Steven Paul Forbes

Steven Paul Forbes inquired about the potential for continued net inventory reduction on the balance sheet, given changes in average tariff rates and winding down excess inventory. He also asked about the visibility and risk surrounding the planned launch of a new brand extension in the spring.

Answer

Chairman and CEO Gary Friedman stated there's no risk to the new brand extension launch unless new 'silly tariff' investigations occur, reiterating concerns about tariffs' disruptive impact on the industry and potential job losses. He highlighted RH's strong leverage and sourcing capabilities. CFO Jack Preston explained that inventory reduction aims for a turn rate closer to the mid-twos, with further room for improvement beyond the $200-$300 million reduction. Friedman added that the new concept is the 'biggest idea' with 'lowest risk' and has $2 billion potential, with three galleries planned for launch. He confirmed Greenwich and San Francisco galleries for the spring launch, with West Hollywood pending permits, and discussed the expansion of the LA ecosystem.

Steven Paul Forbes asked about the potential for continued net inventory reduction on the balance sheet, considering changes in average tariff rates and the winding down of excess inventory. He also sought clarity on the visibility and risks associated with the planned spring launch of a new brand extension.

Answer

Chairman & CEO Gary Friedman and CFO Jack Preston explained that inventory turns, historically in the high twos to low threes, are currently in the mid-twos but are expected to accelerate post-product transformation. Friedman stated there is no risk to the new brand extension launch unless further 'silly tariff' investigations occur, describing it as a low-risk, high-potential 'biggest idea' for the company, launching with three new galleries.