Top 12 Luxury Stocks According to Hedge Funds

4. RH (NYSE:RH)

Number of Hedge Fund Holders: 39

RH (NYSE:RH) is a retailer and luxury lifestyle brand in the home furnishing market. It offers a range of merchandise assortment categories, including decor, lighting, furniture, outdoor and garden, textiles, and more. The company operates under the RH, Waterworks, and Real Estate segments.

Despite the volatility of the housing market, the company reported positive momentum in its business. Demand in fiscal Q3 2024 increased by over 13%. The company’s vector is growing in both direction and magnitude, with November demand increasing by around 18%. This growth was attributed to the company’s initiatives surrounding product transformation and platform expansion. Its RH brand is also driving growth, where November demand increased by 24% due to the introduction of the company’s new RH Modern Sourcebook. Demand in the segment has continued to accelerate into December, with month-to-date demand growing by 30%.

The company has similar transformative plans for the remainder of 2024 and 2025. These include the second mailing of its new RH Modern Sourcebook, which includes 54 new collections across furniture, lighting, upholstery, textiles, and rugs. RH (NYSE:RH) increased its advertising investment by around $6 million to meet demand trends in fiscal Q3 2024, allowing circulation and page count expansion. Based on its quarter-to-date demand, this investment is expected to bring positive returns for the company during fiscal Q4 2024 and the first half of fiscal 2025.

Baron Discovery Fund stated the following regarding RH (NYSE:RH) in its first quarter 2024 investor letter:

“During the quarter, we added to our position in RH (NYSE:RH), a high-end retailer of home furnishings and furniture that has a unique vision to transform from a domestic furniture company to a global luxury brand. Shares were pressured in the earlier part of the quarter due to shorter-term concerns regarding demand amid a volatile macroeconomic environment. Despite these short-term pressures, we remain confident in RH’s ability to gain market share in the fragmented high-end furnishings market, and we see a multi-year growth pipeline driven by store expansion around the globe. We also believe that RH will see improvements in profitability as the brand returns to a fuller-priced sales environment, and as it begins to scale its early international investments.”