RH (NYSE:RH) Q4 2022 Earnings Call Transcript

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Seth Sigman: Great. Thanks a lot. I’d love to follow-up on that last point, actually. Just thinking about your ability to maintain and continue to grow mind share in this environment? And I guess, whatever a normal environment ultimately looks like, I mean, to your point, there is so much newness, but it is getting more promotional, and it feels like a lot of competitors may go back to pre-pandemic promotional levels, right? So you’re taking a firm view on that. How do you cut through that noise, right? And I guess if you continue to restrain from discounting, does that just mean that marketing structurally is higher going forward and just offsets that? How do we think about that?

Gary Friedman: No different than you would have thought about it in 2019. Yes, just don’t €“ just ignore the pandemic. People who have altered their strategies based on the pandemic, I think they are going to find out that those are going to be things that are hard to hang on to as the pandemic is €“ is there some things that are modified, there are going to be more people that work from home. Yes, there are probably people that should have been working from home. Most of the people are going to go back to the office, yes, they are going to go back to the office. Are we going to €“ I mean, I don’t know how many people you see wearing masks out there right now. It’s kind of weird, right. It’s almost like the beginning of the pandemic.

You saw the people with masks and I remember my significant others tell us, you have to put this mask on to go into the grocery store. So I am not going to put that thing on, looks weird. It’s like I didn’t want to put on a mask. And then you couldn’t think of your life without a mask, right. Just like I had people that came in here pitching the ideas during the pandemic and Erie is laughing here, she is smiling right now, because it’s like I had so many people like with small business ideas or things that they were doing wanted to just rather invest or partner and whatnot and telling me it’s the decade of home. It changes €“ it is going to change everything, the decade of home. I mean, it’s a pandemic. How could you say that, something the world has never seen like in our lifetime, right?

I’ve ever seen people walking around the United States with mask before. I’ve never had the government tell us we couldn’t leave our house, that’s go buy groceries, yes. I didn’t have to wear gloves going grocery shopping. I have to wash my groceries in my sink before I even put in my fridge like, I got it. It was a radical change, but it was temporal and not systemic. And it’s just a €“ we don’t think that there is a lot different than 2009. We’re going to play our game for people’s promotional in 2009, they were, say, what’s different about other people from us right now. They are promotional on top of not being promotional. If I push the promotional button right now in our business and send some promotional e-mails, our business would go up 10% to 20% overnight to put some pressures on margins, and it would be really difficult to anniversary next year.

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