As a reminder, this call is being recorded. I would now like to hand the call over to Ms. Allison Malkin. Please go ahead, ma'am.

Operator 3: Good day, everyone, and welcome to the RH Q3 2025 earnings call. As a reminder, this call is being recorded. I would now like to hand the call over to Ms. Allison Malkin. Please go ahead, ma'am.

Allison Malkin: Thank you. Good afternoon, everyone. Thank you for joining us for our Q3 2025 earnings call. Joining me today are Gary Friedman, Chairman and Chief Executive Officer, and Jack Preston, Chief Financial Officer. 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 forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings, as well as our press release issued today, for a more detailed description of the risk factors that may affect our results.

Thank you good afternoon, everyone and thank you for joining us for our third quarter, let's call. It 2025 earnings call. Joining me today are Gary Friedman, Chairman and Chief Executive Officer, and Jack Preston Chief Financial Officer, before we start I would like to remind you of our legal disclaimer that we will make certain.

They must 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 he.

These forward looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our cost release issued today for a more detailed description of the risk factors that may affect our results.

Allison Malkin: Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any decision to these forward-looking statements in light of new information or future events. Also, during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact 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. A live broadcast of this call is also available on the investor relations section of our website at ir.rh.com. With that, I will now turn the call over to Gary.

Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any decision to these forward-looking statements in light of new information or future events. Also, during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact 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. A live broadcast of this call is also available on the investor relations section of our website at ir.rh.com. With that, I will now turn the call over to Gary.

Also note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results.

To these forward looking statements in light of new information or future that also during this call. We may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items.

You'll find additional information regarding these non-GAAP financial measures.

A reconciliation of these non-GAAP to GAAP measures in today's financial results press release.

Live broadcast of this call also available on the Investor Relations section of our website at IR Dot our H dot com with that I will now turn the call over to Gary.

Gary Friedman: Great. Thank you, Allison. Good evening to those of you on the East Coast, and good afternoon on the West Coast. To our people, partners, and shareholders, we continue to generate industry-leading growth, with revenue increasing 9% in Q3 and up 18% on a two-year basis, demonstrating the disruptive nature of our brand despite the worst housing market in almost 50 years and the polarizing impact of tariffs. Adjusted operating margin of 11.6% was below the 12.5% midpoint of our guidance due to higher-than-forecasted tariff expense on prior-period special order and backorder sales delivered in the quarter and higher-than-expected tariffs opening expenses. Adjusted EBITDA was 17.6%, and we generated $83 million of free cash flow in Q3. Year-to-date free cash flow reached $198 million, and we are on track to achieve our outlook range of $250 to $300 million for the year.

Thank you Allison.

Good evening.

So on the East coast and good afternoon on the West Coast.

Two our people partners and shareholders, we continue to generate industry, leading growth with revenue increasing 9% in the third quarter and up 18% on a two year basis, demonstrating the disruptive nature of our brand. Despite the worst housing market in almost 50 years and the polarizing impact Gary.

Adjusted operating margin of 11, 6% was below the $12, 5% midpoint of our guidance due to higher than forecasted tariff expense in prior periods special order and back order sales delivered in the quarter and higher than expected comparison opening expenses.

Adjusted EBITDA was 17, 6% and we generated $83 million of free cash flow in Q3 year to date free cash flow reached $198 million and we're on track to achieve our outlook range of $250 million to $300 million for the year.

Gary Friedman: Net debt at the end of the quarter was $2.427 billion, down $85 million from Q2. We ended Q3 with real estate assets that we believe have an estimated equity value of approximately $500 million and that we plan to monetize opportunistically as market conditions warrant. Additionally, we are making progress on our goal of reducing excess inventory estimated at $300 million, with inventory down 11% versus last year and down $82 million versus the second quarter. While a meaningful portion of our market share gains are coming from the fragmented to-the-trade design showrooms, regional high-end furniture stores, and local independent boutiques, we are also gaining share from the better furniture-based national brands, as you can see from the table below. I would point out that our share gains on a two-year basis range from a low of 12 points to a high of 28 points.

Net debt at the end of the quarter was $2.427 billion, down $85 million from Q2. We ended Q3 with real estate assets that we believe have an estimated equity value of approximately $500 million and that we plan to monetize opportunistically as market conditions warrant. Additionally, we are making progress on our goal of reducing excess inventory estimated at $300 million, with inventory down 11% versus last year and down $82 million versus the second quarter. While a meaningful portion of our market share gains are coming from the fragmented to-the-trade design showrooms, regional high-end furniture stores, and local independent boutiques, we are also gaining share from the better furniture-based national brands, as you can see from the table below. I would point out that our share gains on a two-year basis range from a low of 12 points to a high of 28 points.

Net debt at the end of the quarter was $2 47 billion down 85 million from Q2, we ended Q3 with real estate assets that we believe have been estimated equity value of approximately $500 million and that we plan to monetize opportunistically as market conditions warrant.

Additionally, we are making progress on our goal of reducing excess inventory estimated at $300 million with inventory down 11% versus last year and down $82 million versus the second quarter.

Well it meaningful portion of our market share gains are coming from the fragmented trade design showrooms regional high end furniture stores and local independent boutiques. We are also gaining share from the better furniture based national brands as you can see from the table below.

I would point out that our share gains on a two year basis ranged from a low of 12 points to a high of 28 points, we find it fascinating that the market chooses to reward companies that fact, remarkably low expectations and slightly beat them versus setting high expectations as we do and at times Miss him while still meaningfully.

Gary Friedman: We find it fascinating that the market chooses to reward companies that set remarkably low expectations and slightly beat them versus setting high expectations, as we do, and at times miss them, while still meaningfully outperforming our industry. Let me turn to our outlook. We are providing the following updated financial outlook reflecting our year-to-date performance and our current trends. For the Q4, revenue growth of 7% to 8%, adjusted operating margin of 12.5% to 13.5%, adjusted EBITDA margin of 18.7% to 19.6%. The above outlook includes an approximate negative 200 basis points operating margin impact from investments and startup costs to support our international expansion and 170 basis points impact from tariffs, net of mitigations.

We find it fascinating that the market chooses to reward companies that set remarkably low expectations and slightly beat them versus setting high expectations, as we do, and at times miss them, while still meaningfully outperforming our industry. Let me turn to our outlook. We are providing the following updated financial outlook reflecting our year-to-date performance and our current trends. For the Q4, revenue growth of 7% to 8%, adjusted operating margin of 12.5% to 13.5%, adjusted EBITDA margin of 18.7% to 19.6%. The above outlook includes an approximate negative 200 basis points operating margin impact from investments and startup costs to support our international expansion and 170 basis points impact from tariffs, net of mitigations.

Our industry.

Let me turn to our outlook, we are providing the following updated financial outlook, reflecting our year to date performance and our current trends.

For the fourth quarter revenue growth of 7% to 8% adjusted operating margin of 12, five to 13, 5% adjusted EBITDA margin of $18 seven to 19, 6%.

The above outlook includes an approximately approximate negative 200 basis point operating margin impact from investments and startup costs to support our international expansion and 170 basis point impact from tariffs net of mitigation.

Fiscal year 2025.

Gary Friedman: Fiscal year 2025, our current outlook now is revenue growth of 9% to 9.2%, adjusted operating margin of 11.6% to 11.9%, adjusted EBITDA margin of 17.6% to 18%, and free cash flow of $250 to $300 million. The above outlook includes an approximately negative 210 basis point operating margin impact from investments and startup costs to support our international expansion and a 90 basis point impact from tariffs, net of mitigations. In the short run, the market is a voting machine, but in the long run, it is a weighing machine. Benjamin Graham. We are a company that is playing the long game, historically innovating and investing during certain times. We also believe, post this high investment cycle and historically low housing market, the weighing machine, as it has done over our 25-year history, will accurately reward us with a truly unique, high-performance brand we are building.

Fiscal year 2025, our current outlook now is revenue growth of 9% to 9.2%, adjusted operating margin of 11.6% to 11.9%, adjusted EBITDA margin of 17.6% to 18%, and free cash flow of $250 to $300 million. The above outlook includes an approximately negative 210 basis point operating margin impact from investments and startup costs to support our international expansion and a 90 basis point impact from tariffs, net of mitigations. In the short run, the market is a voting machine, but in the long run, it is a weighing machine. Benjamin Graham. We are a company that is playing the long game, historically innovating and investing during certain times. We also believe, post this high investment cycle and historically low housing market, the weighing machine, as it has done over our 25-year history, will accurately reward us with a truly unique, high-performance brand we are building.

Our current outlook now has revenue growth of nine 9% to nine 2% adjusted operating margin of 11, 6% to 11, 9% adjusted.

Adjusted EBITDA margin of 17, 6% to 18% and free cash flow of 250 to 300 million. The above outlook includes an approximately negative 210 point.

At this point operating margin impact from investments to startup costs to support our international expansion and a 90 basis point impact from tariffs net of mitigation.

In the short run the market is a voting machine, but in the long run it is a weighing machine Benjamin Graham.

We are a company that is playing the long game, historically innovating and investing in that.

Certain times.

We also believe post this high investment cycle, and historically low housing market the weighing machine.

As it has done over our 25 year history will accurately reward us with a truly unique high performance brand we are building.

Gary Friedman: On the other hand, there is no denying what an unusual time it is in our industry, and we also believe it's not a time to underestimate risk. We're in the third year of the worst housing market in almost 50 years. In 1978, there were 4.09 million existing homes sold in the US when the US had a population of 223 million people. We were on track to average 4.07 million existing homes sold over the three years from 2023 to 2025, with a population of 341 million, or 53% higher than 1978. This is a market we've never seen before. Not a time to underestimate risk. Tariffs are disrupting supply chains and driving higher prices. There have been 16 different tariff announcements over the past 10 months that have resulted in significant resourcing, product delays, out-of-stocks, and driven multiple rounds of price negotiations and increases.

On the other hand, there is no denying what an unusual time it is in our industry, and we also believe it's not a time to underestimate risk. We're in the third year of the worst housing market in almost 50 years. In 1978, there were 4.09 million existing homes sold in the US when the US had a population of 223 million people. We were on track to average 4.07 million existing homes sold over the three years from 2023 to 2025, with a population of 341 million, or 53% higher than 1978. This is a market we've never seen before. Not a time to underestimate risk. Tariffs are disrupting supply chains and driving higher prices. There have been 16 different tariff announcements over the past 10 months that have resulted in significant resourcing, product delays, out-of-stocks, and driven multiple rounds of price negotiations and increases.

On the other hand.

There is no denying what an unusual time it is in our industry and.

And we also believe.

It's not a time to underestimate risks where in the third year, the worst housing market and almost 50 years 1978, there were 4.09 million existing homes sold in the U S. When the U S had a population of 223 million people.

We are on track to average 4.07 million existing homes.

So hold over the three years from 2023 to 2025 with a population of 341 million or 53% higher than 1978.

This is a market we've never seen before.

Not a time to underestimate risk terrorists are disrupted supply chains and driving higher prices.

There've been 16 different tariff announcements over the past 10 months that have resulted in significant resourcing product delays out of stocks and driven multiple rounds of price negotiations and increases. Despite the chaos, we continued to demonstrate our ability to gain meaningful market share while aggressively invest.

Gary Friedman: Despite the chaos, we continue to demonstrate our ability to gain meaningful market share while aggressively investing in strategies that we believe will create long-term strategic separation. While not a time to underestimate risk, also not a time to run from it. It's important to separate the signal from the noise. Remember, necessity is the mother of invention. Our most important innovations were birthed during the most challenging and uncertain times. Our strategic separation is a result of innovating and investing during those uncertain times, and this time is no different. Launching the most prolific product transformation in our history of our industry. Believe the launch of our new concept in the spring of next year will re-accelerate our growth and create another step change in our business. We're building an iconic global selling platform that will likely never be duplicated in our lifetimes.

Despite the chaos, we continue to demonstrate our ability to gain meaningful market share while aggressively investing in strategies that we believe will create long-term strategic separation. While not a time to underestimate risk, also not a time to run from it. It's important to separate the signal from the noise. Remember, necessity is the mother of invention. Our most important innovations were birthed during the most challenging and uncertain times. Our strategic separation is a result of innovating and investing during those uncertain times, and this time is no different. Launching the most prolific product transformation in our history of our industry. Believe the launch of our new concept in the spring of next year will re-accelerate our growth and create another step change in our business. We're building an iconic global selling platform that will likely never be duplicated in our lifetimes.

And strategies that we believe will create long term strategic separation.

Well not a time to underestimate risk.

Also not a time to run from it.

It's important to separate the signal from the noise and remember necessity is the mother of invention.

Our most important innovations where burst during the most challenging and uncertain times.

Our strategic separation as a result of innovating and investing during this uncertain times and this time is no different.

Launching the most prolific product transformation and our history of our industry and believe the launch of our new concept in the spring of next year will reaccelerate, our growth and create another step change in our business.

We're building an iconic global selling platform that will likely never be duplicated in our lifetimes construction costs those COVID-19 hit doubled across the industry, making it very difficult to emulate our immersive platform at the same time, we have created new equally immersive physical experiences that are massively more.

Gary Friedman: Construction costs post-COVID have doubled across the industry, making it very difficult to emulate our immersive platform. At the same time, we have created new, equally immersive physical experiences that are massively more capital-efficient than we plan to unveil on our next call, on our call next quarter. We just opened what might be the most beautiful and talked-about retail experience in the world, and arguably the most important city in the world, especially if your vision is to build a global luxury brand. You know which one I'm talking about. RH Paris, you have to see it to believe it. Developing a global hospitality business that generates significant brand awareness, traffic, and cash flow. We have built a powerful restaurant company that is seamlessly integrated into our core business that will generate operating income that represents, on average, 65% of the aggregate galleries' rent they reside in.

Construction costs post-COVID have doubled across the industry, making it very difficult to emulate our immersive platform. At the same time, we have created new, equally immersive physical experiences that are massively more capital-efficient than we plan to unveil on our next call, on our call next quarter. We just opened what might be the most beautiful and talked-about retail experience in the world, and arguably the most important city in the world, especially if your vision is to build a global luxury brand. You know which one I'm talking about. RH Paris, you have to see it to believe it. Developing a global hospitality business that generates significant brand awareness, traffic, and cash flow. We have built a powerful restaurant company that is seamlessly integrated into our core business that will generate operating income that represents, on average, 65% of the aggregate galleries' rent they reside in.

Capital efficient that we plan to unveil on our next call on our call next quarter.

We just opened what might be the most beautiful and talked about retail experience in the world and arguably the most important city in the world, especially if your vision is to build a global luxury brand.

Which one I'm talking about.

Paris, you have to see it to believe it.

Developing a global high speed with developing a global hospitality business that generates significant brand awareness traffic and cash flow.

We have built a powerful restaurant company that is seamlessly integrated into our core business that will generate each generate operating income that represents on average 65% the average aggregate galleries rent they resided.

Gary Friedman: The RH Ocean Grill at RH Newport Beach is our first 20 million-plus restaurant that we believe will reach the mid-20s in its second full year, and its cash flow next year might cover the rent for the entire 90,000sqft gallery. We're establishing a global interior design firm that is moving the brand beyond presenting and selling products to conceptualizing and selling spaces. We opened our first freestanding RH interior design office in Palm Desert, California, with no product except for two small sitting areas in front of our designers' offices. There's four offices in the building and a workspace with clients. It's a real freestanding, customer-facing design firm, which really don't exist in the world, if you think about it. It's like finding a dentist. You know, you move to a new area, you buy a new home, you need a dentist. What do you do?

The RH Ocean Grill at RH Newport Beach is our first 20 million-plus restaurant that we believe will reach the mid-20s in its second full year, and its cash flow next year might cover the rent for the entire 90,000sqft gallery. We're establishing a global interior design firm that is moving the brand beyond presenting and selling products to conceptualizing and selling spaces. We opened our first freestanding RH interior design office in Palm Desert, California, with no product except for two small sitting areas in front of our designers' offices. There's four offices in the building and a workspace with clients. It's a real freestanding, customer-facing design firm, which really don't exist in the world, if you think about it. It's like finding a dentist. You know, you move to a new area, you buy a new home, you need a dentist. What do you do?

CRH Ocean Grill at our Newport Beach is our first 20 million plus restaurant that we believe will reach the mid twenty's in its second full year and its cash flow next year, Mike cover the rent for the entire 90000 square foot Gallery.

We're establishing a global interior design firm that is moving the brand beyond presenting and selling products to conceptualizing and selling spaces. We opened our first freestanding RH interior design office in Palm Desert, California, with no product, except for two small sitting areas in front of our does.

Signers offices.

Four four offices in the building and its workspace with clients.

Hi, it's it's a real freestanding customer facing design firm.

Which really don't exist in the world. If you think about it it's like finding that Dennis.

You moved to a new area you buy a new home you need a Dennis what do you do.

Gary Friedman: You Google it, you ask a friend. Like, where do you find an interior designer? I mean, you can go online. You know, I don't know how that's going to really help. Yeah. But if you think about it, the world of interior design is not a customer-facing business. You know, we opened our first freestanding interior design office in Palm Desert with no product. You know, it's a real freestanding, customer-facing design firm, and it's generating $1 million a month in design business in 3,000sq ft with rent of $200,000 a year. You can do the math. All of which is resulting in building a brand with no peer while generating industry-leading growth with high teens' adjusted EBITDA margin. Imagine what our performance will look like in a robust housing market as we cycle and leverage these investments.

You Google it, you ask a friend. Like, where do you find an interior designer? I mean, you can go online. You know, I don't know how that's going to really help. Yeah. But if you think about it, the world of interior design is not a customer-facing business. You know, we opened our first freestanding interior design office in Palm Desert with no product. You know, it's a real freestanding, customer-facing design firm, and it's generating $1 million a month in design business in 3,000sq ft with rent of $200,000 a year. You can do the math. All of which is resulting in building a brand with no peer while generating industry-leading growth with high teens' adjusted EBITDA margin. Imagine what our performance will look like in a robust housing market as we cycle and leverage these investments.

Google It you ask a friend.

Like where do you find an interior designer I mean, you can go online.

I don't know, how that's going to really help.

But if you think about it the world of interior design is not a customer facing business.

And we opened our first freestanding tiered sign offs palm desert with no product.

It's a real freestanding customer facing design firm and is generating a million dollars a month in design business in 3000 square feet with rent of 200000, a year you can do the math.

All of which is resulting in building a brand with no fear, while generating industry, leading growth with high teens adjusted EBITDA margin.

Imagine what our performance will look like in a robust housing market as we cycle and leverage these investments.

Gary Friedman: Never underestimate the power of the few good people who don't know what can't be done, especially these people. Parfait de me. Operator will now open the call to questions.

Never underestimate the power of the few good people who don't know what can't be done, especially these people. Parfait de me. Operator will now open the call to questions.

Never underestimate the power of the few get people, who don't know what cant be done, especially these people carpathia.

Operator, we'll now open the call to questions.

Operator: Thank you. And everyone, if you have a question today, please press star one on your telephone keypad. We do ask that you limit yourself to one question and one follow-up. Our first question comes from Stephen Forbes from Guggenheim Securities.

Operator 3: Thank you. And everyone, if you have a question today, please press star one on your telephone keypad. We do ask that you limit yourself to one question and one follow-up. Our first question comes from Steven Forbes from Guggenheim Securities.

Thank you and everyone. If you have a question today. Please press star one on your telephone keypad, we do ask that you limit yourself to one question and one follow up our first question comes from Steven Forbes from Guggenheim Securities.

Good afternoon, Gary Jack.

Steven Paul Forbes: Good afternoon, Gary, Jack. Gary, you obviously mentioned RH Paris, but curious if you can maybe give us some color on how the demand book is building, noting it's early. The reason I ask is just curious if you can maybe help inform us how RH Paris has influenced your performance expectations ahead of RH Milan and RH London.

Steven Forbes: Good afternoon, Gary, Jack. Gary, you obviously mentioned RH Paris, but curious if you can maybe give us some color on how the demand book is building, noting it's early. The reason I ask is just curious if you can maybe help inform us how RH Paris has influenced your performance expectations ahead of RH Milan and RH London.

Gary you, obviously mentioned RH, Paris, but curious if you could maybe give us some color on how the demand book is building.

Noting its early and the reason I asked is just curious if you can maybe help inform us how orange Paris has influenced your pro forma expectations ahead of RH born just wanted.

Sure well you know our as far as this.

Gary Friedman: Sure. Well, you know, RH Paris is, one, it's really quite different. While we did open our first gallery with hospitality, it was really, you know, we're two hours out of London at RH England. You know, there's not a lot of traffic out there. Again, knowing how our business has developed, we kind of talked about it last quarter. But, you know, many of the other galleries, as I've spoken about, we didn't open in particularly the way we believed we should open. You know, to acquire the, you know, the RH Paris and RH London, which we think are one-of-a-kind locations, you know, we had to take a kind of a portfolio of galleries and open some of those before we wanted to. That's why we opened London. RH England, excuse me, to, you know, to open something that kind of set a tone.

One is it's really quite different as well.

We did open our first gallery.

With hospitality it was really.

Two hours out of London, England.

Theres not a lot of traffic out there.

No and how our business has developed we kind of talked about it.

Last quarter.

But many of the other galleries as I've spoken about.

We didn't open and particularly the way we we believe we should open.

You know too.

To acquire today.

The tariffs are each line in which we think are one of a kind locations.

Take a kind of a portfolio of galleries and open some of those before we wanted to see that's where we opened London I've already seen excuse me Dave.

Open something that kind of set a tone.

Gary Friedman: You know, it's, I think people know, and in Europe, you know, Americans aren't really known for building luxury brands. We're not really looked upon by the Europeans as having great taste or style. And, you know, all the, really all the luxury brands are, you know, from Paris or Italy. The UK has a couple, and you can argue that we have a couple. You know, argue that Ralph Lauren's luxury brand, a very small part of Ralph Lauren's business is luxury. You know, the biggest part of the business is, you know, it's more of a department store-based, you know, higher-end business, but not luxury, and a giant outlet business. And that's not to say anything bad about Ralph Lauren. It's an incredible company, an incredible brand. It's just not a real, you know, focused luxury brand.

You know, it's, I think people know, and in Europe, you know, Americans aren't really known for building luxury brands. We're not really looked upon by the Europeans as having great taste or style. And, you know, all the, really all the luxury brands are, you know, from Paris or Italy. The UK has a couple, and you can argue that we have a couple. You know, argue that Ralph Lauren's luxury brand, a very small part of Ralph Lauren's business is luxury. You know, the biggest part of the business is, you know, it's more of a department store-based, you know, higher-end business, but not luxury, and a giant outlet business. And that's not to say anything bad about Ralph Lauren. It's an incredible company, an incredible brand. It's just not a real, you know, focused luxury brand.

People know it in.

Europe.

Americans aren't really known for building luxury brands were not really looked upon by the Europeans have had been great taste your style.

And you know all the really all the luxury brands are.

From Paris or Italy.

Okay. That's helpful.

You can argue that we have with Apple.

We argue that Ralph Lauren luxury bass brand is a very small part of Ralph Lauren's businesses luxury yeah. The biggest part of the business is.

Is it more of a department store based.

Uh huh.

Higher end business, not luxury and a giant outlet business.

That's not to say anything bad about Ralph already incredible company, an incredible brand.

It's not a real focus luxury brand and you can argue that.

Gary Friedman: You can argue that the only one we really had pure luxury brand in many ways was Tiffany, and now the French own it. Right? So, you know, the road we're on, the path we're on, it's a tricky one. You know, it's a tricky one to travel. You know, we use the metaphor of climbing the luxury mountain, and Eric coined the phrase, you know, as you get higher and higher in the mountain, it's where the air gets thin and the odds get slim. You know, no one's really made this climb, you know, and from, especially from the level we started at 25 years ago. And so, you know, we're, you know, the next few moves we're making are really important moves.

You can argue that the only one we really had pure luxury brand in many ways was Tiffany, and now the French own it. Right? So, you know, the road we're on, the path we're on, it's a tricky one. You know, it's a tricky one to travel. You know, we use the metaphor of climbing the luxury mountain, and Eric coined the phrase, you know, as you get higher and higher in the mountain, it's where the air gets thin and the odds get slim. You know, no one's really made this climb, you know, and from, especially from the level we started at 25 years ago. And so, you know, we're, you know, the next few moves we're making are really important moves.

The only one we really had to your luxury brand in many ways was Tiffany and now the French on it.

Right so.

At the end of the road road, we're on the path. We're on is it's a tricky one.

Yes, it's a tricky one to travel yeah, we use a metaphor climbing the luxury mountain then Eric coined the phrase because you get higher and higher and the mountain. This is where the area of sand in the Odyssey is slim no one's really made this one.

From especially from the level, we started at 25 years ago.

And so we're.

The next few moves we're making are really important moves.

Gary Friedman: You know, I heard several years ago that someone asked, you know, probably the most famous guy in the luxury world, and I don't, I didn't hear him say this, so I'm not going to say who said it, but you can imagine, you know, only a couple of people have built really the best luxury platforms in the world. But I heard this, you know, someone asked a question, how do you build a luxury brand in China? And the response was, you build great stores in Paris, London, and New York. And I heard that years ago, and I've always thought about that, as I thought about RH and, you know, how do we unveil this brand? And we, you know, we built RH New York, and we opened it in 2018, and we said that was our bridge to Europe. So we did it a little backwards.

You know, I heard several years ago that someone asked, you know, probably the most famous guy in the luxury world, and I don't, I didn't hear him say this, so I'm not going to say who said it, but you can imagine, you know, only a couple of people have built really the best luxury platforms in the world. But I heard this, you know, someone asked a question, how do you build a luxury brand in China? And the response was, you build great stores in Paris, London, and New York. And I heard that years ago, and I've always thought about that, as I thought about RH and, you know, how do we unveil this brand? And we, you know, we built RH New York, and we opened it in 2018, and we said that was our bridge to Europe. So we did it a little backwards.

I'd go.

Further several years ago that someone asked.

Yes, probably the most famous guy in the luxury world.

I didn't hear them say this I'm not going to say, who said it but did you can you can imagine.

Only a couple of people who have built really the best luxury platforms in the world.

I I heard someone asked the question how do you build a luxury brand in China and the response was you build great stores in Paris, London, and New York.

You heard that years ago, and I've always thought about that as a thought about our Asian.

And yes, how do we unveiled its fran.

He built RH, New York and we opened it in 2018, and we said that was our bridge to Europe. So we did it a little backwards and.

Gary Friedman: As we think about it for our business, it's really probably Paris, London, Milan, and New York, because Milan is really the, you know, one of the design capitals of the world, not only, you know, for design, but also for fashion, you know. But it's where the biggest design show in the world is Salone, where 500,000 people go once a year, you know, and, you know, and it's, and it's also the time we're going to open RH Milan. But Paris, we pushed ourselves to another level. It's not a particularly large gallery, but it's very unique, and I can describe it on the last call. If you haven't seen it, we've, you know, we had a video, it's a video, the video on the website or no? Yeah, you know, it's a video.

As we think about it for our business, it's really probably Paris, London, Milan, and New York, because Milan is really the, you know, one of the design capitals of the world, not only, you know, for design, but also for fashion, you know. But it's where the biggest design show in the world is Salone, where 500,000 people go once a year, you know, and, you know, and it's, and it's also the time we're going to open RH Milan. But Paris, we pushed ourselves to another level. It's not a particularly large gallery, but it's very unique, and I can describe it on the last call. If you haven't seen it, we've, you know, we had a video, it's a video, the video on the website or no? Yeah, you know, it's a video.

As we think about it for our business, it's it's really.

Paris, London, and Milan in New York has Milan is really the.

One of the defined capitals of the world badly.

Yes.

For design, but also also for fashion, but it's where the biggest design show in the World. This alone were 500000 people go once a year okay.

Yes, and yes.

And it's also the time, we're going to open RH Milan.

But the Paris, we pushed ourselves to another level.

And it's not a particularly large gallery, but it's very unique and I described on the last call.

And if you haven't seen it.

<unk> had a bit of video and video on the website are now yeah. Some video we're also making a kind of a documentary video like we have some of our other iconic buildings and you'll see that come out probably in the next couple of weeks.

Gary Friedman: We're also making a kind of a documentary video, like we have some of our other iconic buildings, and you'll see that come out probably in the next couple of weeks. But, you know, I don't know, it sounds like, you know, you know, we're bragging about it, but it might be one of the most beautiful, and aspirational, and inspiring retail stores that was ever created. And there's a lot of natural things that we loved about it. One, it's the only building on the Champs-Élysées that doesn't have an entrance on the Champs-Élysées. You can't enter the building. You enter through these, you know, 22-foot gold leaf gates, and you go down, yeah, 195 steps to the front door. And, you know, we built a freestanding interior design office there. We're able to get a building approved, and there's, you know, so many elements of it.

We're also making a kind of a documentary video, like we have some of our other iconic buildings, and you'll see that come out probably in the next couple of weeks. But, you know, I don't know, it sounds like, you know, you know, we're bragging about it, but it might be one of the most beautiful, and aspirational, and inspiring retail stores that was ever created. And there's a lot of natural things that we loved about it. One, it's the only building on the Champs-Élysées that doesn't have an entrance on the Champs-Élysées. You can't enter the building. You enter through these, you know, 22-foot gold leaf gates, and you go down, yeah, 195 steps to the front door. And, you know, we built a freestanding interior design office there. We're able to get a building approved, and there's, you know, so many elements of it.

But.

Yeah.

It sounded like.

Okay.

We're bragging about it but it might be one of the most beautiful and.

Yeah, aspirational and inspiring retail stores that was ever created.

And it wasn't natural things that were.

We loved about it one it's the only building on the <unk> day that doesn't have an entrance on the chancellor of the day you can't enter the building you want to produce.

Yes, 22 foot gold leaf gave some go down.

195 steps to the front door and we built a freestanding interior design office, there were able to get a build improved and there's so many elegant elements of it and that's where he built the first world of our H, which is.

Gary Friedman: You know, it's where we built the first World of RH, which is a, you know, it's an immersive experience that brings to life all our, all the places and spaces that we've built around the world. You know, it's, we think it's an important part of communicating who we are and connecting with consumers. You know, well, we only totally, I think, in the hospitality, they have about 150, 155 seats, so it's really like a normal restaurant, but it's really two, because it's in two smaller spaces. One's on a terrace. It's Le Jardin restaurant, you know, with, and we invented some very new dishes there that we're going to be rolling out in the US because they're so good. And also Le Petit, which is on the, on the top floor and the rooftop.

You know, it's where we built the first World of RH, which is a, you know, it's an immersive experience that brings to life all our, all the places and spaces that we've built around the world. You know, it's, we think it's an important part of communicating who we are and connecting with consumers. You know, well, we only totally, I think, in the hospitality, they have about 150, 155 seats, so it's really like a normal restaurant, but it's really two, because it's in two smaller spaces. One's on a terrace. It's Le Jardin restaurant, you know, with, and we invented some very new dishes there that we're going to be rolling out in the US because they're so good. And also Le Petit, which is on the, on the top floor and the rooftop.

You know, it's an immersive experience.

The life all our all the places in spaces that we've built around the world.

And.

It's we think it's an important part of communicating who we are connecting with consumers.

While we only totally I think well have probably have about 150 to 155 seats. So it's really like a normal restaurant, but it's really too because it's been two smaller spaces, one sign of terrorists as slaves yard in restaurant.

With that we invented some very new dishes are that we're going to be rolling out in the U S. Because they are so good.

Uh Huh and and also liquidity, which is on the list.

On the top floor and the rooftop and the rooftop.

Gary Friedman: And the rooftop, and we're so, so happy we figured out how to, you know, worked with Foster + Partners, and they, you know, we, when we saw the building, we, you know, went up the side stair ladder thing to get on the rooftop, and we couldn't believe we could see the Eiffel Tower, the Grand Palais, and the Louvre, and, you know, and everything we got. Like, is there any way to use this rooftop? And there was no way to get to the rooftop. You know, you said you'd have to build an elevator, but you'll never get an elevator approved because it'll block people's views of the Eiffel Tower.

And the rooftop, and we're so, so happy we figured out how to, you know, worked with Foster + Partners, and they, you know, we, when we saw the building, we, you know, went up the side stair ladder thing to get on the rooftop, and we couldn't believe we could see the Eiffel Tower, the Grand Palais, and the Louvre, and, you know, and everything we got. Like, is there any way to use this rooftop? And there was no way to get to the rooftop. You know, you said you'd have to build an elevator, but you'll never get an elevator approved because it'll block people's views of the Eiffel Tower.

So happy we figured out how to.

You know I worked with Foster's and partners that Nate.

When he saw the building.

The sides share ladder thing to get on the rooftop of couldn't believe we should see the Eiffel tower at the Grand Palais Luiz.

And everything we got like is there any web usage rooftop and there is no way to the rooftop.

You'd have to build an elevator, but you'll never get an elevator fruit because if a block people's views of the Eiffel tower in Boston partners.

Gary Friedman: And Foster + Partners, why you know want to work with the best people is they said, well, maybe we can design a rooftop, design an elevator that you know a hatch opens and the roof and the glass elevator pops up and then it disappears. And I said, well, have you ever done that before? They said, no, but like we love to do things that haven't been done before. But you know like once you see the rooftop, you know, you couldn't unsee it. Once you're up there, you're saying, we've got to figure out how to activate this. And what's interesting, we have 40 seats, I think, on the rooftop. And unfortunately, right now, the rooftop's closed because weather in Paris gets you know pretty grim in the winters.

And Foster + Partners, why you know want to work with the best people is they said, well, maybe we can design a rooftop, design an elevator that you know a hatch opens and the roof and the glass elevator pops up and then it disappears. And I said, well, have you ever done that before? They said, no, but like we love to do things that haven't been done before. But you know like once you see the rooftop, you know, you couldn't unsee it. Once you're up there, you're saying, we've got to figure out how to activate this. And what's interesting, we have 40 seats, I think, on the rooftop. And unfortunately, right now, the rooftop's closed because weather in Paris gets you know pretty grim in the winters.

We don't want to work with the best people is they said well, maybe we can design a rooftop bar.

I had an elevator that Ah ha.

<unk> opened.

And the roofing.

The glass elevator Pops up and then it disappears I think you've ever done that before they said no, but we love to do things that haven't been done before but you know it's like once you see once you've seen the rooftop you couldn't see it once you're up there you're saying we've got to figure out how to activate this.

And what's interesting with 40 seats I think on the rooftop and unfortunately right now the rooftops close because weather and parakeets pretty grim and the winters.

Gary Friedman: You know, we can't evacuate the roof if it starts to rain and pours. There's not enough seats to relocate everybody to the level below. The rooftop, when it was open, you know, the first few months we were open, it is the highest grossing part of the restaurant operation. The two restaurants, we're doing more there per seat than anywhere else. You know, just again, learning about creating incredible spaces that has made us kind of rethink some of the work in Milan and some of the work in London, you know, and some fine, some tweaks there. Then we found out that, you know, we're building this world of RH, and we have this, you know, space where the building turns back.

You know, we can't evacuate the roof if it starts to rain and pours. There's not enough seats to relocate everybody to the level below. The rooftop, when it was open, you know, the first few months we were open, it is the highest grossing part of the restaurant operation. The two restaurants, we're doing more there per seat than anywhere else. You know, just again, learning about creating incredible spaces that has made us kind of rethink some of the work in Milan and some of the work in London, you know, and some fine, some tweaks there. Then we found out that, you know, we're building this world of RH, and we have this, you know, space where the building turns back.

We can evacuate the roof pitch.

If it starts to rain pours.

But it is not enough seats to relocate everybody the level below.

But the rooftop.

When it was opened.

First few months we are open.

The highest grossing part of the the.

The restaurant operation and then the two restaurants, where we're doing more there.

For pursuit.

Anywhere else.

So.

Just again learning about creating incredible spaces that has made us rethink.

Rethink some of the work in Milan, and some of the work in London.

It's implied some tweaks there.

And then we found out.

Yes.

We're building this world of our April.

Space, where the building tariffs fact than we thought.

Gary Friedman: We thought, like, God, well, I don't know what if we put a bar in here and, you know, like try to make it a lounge. So we put a, we put a bar in there. And then we said, like, well, we found out you couldn't, you couldn't have, you couldn't have a bar in Paris unless you had food. And you couldn't just have nuts and snacks. So we had to have, like, a small menu. So we had a small menu. The day we opened, we served our first meal in a place that in our mind wasn't even a restaurant. And on opening night, you know, it's one of those places that was packed. And now, you know, we actually had to kind of retrofit it and put real tables in there that were big enough.

We thought, like, God, well, I don't know what if we put a bar in here and, you know, like try to make it a lounge. So we put a, we put a bar in there. And then we said, like, well, we found out you couldn't, you couldn't have, you couldn't have a bar in Paris unless you had food. And you couldn't just have nuts and snacks. So we had to have, like, a small menu. So we had a small menu. The day we opened, we served our first meal in a place that in our mind wasn't even a restaurant. And on opening night, you know, it's one of those places that was packed. And now, you know, we actually had to kind of retrofit it and put real tables in there that were big enough.

God I don't know, if we put a bar in here and.

Try to make it a lounge and so we put them.

Put a bar in there then we feel like we found out.

You kind of you didn't have the foreign tariffs unless you had food and you Couldnt just have nuts and snack. So you have like the small menu. So we had a small menu.

They reopened we served our first meal and a place.

In our mind wasn't even a restaurant.

And on opening night.

It is a place that has passed and and now yes, we actually had a kind of retrofitting put real tables in there that were big enough now where certain certainly most of the menu KC yeah, yeah, and it is a great offset as we've lost.

Gary Friedman: And now we're serving most of the menu here. We tasted, yeah. Yeah. And it's a great offset as we've lost, you know, the seats on the roof. But there's just been so many lessons and, you know, so much we're learning about the customer and who knows us and who doesn't know us and how, how truly international the business in Paris is. I mean, I would read the list in front of me right now, like of all the design jobs we have in, you know, Mallorca and Morocco and like you name it, like the Middle East. And we're like the design jobs that the team works on. It's like truly a global tour and the clientele is incredible. But so many people don't know us. And, you know, the team's walking people up to the World of RH and walking people through.

And now we're serving most of the menu here. We tasted, yeah. Yeah. And it's a great offset as we've lost, you know, the seats on the roof. But there's just been so many lessons and, you know, so much we're learning about the customer and who knows us and who doesn't know us and how, how truly international the business in Paris is. I mean, I would read the list in front of me right now, like of all the design jobs we have in, you know, Mallorca and Morocco and like you name it, like the Middle East. And we're like the design jobs that the team works on. It's like truly a global tour and the clientele is incredible. But so many people don't know us. And, you know, the team's walking people up to the World of RH and walking people through.

The seats on the roof.

Hi, This is Vince so many lessons.

How much we're learning about us.

Summer.

Who knows esson, who doesn't know if and how.

Hi, how truly international the business imperatives.

List in front of me right now of all the define jobs we have in.

You know Majorca in Morocco, and like you name it like the middle East and work like the design jobs with the team is truly a global door and their clientele is incredible.

But so many people don't know us and and.

The teams are walking people up to the world of our aging walking people through and people I think were kind of shocked by a body of work.

Gary Friedman: And people, I think they're kind of shocked by our body of work because they, you know, many still don't know us. And so just, you know, just the thought of, you know, how important that world of RH is and what a tool that is for our teams to kind of not just try to explain who we are, try to pull it up on the website, but walk people into a really immersive experience that, you know, brings our spaces and places to life and, you know, speaks to our authority and architecture and interior design and landscape architecture because, you know, all of our, you know, buildings are representatives of those kind of core competencies. And, you know, we put at the last minute, we decided the entry with a small little entry and we didn't think it was communicating enough about our truth.

And people, I think they're kind of shocked by our body of work because they, you know, many still don't know us. And so just, you know, just the thought of, you know, how important that world of RH is and what a tool that is for our teams to kind of not just try to explain who we are, try to pull it up on the website, but walk people into a really immersive experience that, you know, brings our spaces and places to life and, you know, speaks to our authority and architecture and interior design and landscape architecture because, you know, all of our, you know, buildings are representatives of those kind of core competencies. And, you know, we put at the last minute, we decided the entry with a small little entry and we didn't think it was communicating enough about our truth.

Many still don't know.

And so just you know just at the thought of.

How important that world of our H isn't what it tool that is for our teams to kind of not just try to explain who we are trying to pull it up on the website for walk people into a really immersive.

Experience that brings our spaces and places the life and it speaks to R. R.

Our authority in architecture.

Interior design and landscape architecture, because Oliver.

Names are representatives of those.

Are those kind of core competencies and yeah, we put at the last minute, we decided the entry with a small little entry.

We just didn't think it was communicated.

Communicate enough about our truth and so we.

Gary Friedman: So we, you know, what, I don't know, we had four weeks to go or six weeks to go, decided to build an architecture and design library like in RH England. Now you can't unsee it. It's so incredible. You walk in, you, you know, you look through the main doors and if you've seen pictures of the gallery, you've seen the Vitruvian Man and the artist design ethos, you know, that you have to interact with. You know, I think most people stop and read it and take pictures in front of it. Then left and right, we have these, these fountains, beautiful fountains. You know, above the fountain, we, you know, we came up with this line that actually my wife came up with the line.

So we, you know, what, I don't know, we had four weeks to go or six weeks to go, decided to build an architecture and design library like in RH England. Now you can't unsee it. It's so incredible. You walk in, you, you know, you look through the main doors and if you've seen pictures of the gallery, you've seen the Vitruvian Man and the artist design ethos, you know, that you have to interact with. You know, I think most people stop and read it and take pictures in front of it. Then left and right, we have these, these fountains, beautiful fountains. You know, above the fountain, we, you know, we came up with this line that actually my wife came up with the line.

I don't know we had four weeks ago six weeks ago excited shipbuilder architecture and design library like in England and.

And as you can see it's seven incredible you walk in you.

If you look through the main doors and if you've seen pictures of the gallery you have seen the <unk> man in the RF design ethos.

You have to interact with you.

I think most people stop and read it and take pictures in front of it.

And then Leslie right. We have these these fountains beautiful thousands.

But the fountain.

We came up with this line actually my wife's came over to life I thought I wrote a really great letter to Parison she read it and she said.

Gary Friedman: So I thought I wrote a really great letter to Paris, and she read it and she had said, "Give me a day." And I said, "What do you mean?" She's like, "You don't like it?" You know, got insecure. And then she wrote that last night, the last line, if you, you know, if any of you got the invite to our party, we, you know, used the letters, you know, an invite with music and so on and so forth and used it for the opening of our video. And it says, "In Paris, the measure is eternity. This we know and have built accordingly." And you walk into that entry and you can't help but read that as you go left and right around the design ethos. And then you go to this, you know, this immersive architecture and design library. Yeah, there's no product.

So I thought I wrote a really great letter to Paris, and she read it and she had said, "Give me a day." And I said, "What do you mean?" She's like, "You don't like it?" You know, got insecure. And then she wrote that last night, the last line, if you, you know, if any of you got the invite to our party, we, you know, used the letters, you know, an invite with music and so on and so forth and used it for the opening of our video. And it says, "In Paris, the measure is eternity. This we know and have built accordingly." And you walk into that entry and you can't help but read that as you go left and right around the design ethos. And then you go to this, you know, this immersive architecture and design library. Yeah, there's no product.

Give me a day.

Yes got them secure and then she wrote that last night last line a few if any of you get the invite to a party we use the letters.

And then by with music and so on and so forth and use it for the opening of our video.

And it says.

In Paris, the measure as attorney.

This we know and have built accordingly.

If you walk into that entry if you can help it read that as you got less than right around the design ethos.

Yes.

Built into this.

Immersive.

Architecture and design Library, Yes, there is no product you don't see it yet.

Gary Friedman: You don't see a, you know, it just like doesn't look like a furniture store at all to anybody, right? You actually, you know, see, you know, we've now owned two copies of De Architectura. You know, the 10 books on architecture where the, you know, first modern printings were in 1521 and we've got one in French. And we have three iconic French architects, Delorem, Haussmann, and who's the third? And then we've got Vitruvius, Da Vinci, and Palladio, you know, displayed with busts and historic books and so on and so forth. And it's something you've never seen anywhere. Like, you know, like I've never even really seen one. But we built our first one in RH England because there was a library there and we came up with the idea and we created something I think really meaningful.

You don't see a, you know, it just like doesn't look like a furniture store at all to anybody, right? You actually, you know, see, you know, we've now owned two copies of De Architectura. You know, the 10 books on architecture where the, you know, first modern printings were in 1521 and we've got one in French. And we have three iconic French architects, Delorem, Haussmann, and who's the third? And then we've got Vitruvius, Da Vinci, and Palladio, you know, displayed with busts and historic books and so on and so forth. And it's something you've never seen anywhere. Like, you know, like I've never even really seen one. But we built our first one in RH England because there was a library there and we came up with the idea and we created something I think really meaningful.

It just doesn't look like a furniture store at all to anybody right.

Do you actually see now in two properties they architect tour.

Right 10 books on architecture, where the first modern paintings, where in <unk> 'twenty one we've got one.

In fresh and we have.

Three iconic French architects Delorme hausmann.

The third and then we've got Vitruvius da Vinci and radio.

Displayed with Boston Historic books, and so on and so forth and it's something that you've never seen anywhere like.

What are you seeing more but we built our first one are each England because there was a library there and came up with the idea and we traded something I think really meaningful and I remember telling the team.

Gary Friedman: I remember telling the team, you know, the night before we opened, you know, we were in the architecture design library. I said, "This might be the most important work we did here." You know, because it really communicates our truth and why we do this and what we believe in. So now we've went back and we've now; you're going to walk into the entry of Milan, which kind of looked like a lobby of a building. Yeah, it looked beautiful, but we didn't know what to do with a couple of couches and a couple of chandeliers. I didn't really, like, you might have like interacted with the first person and go, "Oh, excuse me, but, you know, is this a condominium building?

I remember telling the team, you know, the night before we opened, you know, we were in the architecture design library. I said, "This might be the most important work we did here." You know, because it really communicates our truth and why we do this and what we believe in. So now we've went back and we've now; you're going to walk into the entry of Milan, which kind of looked like a lobby of a building. Yeah, it looked beautiful, but we didn't know what to do with a couple of couches and a couple of chandeliers. I didn't really, like, you might have like interacted with the first person and go, "Oh, excuse me, but, you know, is this a condominium building?

The night before we opened were in.

Is it architectures and library this might be.

The most important work we did here.

And because it really communicated our truth and why we do this in what we believe in and.

So now we went back and we know you are going to walk into the entry of Milan, which kind of looks like a lobby of a bill in the beautiful, but we didn't have to do a couple of couches and couple of chandelier didn't really like you might have interacted. The first person go Oh excuse me.

This is a condominium building.

Gary Friedman: Is this the, you know, because it doesn't look like a store?" You walk in and you immediately look through this kind of loggia into a backyard and, you know, you have to kind of go up and left, left and right. It doesn't have a grand staircase except for that goes down underground. We did our first underground restaurant. Like everybody's going to go, "Oh, well, do they have a rooftop restaurant like this place or that place?" And we, you know, no, we have a restaurant that's underground that's got a, you know, skylight in the middle of the park. But we're putting, you know, an architecture and design library now in the entry.

Is this the, you know, because it doesn't look like a store?" You walk in and you immediately look through this kind of loggia into a backyard and, you know, you have to kind of go up and left, left and right. It doesn't have a grand staircase except for that goes down underground. We did our first underground restaurant. Like everybody's going to go, "Oh, well, do they have a rooftop restaurant like this place or that place?" And we, you know, no, we have a restaurant that's underground that's got a, you know, skylight in the middle of the park. But we're putting, you know, an architecture and design library now in the entry.

It doesn't look like store can you walk in and you immediately looked through.

This kind of low <unk> into our backyard.

Yeah, and you have to kind of go up and left left and right. It doesn't have the grand staircase except for.

And that goes down underground.

And we see it our first underground.

Restaurant.

Everybody's going to go Oh, we have a rooftop restaurant this play for that person.

Now we have a restaurant that's underground.

Yes, skylight in the middle Middle of the park, but we're putting in.

Architect and design Library now in the entry and all of a sudden.

Gary Friedman: And all of a sudden, you're going to kind of go, "Wait, who are these people?" Like, look at this, Vitruvius and Da Vinci and, you know, Palladio and Scamozzi and Alberti, and, you know, all the Italian iconic architects that, you know, shaped the way that most of the world was designed and built, you know, very early on. You know, that's going to come to life there. We're going to have a World of RH in Milan on the top floor in a place, in a space that we probably wouldn't have done anything with. It's kind of like a, I don't know, an attic, you know, but the team reconcepted it as this incredible lounge. And I think it's going to be an iconic place that'll help people understand who we are and what we believe in.

And all of a sudden, you're going to kind of go, "Wait, who are these people?" Like, look at this, Vitruvius and Da Vinci and, you know, Palladio and Scamozzi and Alberti, and, you know, all the Italian iconic architects that, you know, shaped the way that most of the world was designed and built, you know, very early on. You know, that's going to come to life there. We're going to have a World of RH in Milan on the top floor in a place, in a space that we probably wouldn't have done anything with. It's kind of like a, I don't know, an attic, you know, but the team reconcepted it as this incredible lounge. And I think it's going to be an iconic place that'll help people understand who we are and what we believe in.

You are going to go away.

Who are these people like working with Trulia and da Vinci.

<unk> <unk> and other day and all the Italian iconic architecture shaped the way that most of the world was designed and built very early on.

Yes, that's going to come to life. There, we're going to have a world of our H in Milan that popcorn at a place yet face that we probably wouldn't have done anything like that.

I don't know an attic, but the team reached concept data just this incredible lounge and I think it is going to be an iconic place at all.

They'll help people understand who we are and what we believe in it.

Gary Friedman: And also, these are great spaces that we can rent out and do events in that bring the right people into our galleries. You know, we're starting to test the event business because we've got these incredible spaces. You know, I've said no for, I don't know how many years now, 15, 20. My line was always, you know, our galleries are our homes and we don't rent our homes. You know, I've turned down Oscar parties and Grammys parties, you know, like the top artists and everything. And I thought, we finally did an event. We did, you know, I go to a lot of Warriors games and I'm friends with Joe Lacob and Nicole Lacob, you know, and Peter Guber, you know, the owners of the Warriors.

And also, these are great spaces that we can rent out and do events in that bring the right people into our galleries. You know, we're starting to test the event business because we've got these incredible spaces. You know, I've said no for, I don't know how many years now, 15, 20. My line was always, you know, our galleries are our homes and we don't rent our homes. You know, I've turned down Oscar parties and Grammys parties, you know, like the top artists and everything. And I thought, we finally did an event. We did, you know, I go to a lot of Warriors games and I'm friends with Joe Lacob and Nicole Lacob, you know, and Peter Guber, you know, the owners of the Warriors.

And.

And also these are great spaces.

That we can rent out and do events that bring the right people into our galleries.

Starting to test the event business because we've got these incredible spaces.

I've said now for I don't know, how many years at 15%.

The line was always.

Our galleries are homes, and we don't rent our homes.

I turned down Oscar parties.

Our <unk> priority.

Like the top artists and everything and nice start we finally did an event we did.

Got a lot of warriors game, so I'm friends with jet lag up into Cold Lake.

Peter Guber Ericsson Warriors.

Gary Friedman: You know, they hosted the NBA All-Stars, and they wanted to use RH San Francisco to do the owners' party, you know, the opening party for the NBA All-Star weekend. We did it. We just got tremendous, you know, response and had all the right people there. You know, it made us think like, well, maybe we should, you know, for the right, you know, to attract the right clientele. Like, our, you know, we have such incredible spaces. So, you know, so we, you know, in Paris so far, like right away, Chanel wanted to take the World of RH, you know, to hold a dinner. We've been contacted now about like, can so and so do their fashion show here, you know, and take over your gallery for the evening.

You know, they hosted the NBA All-Stars, and they wanted to use RH San Francisco to do the owners' party, you know, the opening party for the NBA All-Star weekend. We did it. We just got tremendous, you know, response and had all the right people there. You know, it made us think like, well, maybe we should, you know, for the right, you know, to attract the right clientele. Like, our, you know, we have such incredible spaces. So, you know, so we, you know, in Paris so far, like right away, Chanel wanted to take the World of RH, you know, to hold a dinner. We've been contacted now about like, can so and so do their fashion show here, you know, and take over your gallery for the evening.

They posted.

NBA all stars.

Wanted to use our <unk> San Francisco.

Do the owners the owners party the opening party for the NBA, All Star weekend, and we did it.

And we've got tremendous response said all the right people there, yes, I think Michael.

But maybe we should for the REIT.

It attracts the right clientele like our we have such incredible spaces.

Yes.

In Paris, so far like <unk> like <unk>.

All right away Chanel and wanted to take that.

The world of our age.

The dinner and we've been contacted NASDAQ and so and so do their fashion show here.

Take over your gallery for the evening, and then and so I think we're learning about this idea of like we're doing these iconix faces an ability to actually <unk>.

Gary Friedman: And yeah, and so I think, you know, we're learning about, you know, this idea of like we're doing these iconic spaces and ability to actually, we have these unique, you know, unique architectural masterpieces and the ability to bring the right people, you know, because we have the right place. You know, and I think it's even more important. Everybody thinks like everything's moving online. Like I think people are dying for experiences. They're dying for authentic connections, not only with people, but with places, you know, and with history, with beauty, and with food. And, you know, like, I mean, how many nights can you order DoorDash or Grubhub? I mean, I loved, I loved the services when I had no time and I, you know, wanted to have something delivered.

And yeah, and so I think, you know, we're learning about, you know, this idea of like we're doing these iconic spaces and ability to actually, we have these unique, you know, unique architectural masterpieces and the ability to bring the right people, you know, because we have the right place. You know, and I think it's even more important. Everybody thinks like everything's moving online. Like I think people are dying for experiences. They're dying for authentic connections, not only with people, but with places, you know, and with history, with beauty, and with food. And, you know, like, I mean, how many nights can you order DoorDash or Grubhub? I mean, I loved, I loved the services when I had no time and I, you know, wanted to have something delivered.

These are unique.

Unique architectural masterpieces and the ability to bring the right people because we have the right place.

Got it.

And I think it's even more important ancillary things like everything is moving online.

I think people are dying for experiences are dying for authentic connections not only with people, but with places.

History, and with beauty with food.

I mean, having a nitrogen you ordered door dasher Grubhub I mean I love.

I loved the services, whether it's Kevin no time in my life.

You wanted to add some delivered but I don't know that anybody else on the phone, but I'd much rather go somewhere.

Gary Friedman: I don't know about anybody else on the phone, but I'd much rather go somewhere and, you know, see people and feel like I'm somewhere and connected, you know. I think, you know, that's why people still, you know, congregate and aggregate. You know, maybe they're not going to movie theaters so much anymore because, you know, that experience is, you know, that's not as unique and differentiated. You know, you don't maybe we don't want to be in a place where someone's coughing behind you and so on and so forth. So that one I get. But I just think the places that we're building, people like to see and they like to be there. You know, there's not a lot of places that are public like ours that you can get a meal in and experience.

I don't know about anybody else on the phone, but I'd much rather go somewhere and, you know, see people and feel like I'm somewhere and connected, you know. I think, you know, that's why people still, you know, congregate and aggregate. You know, maybe they're not going to movie theaters so much anymore because, you know, that experience is, you know, that's not as unique and differentiated. You know, you don't maybe we don't want to be in a place where someone's coughing behind you and so on and so forth. So that one I get. But I just think the places that we're building, people like to see and they like to be there. You know, there's not a lot of places that are public like ours that you can get a meal in and experience.

See people.

Neil I kind of somewhere or you're connected.

Thank you.

That's why people still.

Yeah I agree it in aggregate and then.

And I found a movie theater, so much anymore because that experiences.

No.

Not as unique and differentiated.

Maybe they don't want to be in a place where teams often behind your incentives.

When I get back.

Thanks.

The places that we're building.

People like to see and I'd like to be there.

Theres not a lot of places that are public like ours that you can get a meal and an experience.

Gary Friedman: So, you know, we're learning in Paris. You know, we're having all these people coming from all over the world going, you know, seeing it. And we're thinking about like, gosh, you know, we have to have more people fluent in more languages. We need to ramp the design teams faster. Our design team in Paris kind of got overwhelmed. Like we had no idea that we'd have the traffic we had in Paris. Like it was just so many people that came in and we were just overwhelmed. I mean, and, you know, even, you know, finding out how early you have to hire people because people have given long, you know, tenures. They can't just, you know, give a two-week notice and come to work for you. You know, we kind of got behind in hiring for the restaurants. And like we were behind.

So, you know, we're learning in Paris. You know, we're having all these people coming from all over the world going, you know, seeing it. And we're thinking about like, gosh, you know, we have to have more people fluent in more languages. We need to ramp the design teams faster. Our design team in Paris kind of got overwhelmed. Like we had no idea that we'd have the traffic we had in Paris. Like it was just so many people that came in and we were just overwhelmed. I mean, and, you know, even, you know, finding out how early you have to hire people because people have given long, you know, tenures. They can't just, you know, give a two-week notice and come to work for you. You know, we kind of got behind in hiring for the restaurants. And like we were behind.

What we're learning in Paris, having all these people coming from all over the World go <unk>.

<unk> seen it.

I'd like to ask for that yeah, we have to add some more people fluent in more languages.

We need to ramp the design teams faster our design team in Paris kind of get overwhelmed.

We had no idea.

We'd have the traffic we had tariffs.

So many people that came in and we are just overwhelmed.

And.

<unk> been finding out how early you have to hire people because people keep long.

Tenures at Qantas.

Give it two weeks notice and come to work for you we've kind of got behind in hiring for the restaurants and like Weird. The highway to fly people from America kind of help.

Gary Friedman: We had to fly people from America to kind of help, you know, run the restaurant and cover the shifts. And, you know, they didn't speak French. And, you know, that was important. You know, there's just so, so many things we're learning, you know, especially bringing hospitality into a high-volume space. So, but just a little about the builds. You know, I, you know, I did my own little math and I was trying to understand, you know, got to try to isolate the hospitality business because the hospitality business lost, you know, 25% of its seats after the first couple of months. And so you expect that to be a little off. And it's only a tiny bit off, you know, with all the seats we lost and the highest cost seats.

We had to fly people from America to kind of help, you know, run the restaurant and cover the shifts. And, you know, they didn't speak French. And, you know, that was important. You know, there's just so, so many things we're learning, you know, especially bringing hospitality into a high-volume space. So, but just a little about the builds. You know, I, you know, I did my own little math and I was trying to understand, you know, got to try to isolate the hospitality business because the hospitality business lost, you know, 25% of its seats after the first couple of months. And so you expect that to be a little off. And it's only a tiny bit off, you know, with all the seats we lost and the highest cost seats.

Run the restaurant and cover the shifts and they don't speak French.

That that was important.

Yes.

So so many things, we're learning, especially bringing hospitality into the high volume space. So.

But there's just a little about the bills.

I just did my own little math, and I was trying to understand that.

The hospitality business, because the hospitality business lost 25% of its six after the first couple of months.

That could be a little off and it's only a tiny bit off with policies, we launched and defend the highest record seats.

So.

Gary Friedman: So, but we're thinking that, gosh, we might be able to tent that rooftop and actually do events there and maybe bring in, you know, just as many people, if not more, you know, because we only see 40, I think 44 people max there. But, but the, you know, just about the staffing, about design, like we're learning, learning, learning a ton. And, you know, we're way ahead of, we've done, you know, the team sent some incredible recaps and, you know, learnings. And, you know, we're going to be so much more prepared and so much more efficient. But the builds are really interesting. So the, you know, the math I was looking at, you know, I kind of looked at the first eight weeks because, well, September was a five-week month.

So, but we're thinking that, gosh, we might be able to tent that rooftop and actually do events there and maybe bring in, you know, just as many people, if not more, you know, because we only see 40, I think 44 people max there. But, but the, you know, just about the staffing, about design, like we're learning, learning, learning a ton. And, you know, we're way ahead of, we've done, you know, the team sent some incredible recaps and, you know, learnings. And, you know, we're going to be so much more prepared and so much more efficient. But the builds are really interesting. So the, you know, the math I was looking at, you know, I kind of looked at the first eight weeks because, well, September was a five-week month.

But we're thinking that gasoline, we might be able to turn that rooftop and actually do events. There may be made.

Brian just as many people if not more excuse me <unk> 40 by 244 people Max there but.

Hi.

With the.

Just about the staffing of that design.

We're learning learning learning a ton and we.

We're way ahead of we've been seeing some incredible recaps.

Yes.

<unk>, yes, we're going to be so much more prepared and so much more efficient.

But the bills are really interesting set of the math I was looking at.

You know I kind of looked at the first eight weeks.

Well September was a five week month, we didn't we just didn't open the first one we get another fifth which is.

Gary Friedman: We didn't, we lost, you know. It didn't open the first week, open on the fifth, which is, you know, you know, it was kind of a day, and then the next week started. But, and I kind of try to isolate just our business because when you open cold in a market like this, right, you're not shipping to anyone here. You've got no revenues happening. And, you know, and it's interesting what we're learning all around. But this one with, you know, high volume, high traffic, you know, high traffic, iconic location, international people coming from all over the place. And the first eight weeks, well, I looked at the first eight weeks. And so I kind of got the four weeks of September, the four weeks that we were open in the four weeks of October.

We didn't, we lost, you know. It didn't open the first week, open on the fifth, which is, you know, you know, it was kind of a day, and then the next week started. But, and I kind of try to isolate just our business because when you open cold in a market like this, right, you're not shipping to anyone here. You've got no revenues happening. And, you know, and it's interesting what we're learning all around. But this one with, you know, high volume, high traffic, you know, high traffic, iconic location, international people coming from all over the place. And the first eight weeks, well, I looked at the first eight weeks. And so I kind of got the four weeks of September, the four weeks that we were open in the four weeks of October.

It's kind of a day and then the next week started.

<unk>.

But.

And I've had to try to isolate just our business simply one will open cold in a market like this right you're not shipping.

Shifting to anyone here, you've got no revenues happening and.

Yes.

It's interesting what we're learning all around but this one with in our high volume high traffic.

Hi, Patrick iconic location international people from all over the place.

And.

The first eight weeks.

Just in the first eight weeks.

Yes.

The four weeks of September where we were.

Opened in four.

Four weeks of October and then listen in the next release.

Gary Friedman: Then I've looked at it in the next really almost six weeks. I had to estimate the last three days just to kind of, because we didn't have the business. But when you look at the demand on the core business and we haven't seen ramps like this, the six weeks, the average per week is 62% higher than the first eight weeks. And the first eight weeks actually had more traffic because we, I think we were, you know, it was still the, you know, like the fall and there was a lot of people in Paris and, you know, you had a lot of people come in. We still have very good traffic. But, you know, you can tell the team's starting to kind of get their feet underneath them.

Then I've looked at it in the next really almost six weeks. I had to estimate the last three days just to kind of, because we didn't have the business. But when you look at the demand on the core business and we haven't seen ramps like this, the six weeks, the average per week is 62% higher than the first eight weeks. And the first eight weeks actually had more traffic because we, I think we were, you know, it was still the, you know, like the fall and there was a lot of people in Paris and, you know, you had a lot of people come in. We still have very good traffic. But, you know, you can tell the team's starting to kind of get their feet underneath them.

Almost six weeks I had to estimate the last three days.

Just to kind of yes.

I haven't had the business.

But when you look at the demand on the core business.

And we haven't seen ramps like this.

The six weeks.

The average per week is 62% higher than the first eight weeks and.

In the first eight weeks actually had more traffic.

I think we are.

Still that.

I'd like to fall and there was a lot of people in Paris.

Yeah, a lot of people come in and we still have very good traffic.

But you can tell the team starting to kind of get their feet underneath them.

Gary Friedman: You know, people are starting to kind of figure out who we are and, you know, kind of trust them, kind of buy furniture from them. We, you know, have some people that know us because we're, you know, they either lived in America or they travel internationally and they know us from America. But I didn't expect like the ramp on the core goods that because we opened with such good traffic. But I wouldn't have thought, you know, it'd be a 60%, 62%, 63% ramp those weeks or the other weeks. So when you start to think about that and how that might build, you know, I think it's going to take a while to kind of really understand it. And as we, you know, got to get our arms around the design opportunity.

<unk>.

You know, people are starting to kind of figure out who we are and, you know, kind of trust them, kind of buy furniture from them. We, you know, have some people that know us because we're, you know, they either lived in America or they travel internationally and they know us from America. But I didn't expect like the ramp on the core goods that because we opened with such good traffic. But I wouldn't have thought, you know, it'd be a 60%, 62%, 63% ramp those weeks or the other weeks. So when you start to think about that and how that might build, you know, I think it's going to take a while to kind of really understand it. And as we, you know, got to get our arms around the design opportunity.

Started people are starting to kind of figure out who we are.

<unk> had by furniture from them and we have some people that know us work.

Either lived in America are the traveling internationally and that notice from America.

Sure.

But.

I didn't expect like that ramp on the core goods that as we open with such such as traffic.

But I wouldnt aside.

Thank.

62, 63% ramp those weeks are the other week said when you start to think about that and how that might build.

I think it's going to take a while to kind of really understand it.

We got to get.

Our arms around the business.

The design opportunity there I mean, when you look at all the places we're doing work and you think Oh man our designers are going to have to fly here fly there.

Gary Friedman: There's, I mean, when you look at all the places we're doing work and you think, oh man, our designers are going to have to fly here and fly there and, you know, then our customers pay for that. Like we've been flying people from America to, you know, all the major cities in the world. So many of the major cities, like we've had, you know, customers flying our people to Sydney, Australia, to Melbourne, to Shanghai, to, you know, all over Italy. I mean, I can't say I've been to every country, but, you know, except Middle East. Yeah, Middle East, you know, yeah, we did, you know, for the, let's see, the Prince of Qatar, right? Four homes on his compound, you know, and like a $3 million job or something. Like, but we're doing jobs like hundreds of thousands into the millions.

There's, I mean, when you look at all the places we're doing work and you think, oh man, our designers are going to have to fly here and fly there and, you know, then our customers pay for that. Like we've been flying people from America to, you know, all the major cities in the world. So many of the major cities, like we've had, you know, customers flying our people to Sydney, Australia, to Melbourne, to Shanghai, to, you know, all over Italy. I mean, I can't say I've been to every country, but, you know.

And our customers pay for that so we've been flying people from America.

All the major cities in the world. So many of the major cities.

Customers flying our people too.

Sydney, Australia to Melbourne.

Shanghai.

Yes, Oliver Italy.

So it's almost every country.

[Company Representative 1] (RH): Except Middle East.

Gary Friedman: Yeah, Middle East, you know, yeah, we did, you know, for the, let's see, the Prince of Qatar, right? Four homes on his compound, you know, and like a $3 million job or something. Like, but we're doing jobs like hundreds of thousands into the millions.

Yes Middle East.

Yes, we did.

Got it.

Let's see the prints the Qatar <unk> four homes on its compound.

Like the $3 million job or something like that working on jobs like.

Hundreds of thousands into the millions like we just got.

Gary Friedman: Like, we just got a famous building in New York. I can't talk about it, you know, to be exclusive, but we're just, we're doing a $3 million design project in one of the most famous mansions in New York City. And then another $1.8 million project for someone I can't talk about, you know, very famous. And, you know, just, we're, and that's why I think I made the point about the, you know, design firm. And so, you know, this, you know, there's so much, so much that we're learning about Europe and so much we're learning about, you know, just the potential of our brand at Fixables. And so, you know, long, rambling answer, but you started with a, you know, with a question. I could talk about Paris for a long time. Thank you, Gary. I'll actually pass it on. Thanks so much.

Like, we just got a famous building in New York. I can't talk about it, you know, to be exclusive, but we're just, we're doing a $3 million design project in one of the most famous mansions in New York City. And then another $1.8 million project for someone I can't talk about, you know, very famous. And, you know, just, we're, and that's why I think I made the point about the, you know, design firm. And so, you know, this, you know, there's so much, so much that we're learning about Europe and so much we're learning about, you know, just the potential of our brand at Fixables. And so, you know, long, rambling answer, but you started with a, you know, with a question. I could talk about Paris for a long time.

And our famous building in New York I can I can't talk about it disclosed.

But we're just we're doing a $3 million design project in one of the most famous mentioned in New York City.

And then another $1 $8 million project for Don I can't talk about.

And that's why I think I've made the point about the design firm.

Yes.

And so.

So much so much that we're learning about Europe.

So much we're learning about.

The potential of our.

Our brand is fix a volatile.

Randall rambling answer, but you started with that.

Yes.

For the question.

Talk about Paris for a long time.

Steven Forbes: Thank you, Gary. I'll actually pass it on. Thanks so much.

Thank you Gary I'll actually pass it on thanks, so much.

The next question comes from Max <unk> from TD Cowen.

Gary Friedman: The next question comes from Max Rakhlenko from TD Cowen. Great. Hi, everyone. So, Gary, this is the first time that you guys have taken the pretty outsized price in a while. Can you just talk about how the customer responded in Q3 and the elasticity that you're seeing from the higher price points? What are the learnings and how are you thinking about the right price points for the brand ahead? And depending on where tariffs go, could we actually see RH continue to take prices further? Hey, Max, can I just ask clarifying? Like you're saying you observed Q3 was the first time we raised prices for a while. Is that what you're saying? Not necessarily the first quarter, but you have taken prices just given where tariffs have gone. So just curious what the elasticity looks like, you know, how the customer is responding.

Operator 3: The next question comes from Max Rakhlenko from TD Cowen.

Max Rakhlenko: Great. Hi, everyone. So, Gary, this is the first time that you guys have taken the pretty outsized price in a while. Can you just talk about how the customer responded in Q3 and the elasticity that you're seeing from the higher price points? What are the learnings and how are you thinking about the right price points for the brand ahead? And depending on where tariffs go, could we actually see RH continue to take prices further?

Great Hi, everyone.

Gary. This is the first time that you guys have taken a pretty outsized price in a while can you just talk about how the customer responded in three Q and the elasticity that youre seeing from the higher price points, what are the learnings and how are you thinking about the right price points for the brand ahead.

And depending outer wear and tear of skull can we actually see <unk> continue to Jake prices further.

Jack Preston: Hey, Max, can I just ask clarifying? Like you're saying you observed Q3 was the first time we raised prices for a while. Is that what you're saying?

And Max can I, just ask clarifying extract like Youre, saying Youre observed Q3 was the first time, we raise prices for a while is that we are saying.

Max Rakhlenko: Not necessarily the first quarter, but you have taken prices just given where tariffs have gone. So just curious what the elasticity looks like, you know, how the customer is responding.

Not necessarily the first quarter, but you have taken prices, just given where tariffs of guidance. So just curious what the elasticity looks like how the customer is responding.

Gary Friedman: You know, we're, you know, we're learning. We've taken a lot of price increases this year. We've had a lot of, you know, movement in tariffs, and tariffs are set at one level and then they went up and they, you know, they're moving around and, you know, it takes a while. I mean, everybody, you know, from manufacturers to, you know, product designers, and everybody who's involved in, you know, the development process and, you know, it's, you know, it's the first time we're all trying to navigate this through this thing. So I don't know, you know, maybe it's going to stop moving for a while, but, you know, for a while that we, yeah, we're kind of frozen.

Yes.

We're learning we've taken a lot of price increases this year or is that a lot of.

Movement in tariffs and character set at one level and then they went out.

They are moving around.

It takes a while I mean, everybody from manufacturers too.

Yes product designers and everybody who is involved in the development process.

Yes.

Yes first time, we're all trying to navigate this through this thing so.

I don't know, maybe its going to stop moving for a while but for a while.

Yes were kind of frozen and but I think yes, so far it as long as its fair to everyone.

Gary Friedman: But I think, you know, so far, as long as it's fair to everyone, you know, I think that there's, you know, some businesses that might be kind of violating the rules. You know, I think that there's some, you know, right, people that are coming in, businesses in other countries that are, you know, opening up in the US and they might be making the goods that they know, you know, they might not be, you know, bringing them in at the right price.

But I think, you know, so far, as long as it's fair to everyone, you know, I think that there's, you know, some businesses that might be kind of violating the rules. You know, I think that there's some, you know, right, people that are coming in, businesses in other countries that are, you know, opening up in the US and they might be making the goods that they know, you know, they might not be, you know, bringing them in at the right price.

Think that they are.

I think that there's some businesses that.

It might be.

Kind of violating the rules I think that there is some.

Yeah.

Alright people that are coming in.

As in other countries that are.

Opening up in the U S and they might be making the goods. So they know.

Might not be.

Yes.

<unk> at the right price.

Gary Friedman: You know, they're trying to, yeah, I mean, there's a lot of things going on, like especially where there's marketplaces and, you know, you might have manufacturers bringing in goods and they're figuring out how to get around tariffs, you know, and we hope that any of those kind of things, you know, get the, if we're going to all have tariffs, let's just make it fair. You know, don't let some foreign manufacturer come in here and, you know, those are the people you're trying to stop and there's actually loopholes, you know, they're kind of getting product in here for next to nothing. And that might be an advantage for certain people for a certain amount of time.

You know, they're trying to, yeah, I mean, there's a lot of things going on, like especially where there's marketplaces and, you know, you might have manufacturers bringing in goods and they're figuring out how to get around tariffs, you know, and we hope that any of those kind of things, you know, get the, if we're going to all have tariffs, let's just make it fair. You know, don't let some foreign manufacturer come in here and, you know, those are the people you're trying to stop and there's actually loopholes, you know, they're kind of getting product in here for next to nothing. And that might be an advantage for certain people for a certain amount of time.

They are trying to.

<unk>.

Yes, I mean at this stage.

A lot of things going on especially where theres marketplaces.

It might have manufacturers, bringing in goods and they're figuring out.

How to get around tariffs.

We hope that any of those kind of things.

If we're going to we'll have tariffs, let's just make it fair.

Let some foreign manufacturer come in here.

Those are the people who are trying to stop and Theres actually loopholes, they're getting.

Getting product in here and I think.

And next to nothing in those in that might be an advantage for certain people for a certain amount of time, but I think that steps getting to the administration.

Gary Friedman: But, you know, I think that stuff's getting to the administration, and, you know, hopefully that it'll become a fair playing field for everybody. And then if it is, you know, it is, you know, and, you know, the market, you know, will kind of conform to the reality. You know, I mean, the customer is going to have to conform. You know, it's, you know, things cost more. It's what happens. You know, we've had inflation forever, you know, in this country, you know, and many times much worse than this. So, you know, I think, I think we just think about, hey, just make it a fair game.

But, you know, I think that stuff's getting to the administration, and, you know, hopefully that it'll become a fair playing field for everybody. And then if it is, you know, it is, you know, and, you know, the market, you know, will kind of conform to the reality. You know, I mean, the customer is going to have to conform. You know, it's, you know, things cost more. It's what happens. You know, we've had inflation forever, you know, in this country, you know, and many times much worse than this. So, you know, I think, I think we just think about, hey, just make it a fair game.

Hopefully the it'll become a fair playing field for everybody and then if it is.

And the market.

We will.

Kind of conform to the reality.

Customer.

It's going to have to conform.

Things cost markets.

What happens we've had inflation.

Forever.

In this country.

Many times.

Much worse than that.

So I think I think we just think about just make it a fair game.

Gary Friedman: You know, don't let, don't let manufacturers come in and open a US entity and, you know, if their price is really $1,000 for something, don't let them bring it in for $100 and then pay almost no tariff because they're, you know, shipping it to themselves. Yeah, so. Got it. Yeah. No, that's helpful. And then, Gary, just any more color on the new collection that you're looking to roll out next year? Just how are you thinking about the timing and just what could it look like as we think about some of the building blocks for next year? Yeah, we just got back from the trip that, you know, we worked exclusively on that. And I don't think we've ever been more excited about anything that we've worked on.

You know, don't let, don't let manufacturers come in and open a US entity and, you know, if their price is really $1,000 for something, don't let them bring it in for $100 and then pay almost no tariff because they're, you know, shipping it to themselves. Yeah, so.

Don't let manufacturers.

Come in and open a U S entity.

If their prices really a $1000 for something you don't let them bring it in for $100 than pay almost no tariff.

Yes, Eric.

Shifting it to themselves.

Yes so.

Max Rakhlenko: Got it.

Gary Friedman: Yeah.

Max Rakhlenko: No, that's helpful. And then, Gary, just any more color on the new collection that you're looking to roll out next year? Just how are you thinking about the timing and just what could it look like as we think about some of the building blocks for next year?

Got it.

Yeah No. That's that's helpful. And then Gary just any more color on the new collection that Youre looking to rollout next year. Just how are you thinking about the timing and just what what could it look like as we think about some of the building blocks for next year.

Gary Friedman: Yeah, we just got back from the trip that, you know, we worked exclusively on that. And I don't think we've ever been more excited about anything that we've worked on.

Yes, we just got back from a trip.

Work exclusively on that.

Thank you we've ever been.

We're excited about anything.

We've worked on that.

Gary Friedman: I mean, it's that, and I don't think we've worked any harder, not because we had to, just because we wanted to. Like it's like, it's, I think, you know, Ari, Lisa, and, you know, anybody who's put this on the trip would, you know, that has any perspective of the big moves that we've made over the years, I think this is going to be the biggest incremental move we've ever made. And I think it's going to be like a, you know, a 10-year thing. You know, like it's not only is it a part of our assortment that we're way underpenetrated in, it's, if you look at the architecture that it's targeting and the homes it's targeting, it's targeting the biggest architectural block, you know, an aesthetic block, especially at the high end.

I mean, it's that, and I don't think we've worked any harder, not because we had to, just because we wanted to. Like it's like, it's, I think, you know, Ari, Lisa, and, you know, anybody who's put this on the trip would, you know, that has any perspective of the big moves that we've made over the years, I think this is going to be the biggest incremental move we've ever made. And I think it's going to be like a, you know, a 10-year thing. You know, like it's not only is it a part of our assortment that we're way underpenetrated in, it's, if you look at the architecture that it's targeting and the homes it's targeting, it's targeting the biggest architectural block, you know, an aesthetic block, especially at the high end.

And I think we've worked any harder than that because we had to just because we wanted to visit the site.

Hi.

I think.

Aerie Lisa.

With us on the trip.

If it has any perspective, the big moves that we've made over the years.

I think this is going to be the biggest incremental move we've ever made.

<unk>.

And I think it's going to be like.

A 10 year thing.

It's not only is it a part of our assortment there way underpenetrated in.

If you look at the architecture.

That is targeting in the homes is targeting targeting that.

The biggest architectural block aesthetic block.

Especially at the high end.

Gary Friedman: You know, I mean, some of our data says, you know, 60% of homes, 5 million and above represent this kind of architecture. It's where we used to be strong. You know, when the launch of Modern and Contemporary and really the Modern book happened, you know, it's the Modern book and Modern's Modern Interiors kind of became Contemporary. That's why I consolidated it all together. Then, you know, the kind of those, you know, the major look, you know, without saying too much, you know, is and where we kind of built the company on, you know, it's more classic. It's not only big; it's the next trend. So, what we're doing is our best work and our partner's best work. I mean, everybody is excited about it, especially after this last trip.

You know, I mean, some of our data says, you know, 60% of homes, 5 million and above represent this kind of architecture. It's where we used to be strong. You know, when the launch of Modern and Contemporary and really the Modern book happened, you know, it's the Modern book and Modern's Modern Interiors kind of became Contemporary. That's why I consolidated it all together. Then, you know, the kind of those, you know, the major look, you know, without saying too much, you know, is and where we kind of built the company on, you know, it's more classic. It's not only big; it's the next trend. So, what we're doing is our best work and our partner's best work. I mean, everybody is excited about it, especially after this last trip.

Of our data says.

60% of homes $5 million and above represent this kind of architecture.

It's where we used to be strong and.

The launch of modern contemporary and really either.

The modern book.

Modern book and modern modern.

And curious kind of became contemporary and that's alright.

Consolidated altogether, and then kind of this.

Yeah.

The major look NSF, saying too much yet.

And where we kind of built the company on.

More classic.

It's not only.

It suddenly become the next trend.

So.

And what we're doing this.

It's our best work and our partner access work.

The body.

As excited about it, especially after this last trip and so our target is two <unk>.

Gary Friedman: And so our target is to launch it at Salone in Milan, the biggest design show in the world, you know, when we have probably the biggest opening party that anybody's had in Salone, and, you know, to have the world come see it, talk about it, and, you know, try to get it into as many galleries as we can as quickly as we can. It's what our interior designers and teams, you know, are getting to ask the most about, is what they're most excited about. You know, we don't really represent it very well. So the work we're doing is, I think, incredible work. And then I think we can't wait to jump back on a plane and, you know, go do some work that, like, we just, it can be so big.

And so our target is to launch it at Salone in Milan, the biggest design show in the world, you know, when we have probably the biggest opening party that anybody's had in Salone, and, you know, to have the world come see it, talk about it, and, you know, try to get it into as many galleries as we can as quickly as we can. It's what our interior designers and teams, you know, are getting to ask the most about, is what they're most excited about. You know, we don't really represent it very well. So the work we're doing is, I think, incredible work. And then I think we can't wait to jump back on a plane and, you know, go do some work that, like, we just, it can be so big.

Launch it.

Yes.

Alone in Milan, and the biggest design show in the World.

We have probably the biggest opening party and Anthony has had and sell out and you don't.

And have the world's can see it and talk about it.

And try to get it into as many dollars in Cannes as quickly as we can.

It's what our interior designers and teams.

We're getting the ASP as the most about what Theyre most excited about.

They don't really represented very.

Very well so.

And the work we're doing is I think just incredible work.

I think we can't wait to jump back on the plane.

It can be so big.

Gary Friedman: So I think it's, I kind of look at it and I say, I don't know, it's worth a few billion dollars over the next several years, you know. I don't know if it's five years or 10 years, you know, but it's, it's going to, it could be the biggest part of the brand. It should be, especially with the trend that's going to be powering it over the next, and that trend should go 15 to 20 years, you know, when you look at the cycles. And this is the first time we're going to actually kind of lead a cycle. You know, we usually, I used to say, you know, like, don't go too early on the wave, you know, you're like a surfer. If you get a false negative, the wave will go underneath you.

So I think it's, I kind of look at it and I say, I don't know, it's worth a few billion dollars over the next several years, you know. I don't know if it's five years or 10 years, you know, but it's, it's going to, it could be the biggest part of the brand. It should be, especially with the trend that's going to be powering it over the next, and that trend should go 15 to 20 years, you know, when you look at the cycles. And this is the first time we're going to actually kind of lead a cycle. You know, we usually, I used to say, you know, like, don't go too early on the wave, you know, you're like a surfer. If you get a false negative, the wave will go underneath you.

I think it's I kind of look at it and they say.

<unk> worth a few billion dollars over the next several years.

I know, it's five years or 10 years.

If it could be the biggest part of the brand.

Especially with the trend.

That's going to be powering it over the next and that trend should go 15 to 20 years.

When you look at sites.

And this is the first time, we're going to actually kind of lead the cycle.

We usually say.

Don't go too early on the wave surfer, if you'll get a false negatives that wave will go underneath you.

Gary Friedman: Wait until the wave breaks, let a few people ride that, you know, wave, learn from it, and then go own the wave. But this one, you know, it's actually the first cycle. I actually was a consumer, you know, I bought my first house, you know, my wife was a high-end interior designer and, you know, when she actually first, we did, I met her, she was an interior designer, did the first place I ever bought it, that's, you know, small condo in San Francisco. And, you know, I was the consumer for that look and my house in Belvedere, it was the first house I built, you know, and we did that house and that was the look. So, you know, so I kind of know this one. I actually was like, wow, I'm old enough to live through the cycle here.

Wait until the wave breaks, let a few people ride that, you know, wave, learn from it, and then go own the wave. But this one, you know, it's actually the first cycle. I actually was a consumer, you know, I bought my first house, you know, my wife was a high-end interior designer and, you know, when she actually first, we did, I met her, she was an interior designer, did the first place I ever bought it, that's, you know, small condo in San Francisco. And, you know, I was the consumer for that look and my house in Belvedere, it was the first house I built, you know, and we did that house and that was the look. So, you know, so I kind of know this one. I actually was like, wow, I'm old enough to live through the cycle here.

Wait until the way brakes, let a few people ride that wave learn from it and then go own the wave.

But this one.

The actually the FERC saprolite I actually.

With the consumer bought my first house.

My wife is a high end mid tier designer.

Yes, which actually we did a matter siouxsie interior designer.

First place ever bought a.

Small quadrant Cisco.

I used the consumer foods for the look and might have some belden Erik Hirsch.

Hey, Bill.

We did that house.

That was a lot so.

So I kind of know that's why we actually was like Wow old enough that lift through the cycle here.

Gary Friedman: It's like, that's a good and a bad thing, right? But, you know, it's why we didn't announce like who bought, we don't even, we didn't even announce that stuff yet. Now, yeah, okay, I got to, I got to get off stage. It came out of the business phone. It came out of the business phone. It came out of the business phone. Oh, it came out of the business phone. Oh, okay. Yeah. So if you guys know, we bought Michael Taylor, you know, Michael Taylor Designs. It was, you know, Michael Taylor was the godfather of the California look and, you know, one of the most famous interior designers at the time in the 80s. And, he did the Bel Air Hotel and his famous diamond table was in the lobby of the Beverly Hills Hotel.

It's like, that's a good and a bad thing, right? But, you know, it's why we didn't announce like who bought, we don't even, we didn't even announce that stuff yet. Now, yeah, okay, I got to, I got to get off stage.

That's good and a bad thing right.

But.

While we think we announced that we bought.

We didn't even assets that yet.

Yes.

Got it I got it.

[Company Representative 2] (RH): It came out of the business phone. [crosstalk]

The amount of business became.

I'll take that on.

Business you were interviewed okay.

Gary Friedman: Oh, okay. Yeah. So if you guys know, we bought Michael Taylor, you know, Michael Taylor Designs. It was, you know, Michael Taylor was the godfather of the California look and, you know, one of the most famous interior designers at the time in the 80s. And, he did the Bel Air Hotel and his famous diamond table was in the lobby of the Beverly Hills Hotel.

As you know we bought Michael Taylor micro tailored designs.

Michael Taylor was the godfather of the California look.

One of the most famous interior designers at this time in the eighties.

He did the Barrick just delay is famous diamond tables in the lobby of the <unk>.

Gary Friedman: So we, and I have the dining table in my Belvedere house, you know, it's, you know, I've had the Michael Taylor dining chairs and, you know, the snaps, like really very cool iconic pieces. So we bought the Michael Taylor brand. We own all the IP and, you know, you'll see a fresh only thing coming. So I'm giving it, I'm giving the competition a little heads up. I better shut up. Why didn't you do anything on Ernie's call? I was almost going to kind of do this thing and I thought like, no way, you know, in the world of AI, everybody's going to drink coffee. But, you know, we bought another company besides that. And so we, you know, we're well on our way. It's going to be a big deal. Awesome. Thanks a lot, guys. Best of luck.

So we, and I have the dining table in my Belvedere house, you know, it's, you know, I've had the Michael Taylor dining chairs and, you know, the snaps, like really very cool iconic pieces. So we bought the Michael Taylor brand. We own all the IP and, you know, you'll see a fresh only thing coming. So I'm giving it, I'm giving the competition a little heads up. I better shut up. Why didn't you do anything on Ernie's call? I was almost going to kind of do this thing and I thought like, no way, you know, in the world of AI, everybody's going to drink coffee. But, you know, we bought another company besides that. And so we, you know, we're well on our way. It's going to be a big deal.

And I have the dining table and my Belvedere House.

Yes.

I've had the micro Taylor buy any shares in the flat really.

Every call iconic pieces. So we bought the Michael Taylor brand, we own all the IP and Youll see it fresh.

Only thing I mean.

Given given the competition a little little headset.

I better shut up.

Why did you have anything an earnings call. So I'm, just going to kind of do the segment I thought like no way.

World of AI, everybody got choppy, but yeah, we bought another company besides that instead.

We're well on our way, it's going to be a big deal.

Max Rakhlenko: Awesome. Thanks a lot, guys. Best of luck.

Awesome.

Hi, guys.

The luck.

Up next we'll take a question from Michael Lasser UBS.

Gary Friedman: Up next, we'll take a question from Michael Lasser, UBS. Good evening. Thank you so much for taking my question. Gary, you wrote in the letter that the way you offer your guidance is you have very high ambitions and at times you may fall short of that. Would it make sense to slow the pace of all the initiatives and aim for a little bit more predictability in light of this very dynamic environment? And in that case, profitability might come a little higher as a result, or is the, is your theory at this point we're going to drive top-line growth at all costs and the profitability will eventually come? I guess if I, if I thought that, I would have wrote that, right? I don't think that's what I wrote. You know, I just think that, you know, Wall Street's a funny thing.

Operator 3: Up next, we'll take a question from Michael Lasser, UBS.

Michael Lasser: Good evening. Thank you so much for taking my question. Gary, you wrote in the letter that the way you offer your guidance is you have very high ambitions and at times you may fall short of that. Would it make sense to slow the pace of all the initiatives and aim for a little bit more predictability in light of this very dynamic environment? And in that case, profitability might come a little higher as a result, or is the, is your theory at this point we're going to drive top-line growth at all costs and the profitability will eventually come?

Good evening. Thank you so much for taking my question Gary you wrote in the letter.

Right.

The way you offer your guidance as you have very high ambitions and at times you May fall short of that what do you think Stan.

Okay.

Of all the initiatives and.

Yes.

Aimed for a little bit more predictability in light of this very dynamic environment.

In that case.

Profitability might come a little higher as a result or is it is your theory at this point, we're going to drive top line growth at all costs and profitability will eventually come.

Gary Friedman: I guess if I, if I thought that, I would have wrote that, right? I don't think that's what I wrote. You know, I just think that, you know, Wall Street's a funny thing.

I guess, if I, if I thought that I would have wrote that rate.

I don't think that's what our road.

Yes, I, just think that wall Street defining thing a lot of people said to me throughout my career.

Gary Friedman: A lot of people said to me throughout my career, hey, you know, I hate being a public company and, you know, you got to report quarterly earnings and it gets you to think small. I said, you know, I think that's a choice. I actually like the discipline of being a public company. I actually like that we have to, you know, report earnings once a quarter, right? You know, report numbers and, you know, it makes us stop and think and assess and prioritize, and so on and so forth. I like that we have, you know, quarterly board meetings and I like that we, you know, have to do, you know, go through that process and distill things down and simplify and, you know, assess everything.

A lot of people said to me throughout my career, hey, you know, I hate being a public company and, you know, you got to report quarterly earnings and it gets you to think small. I said, you know, I think that's a choice. I actually like the discipline of being a public company. I actually like that we have to, you know, report earnings once a quarter, right? You know, report numbers and, you know, it makes us stop and think and assess and prioritize, and so on and so forth. I like that we have, you know, quarterly board meetings and I like that we, you know, have to do, you know, go through that process and distill things down and simplify and, you know, assess everything.

Hey, Dana total company.

You got to report quarterly earnings in it.

I think small.

Yes, I think Thats, a choice actually liked the discipline of being a public company I actually like that we have to.

Report earnings once a quarter.

Report numbers and it makes us stop and think and assess and prioritize.

And so on and so forth.

And I'd like that we have in our quarterly board meetings and a license.

Yes.

You go through that process and there's still things down is simplify.

Assess everything.

Gary Friedman: You know, so I don't mind it. I think the thing I've learned and I've observed, I think so many people, you know, they get so focused, you know, like on quarterly results that, you know, that becomes their whole mission as a CEO, you know, or a leadership team is like, how do we make the quarter? And they do a lot of stupid things to make a quarter that aren't brand building or, you know, business model building or anything, you know? And I just think it's not a smart way to build something great, you know? And, you know, one of our board members, you know, grew up in Silicon Valley and she's, you know, an early Facebook team member and everything.

Yes so.

You know, so I don't mind it. I think the thing I've learned and I've observed, I think so many people, you know, they get so focused, you know, like on quarterly results that, you know, that becomes their whole mission as a CEO, you know, or a leadership team is like, how do we make the quarter? And they do a lot of stupid things to make a quarter that aren't brand building or, you know, business model building or anything, you know? And I just think it's not a smart way to build something great, you know? And, you know, one of our board members, you know, grew up in Silicon Valley and she's, you know, an early Facebook team member and everything.

I don't mind it.

I've learned and I've observed I think so many people.

They get so focused.

<unk> quarterly results.

That becomes their whole mission as CEO. Our leadership team is how do we make the quarter and they do a lot of stupid things to make a quarter that arent.

Brand building.

The.

Business model building or anything.

I'll just.

Okay.

It's not a smart way to build something great.

Sure.

One of our board members grew up in Silicon Valley and fees.

Early.

Facebook.

Team member and everything so it says like work.

Gary Friedman: You know, she always says, like, we're like a Silicon Valley startup, you know, but we're a semi-mature public company. I think that's a good thing to be, you know. It creates energy, it attracts great people, you know. Great people don't want to come in and just like, oh, how are we going to make the next quarter? Oh, let's lower our expectations. Let's make sure we make it. You know, that's like a downward spiral a lot of times. You know, I mean, we want to do something great. We want to be the best in the world at what we do. You know, that's not for the faint of heart. It's not for everyone, you know, but we don't need everyone to buy the stock.

You know, she always says, like, we're like a Silicon Valley startup, you know, but we're a semi-mature public company. I think that's a good thing to be, you know. It creates energy, it attracts great people, you know. Great people don't want to come in and just like, oh, how are we going to make the next quarter? Oh, let's lower our expectations. Let's make sure we make it. You know, that's like a downward spiral a lot of times. You know, I mean, we want to do something great. We want to be the best in the world at what we do. You know, that's not for the faint of heart. It's not for everyone, you know, but we don't need everyone to buy the stock.

Or like a silicon valley startup.

Thank you Bert semi mature of the company and and I think that's a good thing debate it creates energy and attract great people great people don't want to come in and just like Hello, how are we going to make the next quarter ellipse lower our expectations, let's make sure we make it.

A downward spiral a lot of times I mean.

Yes.

We want to do something great. We wanted is best in the world of what we do.

That's not for the Fainthearted as slack for everyone.

Hi.

We don't need everyone to buy the stock.

Gary Friedman: You know, we don't, you know, our strategy is really simple here. You know, from a business point of view, I say it's, it's we do what we love with people that we love for people that love what we do. We don't do focus groups. We don't do stuff like that. You know, it's very personal business to us. You know, it's probably, you know, reflect the same way shareholders. You know, we have some people have been with us forever and some people are out of stock and that's okay. They love us sometimes. Some of them don't love us. That's, you know, it's a free world. But I don't know, like I, you know, it's like sometimes, you know, like in good markets, you know, we're eating quarters and making quarters in a market like this.

Hi.

You know, we don't, you know, our strategy is really simple here. You know, from a business point of view, I say it's, it's we do what we love with people that we love for people that love what we do. We don't do focus groups. We don't do stuff like that. You know, it's very personal business to us. You know, it's probably, you know, reflect the same way shareholders. You know, we have some people have been with us forever and some people are out of stock and that's okay. They love us sometimes. Some of them don't love us. That's, you know, it's a free world. But I don't know, like I, you know, it's like sometimes, you know, like in good markets, you know, we're eating quarters and making quarters in a market like this.

Yes.

Our strategy is really simple here.

Yeah from a business point of view I'd say, if we do what we love with people that we love for people that love, what we do we don't do.

Focus groups.

Like that yes, it is very personal business to us.

And.

Probably yes.

Yes reflect the same way shareholders, yes, we have some people that newest forever. Some people are out of stocks and esoteric levels, sometimes the restaurant level.

Yes, it's a free world.

Okay.

I don't know.

Hi.

Sometimes like in good markets.

Even quarters and making quarters in a market like this.

Gary Friedman: This is the time to, you know, make moves and take market share and, you know, create real strategic separation on the other side of it, ready for the, for the turn. I don't think anybody's going to be more ready than we are. I didn't like look out when the housing market comes back. We're just, you think we're creating this, you know. You look at our two-year numbers, you know, like, you know, just the handful of, you know, it's not that many publicly reported people, but, you know, if you look at furniture-based retailers and, you know, a lot of those people, you know, even on the list, they sell a lot of accessories and other things, you know. There's not too many that are just focused on furniture that are even, you know, that I've ever been in a store to me.

This is the time to, you know, make moves and take market share and, you know, create real strategic separation on the other side of it, ready for the, for the turn. I don't think anybody's going to be more ready than we are. I didn't like look out when the housing market comes back. We're just, you think we're creating this, you know. You look at our two-year numbers, you know, like, you know, just the handful of, you know, it's not that many publicly reported people, but, you know, if you look at furniture-based retailers and, you know, a lot of those people, you know, even on the list, they sell a lot of accessories and other things, you know. There's not too many that are just focused on furniture that are even, you know, that I've ever been in a store to me.

This is the time to yes.

Yes make moves and take market share and.

Create real strategic separation on the upside of it ready for the <unk> for.

For the turn and I don't think anybody is going to be more ready than we are.

Yes.

Look out when the housing market.

Do you think where creators you look at our two year numbers.

Yes.

A handful it's not that many publicly reported people, but if you look at furniture based retailers in light of this people even under literally sell a lot.

Accessories and other things, there's not familiar just focus on furniture that are even.

Yes.

They've been a source of it sounds like they will put this company there.

Gary Friedman: So they're like, they'll put this company there. Well, are they even in California? Like, why would we think about them, you know, competitor? Like, you know, they don't sell anything like that, you know, not, they're not at our price point or anything. But, you know, we took, you know, kind of national, you know, public players, and you have, you know, at least 50% furniture. We're 80% furniture, and so we're going to be more cyclical because of the furniture content, but furniture is the biggest part of the business. And, you know, so, you know, should we lower our ambitions? Like, no, I don't think so. I mean, my question was not on looking more stable. I don't know, like, are we not stable? I don't know, like, I mean, we're going to make high teens EBITDA. Yeah.

So they're like, they'll put this company there. Well, are they even in California? Like, why would we think about them, you know, competitor? Like, you know, they don't sell anything like that, you know, not, they're not at our price point or anything. But, you know, we took, you know, kind of national, you know, public players, and you have, you know, at least 50% furniture. We're 80% furniture, and so we're going to be more cyclical because of the furniture content, but furniture is the biggest part of the business. And, you know, so, you know, should we lower our ambitions? Like, no, I don't think so. I mean, my question was not on looking more stable. I don't know, like, are we not stable? I don't know, like, I mean, we're going to make high teens EBITDA.

Are they May, California, like why would we think.

Editor.

And our sell anything like us they are added or price points or anything but yes.

Sure.

National public.

Public players.

And they would have at.

At least 50% furniture, we're 80% furniture.

And so we're going to be more cyclical because of the furniture content, but furniture, it's the biggest part of the business.

Yes.

No.

Should we lower our ambitions like no I don't think so.

I mean.

Yes, My question was not on.

Be more stable I don't know like are we not stable.

No I mean, we're going to make.

<unk> EBITDA.

Michael Lasser: Yeah.

Yes.

Gary Friedman: My question wasn't on the ambitions. It was more of the pace of the initiatives. It was more about the pace of initiatives and slowing down to eventually speed up. But you're not going to love my follow-up question in light of that, so I apologize in advance, but given, you know, like, I like you, Michael. You have good questions. I, you know, it makes me think. Oh, thank you. My second question is in light of the guidance that calls for Q4 that calls for a slowdown in the top line as well as some absorption of the tariffs.

My question wasn't on the ambitions. It was more of the pace of the initiatives. It was more about the pace of initiatives and slowing down to eventually speed up. But you're not going to love my follow-up question in light of that, so I apologize in advance, but given.

My question was.

It was more of the.

Okay.

It was more about the pace of initiatives and slowing down time eventually speed up.

And youre not going to love My follow up question in light of that Biopharma and advanced.

Yes.

Gary Friedman: You know, like, I like you, Michael. You have good questions. I, you know, it makes me think.

David.

Likely Michael Yes, good questions. It makes me think.

Michael Lasser: Oh, thank you. My second question is in light of the guidance that calls for Q4 that calls for a slowdown in the top line as well as some absorption of the tariffs.

Alright.

My second question is in light of the guidance that call for the fourth quarter that calls for a slowdown in the top line as well as some absorption.

The tariff is ignored.

Gary Friedman: Is this a signal that you're running into limitations on being able to manage the tariffs with price and we should consider that as we factor our models for next year, not only could that put a little bit of a drag on the top line, but also we should consider that we may have to absorb some more tariffs in the next year? Thank you. You want to take that job? Yeah. I'm thinking, Michael, you know, the tariff piece. I don't, you know, we didn't materially change the impact from a basis point perspective. Obviously, that's just representative cost alone. You know, the other piece that's not calculated on that is the price increase. You know, Gary called out in the letter, one of the Q3 items was just the tariffs on the back order and special order goods.

Is this a signal that you're running into limitations on being able to manage the tariffs with price and we should consider that as we factor our models for next year, not only could that put a little bit of a drag on the top line, but also we should consider that we may have to absorb some more tariffs in the next year? Thank you.

Ignore that you're running into limitations on being able to manage the.

Tariffs with price.

You should consider that as we factor our models for next year not only did that.

Put a little bit of a drag on the top line, but also we should consider that you may have to absorb some more tariffs into next year. Thank you.

Gary Friedman: You want to take that job?

And.

We want to take that.

Jack Preston: Yeah. I'm thinking, Michael, you know, the tariff piece. I don't, you know, we didn't materially change the impact from a basis point perspective. Obviously, that's just representative cost alone. You know, the other piece that's not calculated on that is the price increase. You know, Gary called out in the letter, one of the Q3 items was just the tariffs on the back order and special order goods.

I'm thinking Michael.

The tariff piece.

Didn't materially change that.

<unk> from a basis point perspective, obviously, that's just representative cost alone.

The other piece that is not calculated in that as the price increase Gary called out in the letter one of the Q3 items was just the tariffs from the back order and special order goods.

Gary Friedman: Some of that was timing, right? Because we experienced, you know, have expected an increase in tariffs. We do our mitigation efforts. We do our resourcing efforts, but we, you know, concurrently also change prices. But you're never perfect. You know, you have some delays in the effectiveness of those, but you know, you're not going to call your customers back and say, oh, by the way, the thing you just bought, we're going to be importing it at a 20% tariff. So can you give us more money? So, you know, as we thread that needle and get all that, you know, dialed in, that was some of the things that surprised us in Q3, and it'll flow a little bit into Q4.

Some of that was timing, right? Because we experienced, you know, have expected an increase in tariffs. We do our mitigation efforts. We do our resourcing efforts, but we, you know, concurrently also change prices. But you're never perfect. You know, you have some delays in the effectiveness of those, but you know, you're not going to call your customers back and say, oh, by the way, the thing you just bought, we're going to be importing it at a 20% tariff. So can you give us more money? So, you know, as we thread that needle and get all that, you know, dialed in, that was some of the things that surprised us in Q3, and it'll flow a little bit into Q4.

Some of that was timing right because we experienced an increase in expected have expected to increase in tariffs. We do our mitigation efforts, we do our resourcing efforts, but.

Concurrently also to change prices.

But you are never perfect you have some.

Delays in the effectiveness of those.

Youre not going to call your customers back and say Oh by the way the thing you just bought.

Be importing it at a 20% tariff so can you give us more money so.

As we thread that needle and get all of that dialed in so that was some of the some of the things that surprised us in Q3, and it'll slow a little bit into Q4.

Gary Friedman: But you know, I don't know that we're ready to say that, you know, make a statement like you're describing. You know, it's a dynamic situation, not to mention looking at competitors. What do competitors do? You know, we don't lose sight of that. So you know, as far as what 2026 looks like, you know, obviously we're a little early for that. I understand the question and the desire to know. We'll talk about that at the end of March. But I think, you know, I think we're proud of how we've been navigating the tariff situation, you know, with price, you know, with mitigation, with resourcing, with vendor partnerships, with price increases, everything that you would expect us to do.

But you know, I don't know that we're ready to say that, you know, make a statement like you're describing. You know, it's a dynamic situation, not to mention looking at competitors. What do competitors do? You know, we don't lose sight of that. So you know, as far as what 2026 looks like, you know, obviously we're a little early for that. I understand the question and the desire to know. We'll talk about that at the end of March. But I think, you know, I think we're proud of how we've been navigating the tariff situation, you know, with price, you know, with mitigation, with resourcing, with vendor partnerships, with price increases, everything that you would expect us to do.

I don't know that were ready to.

To say that.

<unk>.

Like you're like you're describing it.

Dynamic situation.

Not to mention looking at competitors, what's your competitors do.

We don't lose sight of that.

So yes.

Yes.

As far as what 2026, it looks like obviously, we're a little early for that I understand the question on the desire to know we'll talk about that at the end of March.

But I think I think we're proud of how we've been navigating the tariff situation.

With price mitigation.

Mitigation with Resourcing with vendor partnerships with price increases everything everything that you would expect us to do so yeah I mean in place we probably had the most.

Gary Friedman: So, yeah, I mean, like, and plus we probably had the most, you know, difficult situation from based on, you know, where we were sourcing from and what we did. And, you know, we read it wrong. We thought, you know, the president was going to like, you know, moving goods to Vietnam. And Vietnam is, you know, a smart place for us to, you know, move goods into. And then all of a sudden, Vietnam got hit with a 47% tariff or 46% tariff. And we're like, oh, that was costly to move it to Vietnam. And it was, you know, a lot of work and a lot of, you know, effort. And we were just getting ramped up. And then, you know, okay, now where are we going to put it?

<unk>.

[laughter] political situation from based on where we are wherever resources around and what we did in <unk>.

We.

We're at it wrongly we thought.

Precedent.

We're going to like moving goods to Vietnam Vietnam is.

<unk> place for us to move goods into and then also in Vietnam got hit with a 47 era for 46% tariff and were like.

Hello.

It's.

Possibly the move to Vietnam. When it was a lot of work and a lot of effort.

And we're just getting ramped up and then okay. Now we're going to put it in China's going from one tariff to another.

Gary Friedman: Then, you know, China's going from one tariff to another. You know, there's other places we're moving goods to and moving it to the US. You know, it's a bit chaotic right now. Like, I don't know. I, again, kind of look at it all in context and I say everything that we're investing in, you know, we're, you know, we're building a restaurant company. You know, I don't know, name somebody who's ever done restaurants of our quality integrated into a retail experience, especially a furniture store. Now you'll say, well, you know, I hear something they sell meatballs or something, right? And, you know, but actually, you know, we're, you know, we're generating cash.

Then, you know, China's going from one tariff to another. You know, there's other places we're moving goods to and moving it to the US. You know, it's a bit chaotic right now. Like, I don't know. I, again, kind of look at it all in context and I say everything that we're investing in, you know, we're, you know, we're building a restaurant company. You know, I don't know, name somebody who's ever done restaurants of our quality integrated into a retail experience, especially a furniture store. Now you'll say, well, you know, I hear something they sell meatballs or something, right? And, you know, but actually, you know, we're, you know, we're generating cash.

And.

It's other places, we're moving goods to and moving to the U S.

Yeah.

That's a bit chaotic right now like I don't know.

Again, I kind of look at it all in context and I say.

Everything that we're investing in.

We are building a restaurant company.

I don't know the name.

Somebody is ever done restaurants of our quality integrated into or.

Retail experience.

Basically a furniture store now you'll say well.

Here are some things sell meatballs or something right.

And.

Actually.

We're generating cash we're paying 65.

Gary Friedman: We're paying for 65%, it can offset 65% of the rent of the buildings that on average, you know, some are higher, some are lower. You know, we, I think we're one of, what is, one of seven global luxury hospitality companies that own and operate their own business. A lot of people go, like, who's your chef? You know, what hospitality company runs your restaurants? We run them. We're the, we're the chefs. You know, we have, obviously we have culinary leaders and chefs, and we all get together and collaborate, but they're, you know, they're a reflection of, you know, what we love and what we do. We're getting good at it. We're getting better and better. Like, I have an interesting point for a case when, what was our, our average ticket was $38. $38 in '19. In 2019. Yeah.

We're paying for 65%, it can offset 65% of the rent of the buildings that on average, you know, some are higher, some are lower. You know, we, I think we're one of, what is, one of seven global luxury hospitality companies that own and operate their own business. A lot of people go, like, who's your chef? You know, what hospitality company runs your restaurants? We run them. We're the, we're the chefs. You know, we have, obviously we have culinary leaders and chefs, and we all get together and collaborate, but they're, you know, they're a reflection of, you know, what we love and what we do. We're getting good at it. We're getting better and better. Like, I have an interesting point for a case when, what was our, our average ticket was $38.

Yes, it's an offset 50% of the rent to the buildings that on average some are higher some are lower.

And.

Yes.

I think we're one of what is one of seven global luxury hospitality companies that own and operate their own.

Yes.

We'll go like Who's your chef Whats Kelly compete Ramsay restaurants.

We Brennan.

Where are they.

The shifts.

We've obviously got culinary leaders and chaps, and we all get together and collaborate but there they are a reflection of.

What we love, what we do and we're getting good at it we're getting better and better.

And like I have.

An interesting point for.

<unk> was our our average ticket was $38 $38.

Jack Preston: $38 in '19.

Gary Friedman: In 2019. Yeah.

In 2019 cash here is interesting in fact, we just had our 10 year anniversary in October being in the restaurant business we opened.

Gary Friedman: So, I mean, here's the interesting fact. We just had our 10-year anniversary in October, being in the restaurant business. We opened, you know, in Chicago, and that restaurant did get, like, you know, the partner we've, you know, that we did it with is a great guy, still a good friend, and, you know, and super successful. It's, you know, a lot of times you really want to do something, you know, someone's full-time and they're doing this. And, you know, we just realized most of the chefs, you know, driven businesses that are doing hospitality for other people, it's, you know, kind of a license to name thing. They're not there. I mean, we had a deal with Brendan, and he was, you know, we had half his time for a while, but then he, you know, he had so many other opportunities.

So, I mean, here's the interesting fact. We just had our 10-year anniversary in October, being in the restaurant business. We opened, you know, in Chicago, and that restaurant did get, like, you know, the partner we've, you know, that we did it with is a great guy, still a good friend, and, you know, and super successful. It's, you know, a lot of times you really want to do something, you know, someone's full-time and they're doing this. And, you know, we just realized most of the chefs, you know, driven businesses that are doing hospitality for other people, it's, you know, kind of a license to name thing. They're not there. I mean, we had a deal with Brendan, and he was, you know, we had half his time for a while, but then he, you know, he had so many other opportunities.

In Chicago.

That restaurant did.

Yes.

The partner.

We did it with is a great guy he is still a good friend.

And Super successful.

<unk>.

You really want to do something.

On his full time theyre doing that.

We just realized most of the chefs.

Driven businesses that are doing hospitality for other people, it's kind of a license the name thing Theyre not there I mean, we had a deal with with Brenda. He was we had half his time for a while but then he.

If you have so many other opportunities and.

Gary Friedman: We realized, you know, this is, you know, turning into a real thing for us. We need to make it a core, core competency. We've invested now for many years. You know, it's like, but that restaurant in Chicago that we opened, it did $5 million its first year. I mean, the estimate was going to do about $1 million its first year and it did $5 million. It does $9 or 10 million now, Case? Yeah. Yeah. Just shy of $10 million. We opened a second restaurant, a second gallery, you know, in a suburb not too far from that that's doing $11 million. You know, so you think it would have been cannibalized more.

We realized, you know, this is, you know, turning into a real thing for us. We need to make it a core, core competency. We've invested now for many years. You know, it's like, but that restaurant in Chicago that we opened, it did $5 million its first year. I mean, the estimate was going to do about $1 million its first year and it did $5 million. It does $9 or 10 million now, Case? Yeah.

We realize this is.

Yes, turning into a real thing for us and we need to make it a core competencies that we.

We've invested now many years and.

But that restaurant Chicago that we estimated $5 million it's.

It's first year I mean.

The estimate was going to do about a million bucks for adhere that did five.

It is $910 million case, and just just to try to just shy of $10 million and we opened our second restaurant second gallery.

Jack Preston: Yeah. Just shy of 10.

Gary Friedman: Just shy of $10 million. We opened a second restaurant, a second gallery, you know, in a suburb not too far from that that's doing $11 million. You know, so you think it would have been cannibalized more.

A suburb not too far from that that's doing the $11 million.

So you think it would been cannibalized more and.

Gary Friedman: You know, our team is growing and maturing and, you know, collaborating and we're getting better and better. You know, but if someone would have said 10 years ago that, hey, how many people want to wake up in the morning and go to a furniture store for dinner, you know, or for lunch? Like, I don't think anybody would have, you know, so think about that one. Like, I don't know, should we not have done it? Because you could have said like, Gary, that was like really hard. Why didn't you do that? Well, we do hard things, you know, and we do things that are unique and differentiated. You know, I think because we, you know, we're more ambitious than others, we think more deeply than others. We're, we're not just managers of something.

Yeah.

You know, our team is growing and maturing and, you know, collaborating and we're getting better and better. You know, but if someone would have said 10 years ago that, hey, how many people want to wake up in the morning and go to a furniture store for dinner, you know, or for lunch? Like, I don't think anybody would have, you know, so think about that one. Like, I don't know, should we not have done it? Because you could have said like, Gary, that was like really hard. Why didn't you do that? Well, we do hard things, you know, and we do things that are unique and differentiated. You know, I think because we, you know, we're more ambitious than others, we think more deeply than others. We're, we're not just managers of something.

Yeah, our team is <unk>.

Growing and maturing.

Collaborating and we're getting better and better.

But it's similar to said 10 years ago that hey, how many people want to wake up in the morning go to a furniture store for dinner.

For lunch.

I don't think anybody would have.

So think about that one Blake.

Should we not have done it.

Because you can just add Gary that is like really hard why did you do that well.

We do hard things.

And we do things that are unique and differentiated.

I think because we were more ambitious and others, we think more deeply than others.

We're not just managers of something managers that range and organize the status quo we're leaders.

Gary Friedman: You know, managers arrange and organize the status quo. We're, we're leaders. And, you know, leaders are leading people somewhere they've never been doing things they've never done. You know, and leaders have to be comfortable making others uncomfortable, you know, because that's what leaders do. Because, you know, and starting with the leader, the leader's going to be somewhat uncomfortable. So, you know, I'm going to, I'm sorry if I'm making you uncomfortable. You know, it's just what I do. And that's how I know I'm leading. That's how you know you're on the right path. But, you know, if you, if you can build things that other people haven't built and if you can lead, you can create a lot of value. And we believe we're going to create a lot of value.

You know, managers arrange and organize the status quo. We're, we're leaders. And, you know, leaders are leading people somewhere they've never been doing things they've never done. You know, and leaders have to be comfortable making others uncomfortable, you know, because that's what leaders do. Because, you know, and starting with the leader, the leader's going to be somewhat uncomfortable. So, you know, I'm going to, I'm sorry if I'm making you uncomfortable. You know, it's just what I do. And that's how I know I'm leading. That's how you know you're on the right path. But, you know, if you, if you can build things that other people haven't built and if you can lead, you can create a lot of value. And we believe we're going to create a lot of value.

Leaders are leading people somewhere they've never been doing things they've never done and leaders have to be comfortable making others uncomfortable.

Because that's what leadership is.

And starting with the leader the leaders may be somewhat comparable.

I don't know.

Sorry, if I'm, making you uncomfortable.

Yeah, just what I do.

So I know Im reading that you are on the right path.

Hey, Steve.

If you can build things that other people haven't built in if he can lead you can create a lot of value.

Yes.

And we believe we're going to create a lot of value.

Gary Friedman: Like, maybe not at this moment, you know. Like we look really risky, I guess, because we have debt and, you know, but we've said, you know, we're comfortable with paying down the debt. There's lots of, lots of things we can do. You know, heck, we've done more zero convertible notes than anybody in history, I think. You know, we did four. I don't think anybody's done four. And then we're, Yahoo had done two, you know, and, you know, at some point, you know, we might tap the convert market. At some point, we may refinance some of the debt. At some point, you know, like, who knows? We got, we, you know, we've got a lot of real estate and we think we can monetize that over time. And, and we've got, you know, our inventory has been high. We're, you know, turning inventory into cash.

Like, maybe not at this moment, you know. Like we look really risky, I guess, because we have debt and, you know, but we've said, you know, we're comfortable with paying down the debt. There's lots of, lots of things we can do. You know, heck, we've done more zero convertible notes than anybody in history, I think. You know, we did four. I don't think anybody's done four. And then we're, Yahoo had done two, you know, and, you know, at some point, you know, we might tap the convert market. At some point, we may refinance some of the debt. At some point, you know, like, who knows? We got, we, you know, we've got a lot of real estate and we think we can monetize that over time. And, and we've got, you know, our inventory has been high. We're, you know, turning inventory into cash.

Maybe not at this moment.

But we look really risky I guess, because we have that.

Like we said we.

We're comfortable with paying down the debt there's lots of lots of things we can do.

We've done more zero convertible notes than anybody in history, I think we did for I think anybody for it.

Yeah, who identity.

Yes at some point, we might tap the convert market at some point, we may refinance some of the debt at some point.

Who knows we got we got a lot of real estate. When we think we can monetize that over time.

And in our <unk>.

Inventory has been high turnover.

Turning inventory in the caption.

Gary Friedman: You know, but we're, I'm pretty comfortable. Like, hell, I lived on the edge of bankruptcy my first 10 years. This is nothing. It's like, thank you for all the insight. I wish you all a very happy holiday season. Thank you. Great. Happy holidays to you, Michael. The next question comes from Simeon Gutman from Morgan Stanley. Hey, Gary, hey, Jack. Maybe one question, maybe let's talk furniture. Can you talk about the backdrop? I know it's been a tough overall market. Can you just talk about how the quarter, you know, how the customer changed the demand for furniture, how your current lines are resonating, and then barring anything in the backdrop getting worse, can we assume that free cash flow stays positive from here on out? Thank you.

Yes.

You know, but we're, I'm pretty comfortable. Like, hell, I lived on the edge of bankruptcy my first 10 years. This is nothing. It's like.

But.

I am pretty comfortable Vitale, a look on the edge.

<unk> bankruptcy my first 10 years this is not that.

Yes.

Michael Lasser: Thank you for all the insight. I wish you all a very happy holiday season. Thank you.

Okay.

Thank you for all the insight and I wish you all a very happy holiday season. Thank you.

Gary Friedman: Great. Happy holidays to you, Michael.

The holiday Steve Michael.

Operator 3: The next question comes from Simeon Gutman from Morgan Stanley.

The next question comes from Simeon Gutman from Morgan Stanley.

Simeon Gutman: Hey, Gary, hey, Jack. Maybe one question, maybe let's talk furniture. Can you talk about the backdrop? I know it's been a tough overall market. Can you just talk about how the quarter, you know, how the customer changed the demand for furniture, how your current lines are resonating, and then barring anything in the backdrop getting worse, can we assume that free cash flow stays positive from here on out? Thank you.

Hey, Gerry Hey, Jack.

Maybe one question, maybe let's talk furniture.

Can you talk about the backdrop I know it's been a tough overall market can you just talk about how the quarter.

The customer changed the demand for furniture, how your current lines are resonating and then barring anything in the backdrop getting worse can we assume that free cash flow stays positive from here on out. Thank you.

Bye.

Gary Friedman: You know, I don't know if this is the time to assume anything will, you know, be a certain way, right? We just had China and Russia fly bombers over Japan. You know, like, hello, was anybody expecting that? You know, and then we rallied bombers with Japan or fighter jets or whatever. Like, who knows what's going to happen in this world right now? I mean, there's a lot of discord, and there's a lot of noise. And, you know, so I mean, we expect free cash flow to remain positive, but, you know, did we expect at any time early in the year that we were going to have all the tariff announcements, you know, in such an unpredictable, chaotic way and have to delay our interiors book by eight weeks?

I don't know if <unk>.

This is the time to assume anything.

Yes.

A certain way right we just.

We just had China and Russia slide bombers over Japan.

Yes, Mike Hello, everybody expecting that.

And then we rally bombers.

And our fighter jets, or whatever like who knows what's going to happen in this world right now I mean, there's a lot of dysport and Theres a lot of noise.

<unk>.

So.

I mean, we expect free cash flow to remain positive but.

Did we expect.

At any time early in the year that we were going to.

Have all the tariff announcements.

Such as unpredictable chaotic weigh in.

And has that delay our our interior slipped by eight weeks. Thank.

Gary Friedman: Did we think we were going to launch estates this year? Yeah, we did. And, you know, I said the name. Oh God. Okay. Sorry about that. But we, you know, we, it's, it's, it's a really unusual time. And, you know, we're not trying to be flat or up three right now. Like, if we're trying to be flat or up three, would we be more predictable? We might. I don't know. Would that be really good for the long term? I don't think so. I love what we're doing right now. I love that the moves we're making right now. I think nobody's even going to, I think people are going to be shocked. I think competition's going to go, oh, now what? I love, you know, our strategy in Europe, but is it more expensive than we thought? Yeah, it is.

Did we think we were going to launch estates this year? Yeah, we did. And, you know, I said the name. Oh God. Okay. Sorry about that. But we, you know, we, it's, it's, it's a really unusual time. And, you know, we're not trying to be flat or up three right now. Like, if we're trying to be flat or up three, would we be more predictable? We might. I don't know. Would that be really good for the long term? I don't think so. I love what we're doing right now. I love that the moves we're making right now. I think nobody's even going to, I think people are going to be shocked. I think competition's going to go, oh, now what? I love, you know, our strategy in Europe, but is it more expensive than we thought? Yeah, it is.

We are going to launch a states this year, yeah, we did.

And I said the name of that.

Okay sorry.

Sorry about that.

But we.

<unk>.

It's a really unusual time.

And.

Hi.

We're not trying to be flat or up three right now.

Like if we're trying to be flatter up three wood.

We'd need more predictable we might.

Idaho would that be really good for the long term I don't think so.

I Love, what we're doing right now I love that the moves we're making right now I think nobody even get it I think we're gonna be shocked I think competition.

Now what.

I Love our strategy in Europe, but is it more expensive than we thought yes. It is like we built these things during and post COVID-19 in their way more expensive and put pressure on short term.

Gary Friedman: Like, you know, we build these things during and post-COVID, and they're way more expensive. And, you know, put pressure on short-term, you know, cash flow and things. Yeah, sure. But wait till you see what we invented. And, you know, again, necessity is the mother of invention. Put us into a corner, make things tough for us. We'll invent our way out of it. We've designed, I think, some of the most exciting retail concepts coming, you know, like new versions of RH that I think are mind-blowing, and they cost half as much. And we have other ones that are equally creative that will take probably less than half the time and cost less, you know. And, you know, we've got design ecosystems. We have design compounds. We have, you know, you know, interior design office. Yeah, we, we just got a lot of, a lot of things.

Like, you know, we build these things during and post-COVID, and they're way more expensive. And, you know, put pressure on short-term, you know, cash flow and things. Yeah, sure. But wait till you see what we invented. And, you know, again, necessity is the mother of invention. Put us into a corner, make things tough for us. We'll invent our way out of it. We've designed, I think, some of the most exciting retail concepts coming, you know, like new versions of RH that I think are mind-blowing, and they cost half as much. And we have other ones that are equally creative that will take probably less than half the time and cost less, you know. And, you know, we've got design ecosystems. We have design compounds. We have, you know, you know, interior design office. Yeah, we, we just got a lot of, a lot of things.

Yes cash flow.

And you see a sharp, but wait to see what we invented and again necessity is the mother of invention put us into a corner make things tough rest will invent our way out of it we've designed.

I think some of the most exciting.

Retail concepts coming by new versions of our H.

That I think are mind blowing.

Cost half as much and we have other ones that.

We are equally creative that.

We'll take probably less than half the time and cost less.

We've got.

Design ecosystem, we have designed compounds as we have.

At.

Interior design office, yes, we do.

Got it.

A lot of banks in that and.

Gary Friedman: And that's, and they all make a ton of sense. And, you know, so we're, I think, pretty responsive strategically. We just don't like to get stuck in the weeds and not see the bigger picture. And, you know, but we're really excited about where we are. We're super positive. But can you say things are going to be super predictable, in just what we've just seen in the last six to 12 months? I'd say it's going to be predictably unpredictable, like just what we've all had to navigate and deal with. And I mean, there's still changes, like, you know, who knows? There could be a whole new round of tariffs. Like, I mean, the Supreme Court could say, hey, this is illegal.

And that's, and they all make a ton of sense. And, you know, so we're, I think, pretty responsive strategically. We just don't like to get stuck in the weeds and not see the bigger picture. And, you know, but we're really excited about where we are. We're super positive. But can you say things are going to be super predictable, in just what we've just seen in the last six to 12 months? I'd say it's going to be predictably unpredictable, like just what we've all had to navigate and deal with. And I mean, there's still changes, like, you know, who knows? There could be a whole new round of tariffs. Like, I mean, the Supreme Court could say, hey, this is illegal.

And they're all kind of SaaS and so.

So I think we're pretty responsive strategically.

We just don't like to get stuck in the weeds.

I see the bigger picture and.

Yes.

But yes, we're really excited about where we are a super positive, but can you say things are going to be Super Bowl.

And what we've just seen in the last six months to 12 months I would say.

It's going to be predictably unpredictable.

I guess, we've all had to navigate deal with I mean, there's still changes like who knows there could be a whole new round of tariffs.

The.

In a Supreme Court could say hey, this is illegal and then I'll have said, it's going to be you read the news there's going to be these things happened <unk> happened those things happened this changes that.

Gary Friedman: Then all of a sudden it's going to be, you know, if you read the news, there's going to be these things happen. These things happen. Those things happen. This changes that. Like, well, you know, we'll improvise, adapt, and overcome. That's what we do. Simeon on the free cash flow, just so you know, like talked about the $300 million of inventory coming down. So that this year is a kind of a $200 million figure we talked about. So there's still that element to come. There, we talked about reduction in capital spending, you know, last call, a little bit here. So just there's building blocks to maintain positive cash flow going forward. But obviously, you know, there's a lot of unknowns and a lot of uncertainty. So we'll be talking a lot about that and try to drive that result as well.

Then all of a sudden it's going to be, you know, if you read the news, there's going to be these things happen. These things happen. Those things happen. This changes that. Like, well, you know, we'll improvise, adapt, and overcome. That's what we do.

Global.

We'll improvise adapt and overcome that's what we do.

Jack Preston: Simeon on the free cash flow, just so you know, like talked about the $300 million of inventory coming down. So that this year is a kind of a $200 million figure we talked about. So there's still that element to come. There, we talked about reduction in capital spending, you know, last call, a little bit here. So just there's building blocks to maintain positive cash flow going forward. But obviously, you know, there's a lot of unknowns and a lot of uncertainty. So we'll be talking a lot about that and try to drive that result as well.

Simeon on the free cash flow.

You talked about the $300 million of inventory coming down so that this year is it kind of a 200 million figure we talked about so there's still that element to come there as well.

We talked to a reduction in cap Cana capital spending last call.

A little bit here. So just there's building blocks to maintain positive cash flow going forward, but obviously theres a lot of unknowns and a lot of uncertainty. So we'll be talking a lot about that and try to drive that result as well.

Gary Friedman: No exit over the way. Thank you. My client. Up next, we'll take a question from Jonathan Matuszewski from Jefferies. Good evening and thanks for the time. I appreciate the color on market share, Gary. It's easy for us to track the public players you outlined in the table, but less easy for us to assess, you know, the health of the fragmented design showrooms, you know, those regional high-end stores, some of the local independent boutiques. Curious if you could give us a sense of what you're seeing from a dislocation standpoint with the majority of your share gains coming from, you know, those channels. Thanks so much.

[Analyst]: No exit over the way.

Hello exits okay. Thank you.

Simeon Gutman: Thank you.

[Analyst]: My client.

Right right.

Operator 3: Up next, we'll take a question from Jonathan Matuszewski from Jefferies.

Next we'll take a question from Jonathan <unk> from Jefferies.

Jonathan Matuszewski: Good evening and thanks for the time. I appreciate the color on market share, Gary. It's easy for us to track the public players you outlined in the table, but less easy for us to assess, you know, the health of the fragmented design showrooms, you know, those regional high-end stores, some of the local independent boutiques. Curious if you could give us a sense of what you're seeing from a dislocation standpoint with the majority of your share gains coming from, you know, those channels. Thanks so much.

Yes.

Great. Good evening in Kingston, the time I appreciate the color on market share, Gary and it's easy for us to track the public players you outlined in the table, but less easy for us to assess the health of the fragmented design showroom, yes.

Regional high end doors some of the local independent boutique curious if you could give us a sense of what youre seeing from a dislocation standpoint with <unk>.

The majority of your share gains coming from.

Those channels. Thanks, so much.

And.

Gary Friedman: Yeah, I mean, you know, harder for any of us to measure, but, yeah, I mean, the feedback we get from, you know, some of the people that we've acquired and, you know, people that we know that, you know, believe we've been the biggest disruptive force at the high end of the business over the last, you know, 10 years, if not more. So especially with what we've done, you know, with the new galleries and with the assortment and moving up market and taking the, you know, the quality up and the level of design up and, you know, so, you know, I think you could, I mean, we used to track how many independent high-end boutiques there were, right? There used to be 32 between, you know, Sausalito and Santa Rosa, you know, County and Healdsburg and stuff in Napa.

Yes harder.

Harder for any of us can measure but.

Yes, I mean, the feedback we get.

Some of the people that we've acquired in <unk>.

People that we know that believe we have been.

Biggest disruptive force at the high end of the business over the last 10 years.

Not more and so, especially with what we've done.

With the new galleries, and with the assortment and moving up market and taking the quality up and the level of design up in.

So.

Okay.

I think you could.

I mean, we used to track how many independent high end boutiques that were rather you speak 32 between.

Sausalito, and Santa Rosa County, Healdsburg and stuff in Napa.

Gary Friedman: We always said, you know, that they all exist because, you know, RH had a 6,000sq ft gallery in Corte Madera. You know, most of those boutiques were, I don't know, 3,000 to 15,000sq ft, you know, called the majority of them kind of close to the size we are. You know, it wasn't obvious the assortment, you know, if you didn't get our book, you know, you didn't know how big our assortment was. If you didn't go to our website, you know, you didn't know. And we always said, like, when we have the assortment in physical marketplace, there will be a lot less. You know, you're making me want to go do the latest math. I mean, we know, you know, that it went from like 32 to about 18 or 20, you know, over X number of years.

We always said, you know, that they all exist because, you know, RH had a 6,000sq ft gallery in Corte Madera. You know, most of those boutiques were, I don't know, 3,000 to 15,000sq ft, you know, called the majority of them kind of close to the size we are. You know, it wasn't obvious the assortment, you know, if you didn't get our book, you know, you didn't know how big our assortment was. If you didn't go to our website, you know, you didn't know. And we always said, like, when we have the assortment in physical marketplace, there will be a lot less. You know, you're making me want to go do the latest math. I mean, we know, you know, that it went from like 32 to about 18 or 20, you know, over X number of years.

And we always said.

They all exist because.

<unk> had a 6000 square foot Galleria.

Corte Madera and.

Most of those boutiques for.

I don't know 3000 to 15000 square feet.

While the majority of them.

Kind of close.

Close to the sides, we are and it wasn't obvious the assortment if you didn't get our book.

You didn't know how big of a short was if you didn't go to our website.

Didn't know and we always said like when we have the assortment.

Physical marketplace.

There will be a lot less and you make me want to go do the latest math I mean, we know.

It went from like 32 to that.

18 or 20.

Over X number of years into this together do the math again, but.

Gary Friedman: If you go do the math again, you know, but I mean, I think, you know, we went from $300 million to $3.5 billion and, you know, some of it's hospitality and, you know, with, you know, contract business and we own Waterworks and, but, you know, we, we, we believe most of the share came from the higher end and came from the, like, it came from the showrooms and they came from the independents and they came from the regional furniture stores and they came from, you know, the Ethan Allens of the world or people like that. I'm not to pick on Ethan Allen or anything, but, I mean, Ethan Allen, when I was at RH earlier days, they were like $1.2 billion or something.

If you go do the math again, you know, but I mean, I think, you know, we went from $300 million to $3.5 billion and, you know, some of it's hospitality and, you know, with, you know, contract business and we own Waterworks and, but, you know, we, we, we believe most of the share came from the higher end and came from the, like, it came from the showrooms and they came from the independents and they came from the regional furniture stores and they came from, you know, the Ethan Allens of the world or people like that. I'm not to pick on Ethan Allen or anything, but, I mean, Ethan Allen, when I was at RH earlier days, they were like $1.2 billion or something.

I think.

We went through.

$303 5 billion, yes.

Yes, some of its hospitality.

This contract.

Contract business, we own waterworks.

Right.

Yes.

We believe most of the share came from the higher end and came from.

It came to the showrooms and they came from the independents and they came from the regional furniture stores and they came from.

Ethan Allen's of the world or people like that and Thats taken Ethan Allen or anything but.

I mean Ethan Allen.

Got it.

That are H earlier days early $1 2 billion or simply and then we looked up to them and I think I don't know if they do today, five or $600 million $700 million.

Gary Friedman: And then, you know, they, we looked up to them and I think they, I don't know if they do today 500 or 600 million or 700 million, you know. So, you know, there's always going to be those shifting dynamics, you know, they're sometimes hard to measure. But, you know, we like how our business has been performing from a market share point of view. And there's enough data to say, you know, we're one of the leading share gainers right now at a, you know, at a certain size, you know, especially furniture-based, right? Again, you know, there's other people that have a big tabletop business and they have big accessories business. So they're in seasonal businesses like Halloween and Easter and this and Christmas. And we're not in any of those businesses anymore, you know?

And then, you know, they, we looked up to them and I think they, I don't know if they do today 500 or 600 million or 700 million, you know. So, you know, there's always going to be those shifting dynamics, you know, they're sometimes hard to measure. But, you know, we like how our business has been performing from a market share point of view. And there's enough data to say, you know, we're one of the leading share gainers right now at a, you know, at a certain size, you know, especially furniture-based, right? Again, you know, there's other people that have a big tabletop business and they have big accessories business. So they're in seasonal businesses like Halloween and Easter and this and Christmas. And we're not in any of those businesses anymore, you know?

Yes so.

There's always going to be those shifting dynamics, there is sometimes hard to measure.

But.

We like how our business has been performing from a market share point of view and there is enough data to say, we're one of the leading share gainers right now.

No.

Certain size, especially furniture based right again, there's other people that have the big tabletop business. So they are big accessories business. So they are in seasonal businesses like Halloween and eastern This Christmas and we're not in any of those businesses anymore.

Gary Friedman: So yeah, you got to compare us to the right kind of people. And, you know, so we, we don't have some of those other businesses that might make us a little less cyclical. You know, there's some of the businesses I think we exited too far. You know, we ought to probably have some more home accessories or, you know, some layer, you know, designers, you know, that would like to have more things to complete a home. And so, you know, we're considering those things. We used to have a book called The Objects of Curiosity, and we may re-relaunch that at some point. And, you might see us, I don't know, I wouldn't even rule out would we be in the tabletop business, but just in our own way, you know?

So yeah, you got to compare us to the right kind of people. And, you know, so we, we don't have some of those other businesses that might make us a little less cyclical. You know, there's some of the businesses I think we exited too far. You know, we ought to probably have some more home accessories or, you know, some layer, you know, designers, you know, that would like to have more things to complete a home. And so, you know, we're considering those things. We used to have a book called The Objects of Curiosity, and we may re-relaunch that at some point. And, you might see us, I don't know, I wouldn't even rule out would we be in the tabletop business, but just in our own way, you know?

Yes, you got to compare us to the right kind of people.

And so we don't have some of those other businesses that might make us a little less cyclical.

And there is some of the businesses I think we exited too far.

Probably have some more home accessories or.

Some leather designers.

We'd like to add more things to complete a home.

And so we're considering those things we used to have a book called the objects of curiosity and we may <unk>.

Relaunch that at some point Tien.

Might see us.

I don't know I wouldnt, even roulette would we be in the tabletop business, but just in our own way.

Gary Friedman: I don't think I want to be in the chase of the holiday businesses, you know, but it doesn't mean we can't have, you know, beautiful candles and that are, you know, that are, they're like our branded stuff, you know? We, I mean, we can't have like our maze blanket or things like that, you know, and that are really high-end and aspirational, and, you know, can be great gifts, and, you know, things you'd really want to in your home to identify, you know, that, you know, identify your status and where you are in life. So we think we build the brand correctly, you know; there's going to be other opportunities like that, but, you know, but I, yeah, you know, hard to, it's, it's that fragmented, right? It's like not easy to exactly know. Helpful. Thank you, Gary.

And.

I don't think I want to be in the chase of the holiday businesses, you know, but it doesn't mean we can't have, you know, beautiful candles and that are, you know, that are, they're like our branded stuff, you know? We, I mean, we can't have like our maze blanket or things like that, you know, and that are really high-end and aspirational, and, you know, can be great gifts, and, you know, things you'd really want to in your home to identify, you know, that, you know, identify your status and where you are in life. So we think we build the brand correctly, you know; there's going to be other opportunities like that, but, you know, but I, yeah, you know, hard to, it's, it's that fragmented, right? It's like not easy to exactly know.

I don't think I have beaten the chase the holidays businesses.

But doesn't mean, we can't have.

Beautiful candles and better.

They are.

They are like our branded stuff.

Doesn't mean, we can't have like our our manage blanket or things like that.

That are really high and an aspirational.

Hi.

Great Yes.

Things you really want it in your home that identify that.

Identify your status on where you are in life.

So we think we build the brand correctly, there's going to be other opportunities like that but.

Yes, yes.

Yes.

That fragmented right, it's not easy to exactly know.

Jonathan Matuszewski: Helpful. Thank you, Gary.

Helpful. Thank you Gary.

Gary Friedman: That does conclude our question and answer session. I'll hand the conference back over to Mr. Gary Friedman for any additional or closing remarks. Great. Thank you, operator. Thank you, everyone, for your interest. I just want to thank our teams, you know, that bring our brand to life, each and every day, you know, throughout our galleries, our hospitality, our distribution centers, you know, every aspect of the company, you know, everybody in, you know, every location around the world, and everybody who's all of our partners around the world that, you know, work so hard to, you know, bring these beautiful products to life. You know, we appreciate everyone and your efforts and your collaboration. We wish everyone a, you know, just a wonderful holiday. We'll look forward to talking to you in the next year. Thank you.

And that does conclude our question and answer session I will hand the conference.

Operator 3: That does conclude our question and answer session. I'll hand the conference back over to Mr. Gary Friedman for any additional or closing remarks.

Back over to Mr. Gary Friedman for any additional or closing remarks great.

Gary Friedman: Great. Thank you, operator. Thank you, everyone, for your interest. I just want to thank our teams, you know, that bring our brand to life, each and every day, you know, throughout our galleries, our hospitality, our distribution centers, you know, every aspect of the company, you know, everybody in, you know, every location around the world, and everybody who's all of our partners around the world that, you know, work so hard to, you know, bring these beautiful products to life. You know, we appreciate everyone and your efforts and your collaboration. We wish everyone a, you know, just a wonderful holiday. We'll look forward to talking to you in the next year. Thank you.

Great. Thank you operator, thank you everyone for your interest.

But I want to thank our teams.

Yet.

Bring our brand to life.

Each and every day for our galleries or hospitality or distribution centers.

Every aspect of the company everybody in.

Every location around the world and everybody Who's all of our partners around the world.

Worked so hard to bring these beautiful.

Product for life.

We appreciate everyone in and your efforts and your collaboration.

And we wish everyone to the <unk>.

For holiday.

And we look forward to talking to you in the next year.

Once again, everyone that does conclude today's conference we would like to thank you all for your participation today you may now disconnect.

Gary Friedman: Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.

Operator 3: Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.

Yeah.

Yes.

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