Transcription de l'appel aux résultats du 4e trimestre 2020 de RH (RH)


Logo de casquette de bouffon avec bulle de pensée.

Source de l'image: The Motley Fool.

RH (NYSE: RH)
Appel aux résultats du T4 2020
24 mars 2021, 17h00. ET

Contenu:

  • Remarques préparées
  • Questions et réponses
  • Appelez les participants

Remarques préparées:

Opérateur

Mesdames et messieurs, merci de votre présence et bienvenue à la conférence téléphonique RH du quatrième trimestre 2020. (Instructions pour l'opérateur) Pour rappel, l'appel d'aujourd'hui est en cours d'enregistrement.

Je voudrais maintenant céder la parole à votre hôte, Mme Allison Malkin de l'ICR.

Allison MalkinRelations avec les investisseurs

Merci. Bonjour à tous. Merci de vous joindre à nous pour notre conférence téléphonique de questions-réponses du quatrième trimestre et de l'exercice 2020. Je suis accompagné aujourd'hui de Gary Friedman, président-directeur général; et Jack Preston, directeur financier. Avant de commencer, je tiens à vous rappeler notre avis de non-responsabilité juridique selon lequel nous ferons aujourd'hui certaines déclarations prospectives au sens des lois fédérales sur les valeurs mobilières, y compris des déclarations sur les perspectives de nos activités et d'autres sujets référencés dans notre presse. communiqué publié aujourd'hui. Ces déclarations prospectives impliquent un certain nombre de risques et d'incertitudes qui pourraient faire en sorte que les résultats réels diffèrent sensiblement. Veuillez consulter nos documents déposés auprès de la SEC, ainsi que notre communiqué de presse publié aujourd'hui, pour une description plus détaillée des facteurs de risque susceptibles d'affecter nos résultats.

Veuillez également noter que ces déclarations prospectives reflètent nos opinions uniquement à la date de cet appel, et nous ne nous engageons à aucune obligation de réviser ou de publier publiquement les résultats de toute révision de ces déclarations prospectives à la lumière de nouvelles informations ou d'événements futurs. . De plus, au cours de cet appel, nous pouvons discuter des mesures financières non conformes aux PCGR, qui ajustent nos résultats selon les PCGR pour éliminer l'incidence de certains éléments. Vous trouverez des informations supplémentaires concernant ces mesures financières non conformes aux PCGR et un rapprochement de ces mesures non conformes aux PCGR avec les mesures conformes aux PCGR dans les résultats financiers publiés aujourd'hui. Une diffusion en direct de cet appel est également disponible dans la section Relations avec les investisseurs de notre site Web à ir.rh.com.

Sur ce, je cède la parole à Gary pour ses remarques liminaires.

Gary FriedmanPrésident et Directeur Général

Génial. Merci. Bonjour à tous et merci de vous joindre à nous. Nous allons essayer un format différent pour cet appel. Cela nous a été recommandé et beaucoup d'entre vous se bousculent parfois et n'ont pas nécessairement la chance de lire la lettre avant le début de l'appel car il n'y a qu'une heure entre la sortie de la version et nous avons eu une suggestion pour commencer par le lettre et lisez la lettre. Et puis de cette façon tout le monde est ancré et ce que nous venons de dire et cela pourrait simplement élever et améliorer la qualité du dialogue au fur et à mesure que nous avançons. Je vais donc commencer par lire la lettre aux actionnaires que nous venons de publier.

À nos employés, partenaires et actionnaires, alors que nous célébrons ce qui a été l'une des années les plus difficiles de l'histoire récente et que nous commençons à voir la lumière au bout du tunnel sombre de ce virus mortel et perturbateur, nous le faisons avec un une plus grande appréciation de notre liberté et des gestes simples de la vie comme une poignée de main ou un câlin. Nous tournons également ce coin en sachant que nous avons utilisé notre temps à bon escient pour nous réinventer et nous réinventer une fois de plus. En période de troubles, les humains ont tendance à se déplacer en troupeaux en s'accroupissant et à trouver le confort et la conformité. Même ceux qui analysent et rapportent les nouvelles semblent trouver un réconfort dans la réplication, essayant de tout intégrer dans une pile de gros titres prévisibles que nous avons tous lus.

Nous, par exemple, avons été mis dans ce qu'il n'y a pas de place comme la maison pile. D'autres ont été placés dans le commerce électronique, c'est tout. Les deux sont en fait de bonnes piles parce que chacune de celles qui vous ont été considérées favorablement, que vous soyez en haut ou en bas de la pile. Je crois que beaucoup de Wall Street gèrent leurs portefeuilles en tas, regardant à travers les lunettes de lecture quand ils ont vraiment besoin d'un microscope et d'un télescope. Un microscope pour rechercher les détails et les différences dans ces rares marques et entreprises qui appartiennent n'importe où avec la pile et un télescope pour voir les opportunités qu'ils exploiteront après cette pandémie. Étant donné que nous, les membres de l'équipe RH, nous nous déplaçons généralement dans la direction opposée du troupeau, nous sommes allergiques à l'accrochage et ne croyons sûrement pas que nous appartenons à la pile pandémique.

Nous avons pris une photo de quatre titres simples qui ne nécessitent ni microscope ni télescope. Les quatre P qui vous donnent un aperçu de ce que vous pourriez attendre de nous, car alors que la plupart des pays du monde se sont mis à l'abri cette année, nous avons passé le temps à nous réinventer et à nous réinventer à un rythme jamais vu auparavant. Permettez-moi donc de parler de ces quatre P: notre produit, nos performances, nos prospects et nos collaborateurs. Notre produit, nous construisons la collection d'ameublement de luxe la plus complète et la plus convaincante au monde. La désirabilité et l'exclusivité de notre produit amplifiées dans nos espaces inspirants nous ont permis de gagner des parts de marché significatives avec RH pour la demande en hausse de 36% au quatrième trimestre.

Notre demande s'est fortement accélérée avec février en hausse de 73% et les deux premières semaines de mars en hausse de 96% avant le cyclisme – avant la fermeture cyclique de nos galeries, restaurants et points de vente il y a un an. La marge brute ajustée a augmenté de 480 points au cours du trimestre, de 540 points de base pour l'année et de 1210 points de base sur une base de trois ans par rapport à l'exercice 2017, ce qui démontre à nouveau l'intérêt de notre offre exclusive et le pouvoir de tarification de notre marque. La séparation stratégique que nous avons créée continuera de croître au fur et à mesure que nous élevons et étendons davantage la marque RH avec les introductions de RH Contemporary en 2021 plus RH couleur, RH Couture et RH Bespoke au cours des prochaines années.

De plus, notre plan est de dévoiler The World of RH, un portail numérique présentant nos produits, lieux, services et espaces cet automne. Nous commencerons à donner vie aux différentes parties de notre écosystème intégré avec un contenu riche qui, selon nous, améliorera notre marque et établira des liens avec nos clients à un niveau beaucoup plus profond. Notre performance; nous continuons à construire la plate-forme d'exploitation et le modèle d'affaires les plus productifs de notre secteur avec des marges d'exploitation ajustées augmentant de 750 points de base à 21,8% contre 14,3% l'an dernier avec une croissance des revenus de seulement 8%. Je le répète, 750 points de base sur seulement 8% de croissance des revenus. C'est une marge opérationnelle jamais vue auparavant dans ce secteur des meubles de maison sur le marché, et plus de 50% meilleure que celle du concurrent le plus proche.

Notre ROIC de 53% en 2020 le place également dans une classe à part. Nos résultats représentent un soulèvement systémique qui n'est pas simplement un changement de pandémie temporel dû à un gain de revenus insoutenable. N'oubliez pas que pratiquement 100% de notre activité principale est directe au client, avec moins d'un dixième de 1% en espèces et à emporter de nos magasins, ce qui est essentiellement une vente au sol à la fin de la saison. C'est là que notre demande par rapport aux revenus est à la traîne – notre demande à un décalage des revenus est beaucoup plus grande que celle des autres détaillants d'accessoires de maison qui ont des assortiments saisonniers et de grandes entreprises de cash and carry. Il est également important de noter qu'en raison du virus et des perturbations de la chaîne d'approvisionnement, environ 150 millions de demandes générées en 2020 seront comptabilisées en tant que revenus en 2021.

Alors que la majorité du coût de vente pour générer la demande – cette demande a été absorbée en 2020. Si ces revenus avaient été reconnus l'an dernier, notre marge opérationnelle ajustée aurait atteint 23%. Je cite souvent Bernard Arnault, président-directeur général de LVMH, car il dit que le luxe est le seul domaine dans lequel il est possible de faire des marges de luxe. A 21,8% de marge opérationnelle ajustée en 2020, RH éclipse désormais la marge opérationnelle de LVMH. Et nous avons une ligne de mire claire à 25% plus la marge opérationnelle au cours des prochaines années. Avec moins de 3 milliards de dollars de revenus nets, vous pouvez imaginer l'effet de levier dont nous devrions bénéficier à mesure que nous évoluons. RH est également devenu l'un des titres de consommation les plus performants de la dernière décennie.

Depuis notre introduction en bourse le 2 novembre 2012 à 24 $ par action, RH a surpassé Apple, Amazon, Google, Facebook, Nike, Starbucks, LVMH, Home Depot, Hermes et à peu près tout le monde sauf Tesla. Warren Buffet dit que le temps favorise l'entreprise bien gérée. Nous pensons que nos performances l'ont prouvé et continueront de le prouver. Permettez-moi de parler de nos perspectives. Nous avons terminé 2020 avec un peu moins de 3 milliards de dollars de revenus nets et pensons que les données soutiennent la marque RH atteignant 5 à 6 milliards de dollars en Amérique du Nord et 20 à 25 milliards de dollars dans le monde. Nous pensons que ce nombre continuera de croître si vous considérez nos opportunités dans l'hôtellerie et la construction de maisons alors que nous continuons d'élargir l'écosystème RH avec l'introduction de RH Guesthouses et RH Residences.

Nous sommes sur le point de commencer notre expansion internationale en Europe avec l'ouverture de RH England et RH Paris en 2022. Nous prévoyons d'ouvrir notre première maison d'hôtes à New York cet automne, suivie de notre deuxième maison d'hôtes à Aspen qui comprendra notre première RH Bath House & Spa à l'automne 2022. Nous sommes actuellement en développement de la conception de nos premières résidences RH dans le cadre de notre plus vaste écosystème d'Aspen et avons déjà reçu plusieurs propositions non sollicitées pour acheter nos maisons à vue et à – ou à placer caution et réserver une maison. Et nous n'avons rien mis là-bas. Et nous n'avons rien dit d'autre que la publication du communiqué de presse original. Et nous pourrions probablement vendre chaque maison aujourd'hui.

Nous croyons que la conception révolutionnaire des maisons d'hôtes et des résidences a le potentiel de créer des marchés entièrement nouveaux dans leurs industries respectives tout en positionnant RH comme un leader d'opinion, un goût et un lieu. Nous prévoyons également d'ouvrir quatre nouvelles galeries de design en 2021, toutes avec des restaurants et des bars à vin intégrés; RH San Francisco, la galerie de l'historique Bethlehem Steel Building; RH Dallas, la galerie Knox Street, RH Oak Brook, la galerie du Centre; et RH Jacksonville, la galerie du St. Johns Town Centre. Nous parlons de notre peuple. Je crois que nous sommes l'équipe la plus ingénieuse de notre industrie, et encore une fois pas du tout. Tony Robbins dit que l'ingéniosité est la ressource ultime. Ce n'est pas une question de temps, d'argent ou de technologie.

Il s'agit de passion, de persévérance, de vision et de valeurs. En commençant sans ressources, nous avons transformé une entreprise presque en faillite vendant des objets de découverte nostalgiques avec une capitalisation boursière de 20 millions de dollars en la principale marque de maisons de luxe au monde avec une valeur marchande de plus de 10 milliards de dollars. L'histoire a prouvé que les hommes et les femmes travailleront pour un dollar mais mourront pour ce en quoi ils croient. Nous disons au sein de notre organisation, ce n'est pas notre entreprise. C'est notre cause. C'est un reflet authentique de qui nous sommes et de ce en quoi nous croyons. Certaines personnes disent ne pas le prendre personnel. Ces gens ne sont pas notre peuple. Ne fais pas d'erreur. C'est très personnel pour nous. Nous pensons que les marques avec plus de contrôle deviendront plus précieuses.

Nous avons toujours investi dans le contrôle de notre marque du concept au client en évitant les intermédiaires qui ne se soucieront jamais autant que nous. C'est pourquoi nous avons évité les partenariats, les parrainages, la franchise ou les licences, et continuons de croire que les marques avec plus de contrôle deviendront plus précieuses. Le chemin facile de l'expansion de la marque s'avère rarement être le meilleur chemin. La route de l'expansion mondiale est jonchée de marques qui font confiance aux autres pour passer des années à négocier des droits de rachat des décennies plus tard après que le dommage est fait. Cela ne veut pas dire qu'il n'y aura pas d'exceptions lorsqu'il y a un partenaire exceptionnel dans un pays difficile. Mais ce sera une rare exception au fur et à mesure que nous développons la marque RH dans le monde entier.

Nous continuons également à investir pour mieux contrôler l'expérience client et avons testé notre HR chez vous sur les marchés de Los Angeles et de San Francisco, et nous sommes extrêmement satisfaits des premiers résultats. Comme le décrit Fernando Garcia, notre président des opérations de meubles et de la livraison à domicile, RH dans votre maison n'est pas une expérience différente ou meilleure. C'est une expérience unique et mémorable alors que nous étendons la galerie dans le client – dans la maison de notre client. Avec des ambassadeurs du mobilier qui gèrent chaque détail, cela crée une impression chez nos clients qui peut durer toute une vie. De plus, nous en ouvrons un – un nouveau centre de distribution de meubles de 1 million de pieds carrés dans le sud de la Californie ce printemps.

La nouvelle installation nous permettra de réduire les délais de livraison de 7 à 10 jours pour les meubles d'extérieur et les tissus d'ameublement sur commande spéciale dans la plupart des grands marchés. 2021 a tous les signes d'une très bonne année. Alors que 2021 sera sûrement une histoire en deux moitiés, le fait que nous – le fait que nous ayons un marché immobilier en plein essor, un marché boursier record, des taux d'intérêt bas, l'attente d'un rebond de l'économie et du marché de l'emploi combiné à la récente une nouvelle accélération de nos tendances de la demande car il se sent plus plutôt que moins optimiste qu'il pourrait bien se révéler être deux très bonnes moitiés. Ce à quoi nous nous attendons à faire face – alors que nous nous attendons à faire face à des difficultés continues pour augmenter la production des fournisseurs pour répondre à la demande, et que nous ne voyons pas les défis du fret maritime ou de la congestion portuaire se résoudre de si tôt.

Il est difficile de ne pas prévoir une croissance du chiffre d'affaires d'au moins 50% au premier trimestre et une marge opérationnelle ajustée de l'ordre de 20%. Avec la dynamique de l'activité, nous pensons qu'il est prudent de dire que 2021 devrait se traduire par une croissance des revenus de l'ordre de 15% à 20% avec une marge opérationnelle ajustée augmentant de 100 points de base à 200 points de base et un retour sur investissement supérieur à 60%. Nous avons pris la décision une fois de plus de reporter l'envoi de nos livres sources et le lancement de RH Contemporary à l'automne 2021 pour permettre à nos partenaires manufacturiers de rattraper les tendances croissantes de la demande. Cette décision devrait également soutenir un second semestre solide car nous avons retenu de nouvelles collections au cours de l'année écoulée, ce qui se traduira par l'un de nos plus grands lancements de nouveaux produits de notre histoire.

Notre livre source RH Outdoor rempli de 10 nouvelles collections est prévu pour être à la maison à partir de cette semaine, avec le livre source numérique et les nouvelles collections extérieures en direct sur notre site Web aujourd'hui. C'est un moment qui doit être défini par notre vision, pas par un virus. Alors que nous franchissons les jours sombres de la pandémie, souvenons-nous de notre résurrection, une époque où nous nous sommes réinventés et réinventés une fois de plus. Une époque où nos résultats ont été redéfinis possibles pour une marque d'ameublement, une époque où nos performances ont obligé le reste du monde à nous sortir de cette pandémie et à nous voir pour qui nous sommes vraiment. Une équipe de personnes qui ne savent pas ce qui ne peut pas être fait. C'est un moment qui doit être défini par notre vision, pas par un virus. Carpe Diem.

D'accord, je vous cède la parole, opérateur, pour ouvrir l'appel aux questions.

Questions et réponses:

Opérateur

Merci. (Instructions pour l'opérateur) Et votre première question vient de la lignée de Steven Zaccone de Citigroup. Votre ligne est ouverte.

Steven ZacconeCiti – Analyste

Génial. Merci. Félicitations pour les bons résultats et heureux d'être un nouvel ajout à l'appel des résultats. Gary, vous avez beaucoup d'élan dans l'entreprise en ce moment et une quantité importante de nouveautés de produits, vous développez les offres d'hospitalité et le profil de marge surpassant considérablement vos premières perspectives pour l'entreprise. Avec tout cet élan à l'esprit et en réfléchissant à la façon dont le monde a changé du point de vue d'une pandémie mondiale, où avez-vous gagné plus confiance dans le potentiel de croissance à long terme de cette entreprise?

Gary FriedmanPrésident et Directeur Général

Je ne sais pas si quelque chose a vraiment changé pour nous en raison de la pandémie. En fait, je ne pense pas que tant de choses aient changé que la plupart des gens le pensent ou le croient. Je veux dire, regardez, commencez par le fait que notre entreprise est essentiellement 100% directe à la plate-forme client. Nous avons donc été neutres en termes de canaux toute notre existence ici. Nous ne nous soucions pas vraiment de l'endroit où quelqu'un passe une commande et de savoir si c'est à travers la pandémie lorsque la commande est passée des magasins à en ligne ou virtuellement avec nos employés. Dès la réouverture de nos galeries, nos activités semblaient plutôt normales et je sais qu'on en parle beaucoup et que cela va accélérer la croissance d'Internet de 10 points au cours des prochaines années. Cela peut être vrai ou non.

Je dirais que nous sommes indifférents à cela. Nous sommes vraiment indifférents au changement de canal inhérent qui va se produire au cours des prochaines décennies. Nous avons prévu cela. Nous savions que cela allait arriver. Nous sommes indifférents à ce qui se passe. Les gens sont en quelque sorte en train de recadrer leurs modèles et de fermer les magasins à un rythme accéléré en raison du fait qu'il y a eu ce changement de canal et cela peut être vrai parce que leur modèle est conçu avec une vue transversale – une vue indépendante sur tous les canaux stratégiquement ou financièrement. C'était peut-être un ancien modèle qui avait été conçu uniquement pour une entreprise de vente au détail et ils se sont récemment lancés dans une entreprise avec un client direct et se sont précipités en ligne sans réfléchir stratégiquement à toutes les implications de cela.

Nous avons construit cette entreprise il y a 20 ans en tant qu'entreprise neutre en termes de canaux et c'est une plate-forme tournée vers l'avenir pour les 20, 30, 40 prochaines années et disant que nous pourrions voir le monde aller là-bas. Donc, que ce soit là-bas – que ce soit 5% ou 10% plus rapide et qu'il y ait un changement plus important ou un changement plus lent, nous sommes complètement indifférents. Cela ne change rien à notre stratégie immobilière ou à notre stratégie en ligne ou à tout ce que nous faisons. Nous croyons que le physique – grand physique – permettez-moi de vivre de grandes expériences physiques dans ce monde physique dans lequel nous vivons vont rester pertinentes. Si quoi que ce soit, je pense que nous allons être encore plus pertinents après cette pandémie parce que c'est – je pense que cela a effrayé beaucoup de gens à ne pas investir dans le monde physique.

Et cela a simplement motivé beaucoup de gens à suivre le troupeau dans la précipitation pour devenir une entreprise en ligne, à se précipiter pour être une entreprise numérique d'abord, à se précipiter pour être une entreprise numérique d'abord avec quelques magasins. Je sais où tout le monde se précipite et nous ne le faisons pas – nous nous précipitons seulement vers un endroit où nous avons tout compris. Et nous y avons réfléchi longtemps et très profondément, alors je dirais que rien n'a fondamentalement changé dans notre stratégie basée sur la pandémie. Il y a – nous sommes indifférents à la pandémie, nous nous concentrons uniquement sur la création de l'assortiment de produits le plus convaincant présenté sur la plate-forme immersive la plus inspirante au monde avec le service le plus incroyable – des services que quiconque puisse avoir dans ce secteur. Et nous pensons que ce sont les bonnes choses sur lesquelles se concentrer, pas pour chasser les changements dans l'entreprise. C'est très tactique. D'autres passeront en ligne. Génial. Si vous ne l'avez pas vu venir jusqu'à présent, vous êtes très en retard.

Steven ForbesGuggenheim Partners – Analyste

Génial. C'est un détail très utile. Juste une question sur les perspectives de marge pour l'expansion de 100 points de base à 200 points de base, comment devrions-nous y penser du point de vue de l'effet de levier brut par rapport aux opex? Et en particulier du côté de la croissance, vous avez eu deux bonnes années d'expansion de la marge de vos produits. Vous attendez-vous à ce que cette force se poursuive cette année? Merci beaucoup.

Gary FriedmanPrésident et Directeur Général

Je vais laisser Jack prendre celui-là. Allez-y, Jack.

Jack PrestonDirecteur financier

Ouais. Eh bien, comme vous l'avez dit, au cours des deux dernières années, l'expansion de notre marge a été principalement attribuable à la marge brute. Donc, pour l'exercice 20 de l'augmentation de 750 points de base, les trois quarts sont presque là où la marge brute. Et donc je pense que dans l'ensemble, vous allez voir que – la qualité de cette marge continue d'augmenter. Et donc, même si nous ne nous guidons pas spécifiquement pour dire quelle partie exacte des 100 points de base à 200 points de base va provenir de la marge brute, je la qualifierais d'au moins la moitié sinon plus.

Gary FriedmanPrésident et Directeur Général

Ouais. Et permettez-moi de développer le point de Jack. Je pense – comme vous l'avez demandé, cela me fait penser à ce qui n'est probablement pas évident si vous êtes à l'extérieur de ce secteur, parce que les gens nous ont vu repositionner les produits. Cela a tendance à prendre des prix. Mais je pense qu'il n'est probablement pas clair qu'au fur et à mesure que nous faisons évoluer cette marque et que nous continuons notre ascension dans la montagne du luxe, la qualité du produit continuera à évoluer considérablement. Et le prix évoluera naturellement avec le produit. Mais l'équation de la valeur deviendra plus forte et non plus faible à mesure que nous deviendrons plus intelligents ici et que nous développons des relations meilleures et plus profondes avec nos principaux partenaires de fabrication.

Donc, ce qui n'est peut-être pas clair, c'est que lorsque vous augmentez les prix et que vous obtenez une marge de produit dans cette équation, vous obtenez également un effet de levier tout au long de la chaîne d'approvisionnement, n'est-ce pas? Et donc – et c'est probablement une simple équation mathématique sur laquelle tout le monde n'est peut-être pas en train de relier les points. Mais c'est relativement simple si vous y réfléchissez. Et si vous essayez simplement de capturer l'essence de la citation de Bernard Arnault que seuls les produits de luxe peuvent vous permettre de faire des marges de luxe. Il y a une simplicité et une vérité à cela. Ce serait – il serait très difficile de construire un modèle comme le nôtre si vous jouez au milieu du marché.

Steven ZacconeCiti – Analyste

Génial. C'est très utile. Merci.

Opérateur

Et en raison des contraintes de temps, nous vous demandons de vous limiter à une question et à un suivi. Votre prochaine question concerne la ligne d'Adrienne Yih de Barclays. Votre ligne est ouverte.

Adrienne YihBarclays – Analyste

Génial. Merci beaucoup. Merveilleuses nouvelles sur l'élan qui se poursuit. Gary, nous avons déjà parlé de la création de la demande, du fait qu'il ne s'agit plus d'un seul chiffre sur le P&L comme un pourcentage des ventes, mais d'une confluence des investissements que vous faites à Aspen, Londres, RH3, etc. construire davantage de création de désir et un pipeline de futurs clients. Alors, qui veut le style de vie RH, c'est vrai, et tout ce qui va avec. Alors, comment devrions-nous penser à l'avenir de cette ligne de création de demande publicitaire? Merci beaucoup.

Gary FriedmanPrésident et Directeur Général

C'est une très bonne question. Et donc la bonne façon d'y penser. Construire l'une des marques les plus admirées au monde, les marques souhaitées dans le monde, selon ce que vous voulez utiliser, cela prend vraiment un chemin différent, cela prend une manière différente de communiquer et je pense que nous sommes dans un monde où c'est plus difficile et plus difficile de faire passer votre message car il y a tellement d'informations là-bas. J'ai lu une étude et je pense que c'est il y a environ un an que les humains consomment 700% – 7 fois plus d'informations qu'ils ne l'étaient il y a 20 ans et c'est un nombre étonnant si vous pensez à cela d'il y a 20 ans, nous consommons 7 fois plus d'informations en raison de ces appareils que nous avons et de la quantité d'informations, de la quantité de plates-formes sur lesquelles nous communiquons et de la facilité de nous communiquer. Alors, le chemin vers une sorte de percée, non?

Steve Jobs a dit quelque chose si vous regardez son type original de présentation sur YouTube quand il est sur son short et ses tongs sur une petite scène Apple quand il est revenu à Apple et qu'il parlait qu'il réintroduisait pour penser – réintroduire Apple et introduire le think campagne différente. Et il a dit que nous vivons dans un monde vraiment bruyant et qu'il va être vraiment difficile pour quiconque de se souvenir de quoi que ce soit sur l'un d'entre nous et qu'il est si important de – qu'il a parlé de marketing et de valeurs, n'est-ce pas? À propos de ces choses en lesquelles vous croyez profondément et en vous connectant avec les gens sur les valeurs et il parle de certaines des grandes marques. Il a dit que Nike était l'une des grandes marques au monde. Et il a dit que si vous pensez à Nike, ils vendent une marchandise, ils vendent des chaussures de tennis, non? Ils vendent des chaussures pour la plupart.

Et il a dit – mais pourtant dans leur publicité, ils ne parlent pas de la chaussure. Ils ne parlent pas de la semelle. Ils ne parlent pas des lacets. Ils ne parlent pas – ils parlent – ils célèbrent les grands athlètes et le grand athlétisme, n'est-ce pas? Et il a parlé d'Apple pensant qu'ils pouvaient – que les gens – qu'ils étaient assez passionnés pouvaient vraiment changer le monde. Et que dans cette marque Apple, la campagne Think Different, c'était aussi une campagne qui portait plus que tout sur l'absence du produit, non? Vous n'avez pas vu d'iMac. Vous n'avez rien vu dans la campagne. Vous ne pensez pas vraiment à Nike. Il n'a pas construit sa marque sur la base d'une chaussure en particulier. Nous nous souvenons tous de la chaussure Jordan. Mais pourquoi nous souvenons-nous de cette chaussure Jordan? À cause de Michael Jordan, pas de la chaussure spécifique, non? Donc, si vous pensez aux grandes marques et que vous pensez à la façon dont elles les ont construites et à la façon dont elles ont communiqué, elles – c'est un chemin très unique.

Penses-y. Le hors concours. Tesla est la société automobile la plus précieuse à la croissance la plus rapide au monde. Ils n'ont jamais eu de publicité télévisée. Pensez-y. Les gens font la queue pour Teslas, non? Nous disons donc qu'à l'intérieur de notre entreprise, par exemple, nous n'avons pas de service marketing, et cela peut choquer beaucoup de gens. Nous n'avons pas de département marketing parce que nous faisons beaucoup de marketing pour mettre du rouge à lèvres sur un cochon, non? C'est comme prendre une idée moyenne et essayer de l'habiller, de la faire tourner et d'en faire quelque chose de meilleur que la moyenne. C'est vraiment difficile à faire, non? C'est vraiment difficile à faire. Et nous n'avons pas de département marketing, nous disons que ce n'est pas ce que nous disons, c'est ce que nous faisons qui nous définit, non?

Donc, nous avons un groupe de vérité et notre groupe de vérité, dans le passé, ils venaient me voir et me disaient que quelqu'un voulait écrire une histoire à ce sujet et ils vont nous mettre dans cette histoire et aller bien, ce n'est pas ce que nous croire. Par exemple, pourquoi voudrions-nous être dans cette histoire? Ce n'est pas notre vérité. Et donc notre travail est notre vérité. Et nous nous définissons à travers notre travail. Et nous nous connectons avec les gens grâce à notre travail. Et c'est pourquoi le lancement d'une sorte d'écosystème révolutionnaire entièrement intégré dans un endroit comme Aspen où les vacances riches et aisées – visite et vacances et faire quelque chose d'extraordinaire là-bas, vous l'avez – vous avez l'attention des bonnes personnes .

Et nous n'allons pas cogner des casseroles et des poêles et dire regarder nous, nous allons faire un travail extraordinaire. C'est pourquoi je dis qu'en gravissant la montagne de luxe et en empruntant le chemin que nous avons emprunté, toutes les marques de luxe sont nées au sommet de la montagne, n'est-ce pas? Comme vous pensez à toutes les marques de luxe, elles sont toutes nées au sommet de la montagne. Nous ne sommes pas nés là-bas. Nous étions – nous n'étions pas nés au pied de la montagne, c'est vrai, nous sommes nés sous terre. Nous sommes essentiellement une entreprise en faillite. Nous avons donc dû nous extraire du sous-sol et ensuite décider comme si nous allions faire une ascension qu'aucune marque n'a jamais faite.

Personne n'a jamais essayé de faire cette ascension. Et donc nous sommes – et les gens au sommet de la montagne, ils ne veulent pas vraiment que vous fassiez cette ascension. Vous n'êtes pas du quartier, vous n'êtes pas invité à leurs soirées. Et il faut donc faire un travail si extraordinaire, si remarquable, si incroyable que cela crée une reconsidération forcée de notre marque, que cela oblige les gens au sommet de la montagne à baisser leur chapeau, non? Pour dire un bon travail. Nous devons gagner leur respect. Il y a donc une citation célèbre qui dit que lorsque vous ne venez pas de la royauté, vous devez le gagner, n'est-ce pas? Et donc ce travail que nous faisons, les choses que nous faisons pour construire cette marque que nous croyons être le bon type de travail.

Nous croyons que si nous faisons un travail extraordinaire qui brise le désordre, les gens vont en parler. Et au fait, nous avons publié un communiqué de presse, un communiqué de presse d'une seule page parlant d'Aspen. Et je ne pense pas avoir jamais vu plus de milliardaires me contacter et m'envoyer des notes et dire ce que tu fais à Aspen? Comme j'ai personnellement eu trois demandes pour acheter une de leurs maisons. Notre partenaire a reçu environ 12 demandes. Personne n'a même vu de maison. Nous n'avons même pas sorti de rendu. Donc, quand vous y pensez, c'est comme si nous parlons d'espaces. Nous parlons de design et d'architecture et de vie, d'espaces et de lieux. Et c'est de cela que nous sommes. Et donc, en créant des espaces incroyables, en créant des environnements inspirants, nous pensons que cela brisera le désordre. Et c'est beaucoup plus puissant que de simplement le faire et d'essayer d'en parler.

C'est pourquoi nous n'avons pas de réseaux sociaux. C'est pourquoi nous n'avons pas de compte Instagram. Nous n'avons pas de Twitter. On ne fait pas ça. Tout le monde me l'a dit, vous devez tweeter. Vous devez avoir besoin d'un compte Pinterest, Pinterest. Vous devez avoir un compte Instagram. Les gens vous suivront. Gary, si vous tweetez, vous aurez tous ces adeptes. Je suis comme, je ne veux pas passer mon temps à penser à quoi tweeter demain. Donc, je ne veux pas passer mon temps, je ne veux pas avoir un département qui examine les photos à mettre sur Instagram ce jour-là. Et au fait, à titre de référence, nous n'avons pas de Pinterest, Twitter et Instagram, mais nous sommes la marque la plus épinglée de notre genre au monde.

Nous sommes la marque de notre genre la plus tweetée au monde et la marque la plus Instagram de notre genre au monde. Et donc, c'est pourquoi nous croyons qu'il s'agit de notre travail et c'est pourquoi nous faisons les choses que nous faisons et en passant, en faisant les bonnes choses que nous faisons comme même la construction et les galeries aspirantes que nous construisons, nous ' Nous regardons maintenant le modèle et nous disons dans ces galeries et surtout celles avec les restaurants, à droite, qui génèrent un trafic important. Nous ne pensons pas que nous devons dépenser autant d'argent pour envoyer des catalogues sur ce marché, car avec des milliers de personnes, nous alimentons chaque semaine.

Et donc, lorsque vous pensez à notre modèle financier, aux opportunités et à l'effet de levier en matière d'investissement simplement parce que nous avions l'habitude d'investir d'une certaine manière, cela ne signifie pas que nous devrions continuer à investir de cette façon parce que nous – en continuant à innover, nous pouvons voir davantage. coins, nous avons plus de données, nous avons plus d'apprentissage et je suis assis ici aujourd'hui et je vais comme ça, nous n'avons pas envoyé la source à la recherche depuis combien de temps. Un an, non? Ouais, un an. Nous n'aurons pas envoyé le livre source pendant 18 mois ou quelque chose comme ça au moment où nous posterons les livres sources d'automne, je ne sais pas si nous devons retourner à l'envoi des livres sources deux fois par an.

Avons-nous besoin d'envoyer cela profondément comme dans les marchés où nous avons ces magnifiques espaces et lieux architecturaux importants que nous avons construits. Combien valent-ils pour le marketing, n'est-ce pas? Et je comprends. Ouais, vous pourriez fermer des magasins si vous construisez une sorte de magasins de merde qui font la queue dans un centre commercial où tout le monde a une vitrine en verre et tout ce que vous avez, c'est votre logo au-dessus, c'est différent. Mais ce n'est pas ce que nous faisons, non? Nous faisons donc quelque chose de différent. Donc vous ne pouvez pas – c'est pourquoi je dis que vous ne pouvez pas nous mettre dans la pile pandémique, n'est-ce pas? Vous ne pouvez pas nous mettre dans la pile avec tout le monde; vous manquerez toute l'histoire ici.

Adrienne YihBarclays – Analyste

Gary, c'est très utile.

Gary FriedmanPrésident et Directeur Général

(Indéchiffrable) l'une des meilleures questions que j'ai eues depuis longtemps.

Adrienne YihBarclays – Analyste

Votre philosophie est toujours la bienvenue. Jack, un très rapide. En fait, celui-ci est de 73% et une croissance de la demande de 96% se traduit. Et puis nous avons – nous sommes maintenant dans la partie où les magasins ont été fermés. What — to at least 50% revenue growth, is that due to poor congestion or lack of inventory? It seems like the spread between those two numbers would be tighter.

Jack PrestonChief Financial Officer

Ouais. Well look, you're going to see the same dynamics in terms of the supply chain constraints. And for the same reasons that the demand growth exceeded revenue growth in Q3 and Q4 were with the strength and business you're going to continue to see that in Q1 and the potential acceleration given the strength and acceleration in demand.

Gary FriedmanChairman and Chief Executive Officer

Ouais. And again, the key word is at least, is at least, right? So we give you at least how many times over the last few years, at least this, at least 18% operating margins, then it's at least 20%. Then it's — so we tend to kind of give you at — we want to make sure whatever happens, we're going to hit the at least. But we generally beat the at least pretty handedly. And — but yeah, there's a lot of things to kind of consider but at least means that we have more than that.

Adrienne YihBarclays — Analyst

Understood. Great luck. Great job. Merci.

Gary FriedmanChairman and Chief Executive Officer

Thank you, Adrienne.

Opérateur

Your next question comes from the line of Curtis Nagle from Bank of America. Your line is open.

Curtis NagleBofA Global Research — Analyst

Good afternoon. Thanks very much. Gary, perhaps a bit of a piggyback question on Adrienne's, perhaps just a little bit more specific just thinking about the ecosystem that you guys are — you must have rolling out. I just go two questions. How meaningful do you think that could be as a brand enhancer for RH over, say, the next three to five years? And as a stand-alone business, how important that — as a revenue and profit contributor or as — I guess kind of the former points more important, how should we think about that?

Gary FriedmanChairman and Chief Executive Officer

Ouais. Well, I think it's going to be a meaningful brand enhancer. And I think if — it's funny I — if you would ask me five or seven years ago, we started work upon this, I would have told you it's going to be a meaningful brand enhancer. Now, I look back, and I go, that wasn't even any good at all. We were working five, seven years ago because we keep — tend to keep making things better. And that's the great thing about kind of only having a vision about something versus kind of start working on something, right? You really learn when you start doing. And that's when you can really start accelerating your education and connect more dots to see around more corners. I think what we're about to unveil in New York and Aspen — I don't think anybody has any idea what it is.

I really — I don't. It's — I've been fortunate enough in my life that — I've been traveling since I was a relatively young man and traveling all over the world. And I've been in a design business whether it be at my former — the former company I worked at or today where we search the world for the best stuff, the best design, the best hotels, the best places, where are we going to get inspired, what are we going to see? So I've seen a lot, right. I've been to most of the Aman Resorts in the world. I've been to so many so many places both personally and professionally. And someone asked me, how long have you been working on the Guesthouse? And I told them about 30 years because that's how long you've been thinking about it.

That's how long you've been traveling to really great places and asking myself questions like, why don't they have this? And why isn't anybody thought of that? And why does it have to be like this? And I think when you see what we've done with the Guesthouse, there's just things that no one has ever done in hospitality. And why they say a lot of the — most of the innovation in the world happens outside. It comes from outside of industries not inside of industries, right? Like, again I go back to Tesla. The guy never built a car ever, ever. And it's massively turned over the car industry. And now every car company in the world is racing, racing to catch up, racing to have electric cars, right? We've never opened a hotel before and we're not going to now because it's not a hotel, it's a guesthouse and it's importantly said that.

And when you see our website launch in the west — on the — the website launch when we open, the first thing you're going to read on the website, it says this is not a hotel, right, because it's not. It's a completely new way to think about an experience like that. And so I think when you do work like that, one, it has a great chance of having people at the top of the mountain tip their hat because they haven't seen it. I mean think about this. Like if we want — if you go to the top of the luxury mountain and say OK, who lives there? Who has the biggest house? Bernard Arnault, right, runs the biggest luxury platform in the world. I'd say internally I joke around and say look, Bernard Arnault just bought Belmond for $3 billion, right? (Indecipherable) like nobody thinks we're impressing Bernard Arnault.

I guarantee you, when he sees this guest house. He's going to be forced to tip his hat, because nobody's seen anything like this in the world. And that is what is going to create the conversation, right? That is what's going to change the perception of the brand. A brand that started underground had to dig its way out of the grave and start climbing a mountain that's never been climbed before. You just have to do things that people can't imagine. And I think this is all about — it's all about brand building. It's all about truth and respect, right? The work is our truth and I believe our work will be respected. And our truth then will be respected, and people will listen closer.

They'll pay more attention to us. And then out of that, you know, out of that and same thing with the homes that we're doing, the residences that we're doing and other things you'll hear about. I mean, let me just go back for seconds to start here. We never knew anything about restaurants, right? A few years ago, everybody will tell you, you're going to open a restaurant like, what are you going to do? Who's going to run it? It's just that we had a partner to start now we run the whole thing ourselves. We have — we're vertically integrated to hospitality organization. We have 10 restaurants today. Our restaurant volumes and how they're tracking, because we keep innovating and evolving. And the things we've done in the last 18 months — 12, 18 months, you can't even see them yet because of the pandemic.

But our restaurant volumes will rival the highest volume of restaurants anywhere besides the one or two great ones. But when people — when we reopen and really reopen, when we can seat all our restaurants our volumes are going to be among the best. People used to talk forever about mall developers really wanted a cheesecake factory because they did $10 million on average on restaurant. It's very likely very soon our restaurant will be at that kind of volume and it has to do with not just the number of customers coming through but the average ticket of the customer coming through which then influences who's coming through which makes sure we have an audience that is aligned with the target consumer and who we want to impress.

But we're going to be a pretty good restaurant company if you looked at the numbers and the returns and the margins on our restaurants today, they're three times better than they were three years ago. And so we're pretty good at that and I think what happens is with things that you really care about, right? We talk in our company about three lenses. We look at every decision base and we choose based on what is the emotional value of an idea, what is the strategic value of an idea or what is the financial value of idea in that order, right? Because if you just focus on the financial value but idea if nobody really believes in it, if nobody's going to die trying to bring it to life, the financial value is never going to manifest itself.

But if you've got ideas that have really high emotional value that the people in the organization really give a shit they really care about it. They're going to get knocked down 10 times and get up 11. The effort and the passion and the learnings that happened just change the outcome. I've seen things that have really high financial value — really high strategic value, really high emotional value, relatively high strategic value, but moderate financial value that have turned out to be the biggest financial ideas in the company because the work turns out to be so good. And on the opposite hand, I've seen just the opposite. I've seen things with moderate emotional value, relatively high strategic value, and super high financial value.

Somebody thought it's worth — the $500 million idea wind up being a $5 million idea because nobody cared enough about it. And to do great work, the effort has to be — you want extraordinary outcome, you have to put an extraordinary effort. There's no shortcuts, right? Elon Musk was asked, you run three different companies. You run Tesla and SolarCity and SpaceX. How do you do that? He said, look, it's simple. It's just physics because the average executive might be working 40, 50 hours a week. And he said I work about 150 or 160 hours a week. So I work three times — I work three times more hours than the average person so I could do three times more. And he goes, it's very simple math. If you hung out with the people in our organization, you find out that we really love what we do.

You cannot stop us. We are going to figure it out or die trying because it's more than just a job to us. It's our life. And when you work on stuff like that, the outcome tends to be much greater than you could even imagine in your original vision, you meaning us, right? And so that gives me — like somebody said, hey, do you think you'll ever make money in the Guesthouses? Well, I said, yeah, if it — I said, look, if I don't lose a lot of money, it's going to be a really good thing for the brand. I actually think we — now, when I look at it, I think this is going to work. I mean I — we haven't sold a room, not yet. But let me tell you something, I sure want to stay there not just because we — I built it.

And — but like we have thought so deeply about it that we're going to do things that no one in hospitality has ever done and they're really good ideas. And the same thing with our residences like there, we've designed the one on Red Mountain. Like it's shocking, it's so good. And so, and it's because this is, we're passionate about it. It is — these ideas have huge emotional value. And when it has high emotional value, people, they don't put in a day's work. They put in a week's worth than a day and the outcome reflects that. So I think these will at a high-level, these will massively, massively elevate and render the brand more valuable. And I'm hopeful today that they'll also have really good financial models. I feel more clear about the homes by the way.

I think I think that the homes is easier math for me because I own homes and bought homes and like, I'm the consumer and I know what we can build and what we can sell them for and how much we can make, and I think will create an extraordinary product that I think we'll make a lot of money in the home business. Whether it's single family homes, condominiums, things like that, we do luxury apartments which is a really interesting market. It's like there's no great apartments in the world. They're just not designed well you know.

But think about it, if we do fully furnished luxury apartments, right and how many people need to go into a market, live somewhere for a year or two, don't want to buy a home but they got a lot of money and they want to live in a really beautiful place. I mean, we think that could be a fantastic idea. The Guesthouse thing, I don't know, like it's — we're doing things no one's ever done. Like we got no meeting rooms. We've got no weddings, no nothing. No celebrations. Very private. It does a few things better than anybody else in the world but it doesn't do all the thing. So it all depends what kind of room rate can we get for this extraordinary rooms and this unbelievable sense of privacy and luxury we created we'll know soon, yeah, we'll know soon but we're excited about it.

Curtis NagleBofA Global Research — Analyst

Ouais. Clearly and thank you for the very thoughtful answer and hopefully come fall we can start to see some of us in person. So good luck for the rest of the year and thanks.

Gary FriedmanChairman and Chief Executive Officer

Ouais. We'll figure out how to kind of do a little — like we're thinking. We don't know — how do you do a launch party in a 10 room hotel, right? You can't have just people like walk around the hallways, right? And so like we — then we thought, like I thought I'm going to do it like I might do a week of sleepovers, right? Where you get invited for a sleepover but I can only do like can we get two people in a room times 10 rooms, so we have 20 people a night but it's still 100 people. We get the right influencers and the right people and we're going to try to — we're going to try to open this. We think coincide with Fashion Week and we think Fashion Week will come back and everybody in New York will be back in the Hamptons.

We think people be traveling again in September. It could be like the greatest coming out party in the world and some of the who's who maybe want to come for a sleepover and get to see something no one's ever seen. And yeah, we start the right conversation. But I think what we'll do is probably during that week we'll stay there for a while and maybe it's a good time to do an investor meeting in New York and bring everybody up to speed and do a tour of the guest house probably right before we really open it to the public because once it's open you can't tour anybody through it, right? Because privacy it can't be taken. Hey, these are bunch of Wall Street guys taking through here. Sorry, sorry, excuse us. Yeah, we know this is about privacy but not today. And so there's going to be one shot to kind of really see it and we'd like to kind of do that before it opens.

Opérateur

Your next question comes from the line of Max Rakhlenko from Cowen & Company. Your line is open.

Max RakhlenkoCowen and Company — Analyst

Great. Thanks a lot guys and congrats on the incredible quarter. So as we think ahead about the 100 basis points to 200 basis points of EBIT margin expansion in 2021, what do you see as the biggest buckets of opportunity is? And then longer term as we look ahead to the 25% plus, what do you see as additional opportunities beyond 2021?

Gary FriedmanChairman and Chief Executive Officer

Ouais. Well — look, the — we've kind of said a 100 basis points to 200 basis points, we also kind of put some dots out for you, right? We said, hey, of that $150 million had shift this year. We would've been at 23 to start with. We're kind of 23. And so, then we — then we got another 100 basis points to get you to 24 which is 200 basis points higher than 2018, right, 2,200. So, you can get there pretty easily. It's not a lot of moves. And some of it will depend to just how much — where is the revenues really go here. We don't need a lot of revenues to kind of get to where we're pointing you. If for some reason these revenue trends continue — like, I mean it's really interesting.

I've never — this is — I've never seen anything like this. I mean, I've been through the Great Recession and I've been through multiple recessions in my career. I've been in the home category now like how many years, 34 years. Just like Jack reminded me the other day it was my 20th year anniversary here, not to get to everybody that wished me happy anniversary, but I don't even know that. He goes, Oh, God I'm sorry. And I missed your anniversary. He didn't even know it's my anniversary. So, yeah, I've been here 20 years, at Williams-Sonoma, 14 years. I've been 34 years in the home business. And I've seen a lot of cycles during that time.

And I've never seen anything quite like this. I tend to — when there's really good news like this, I tend to be the pessimist in the company. I tend to be the one with just — whatever demand you think we're getting right now, it's not because of us. It's not going to stay. Don't architect the business for this. This is going to go away. And it hasn't gone away yet. And I've talked to some pretty smart people that have given me different insights into — look, Gary, what — like, here's one that I think is interesting for everyone to think about. And this is really smart.

And it comes out of an — from analysis from a really credible deep thinking smart person that the move of America that you're seeing today, the pandemic shift of out of cities into suburbs or into second home markets, which — by the way, the suburbs thing is a great thing for us because 80% of our business is in the suburbs. And so the move to the suburbs is not just a move to the suburbs. It's a square footage expansion by — they believe it's two times or more square footage expansion for the consumer. And I hadn't thought about that before. And that was a really interesting point. And their map said, look, Gary, your customers that are moving from the cities maybe in a 3,000-square-foot apartment are moving to a 6,000-square-foot to 10,000-square-foot house in the suburbs.

And they didn't have outdoor furniture in their apartment in the city. And now they all have outdoor furniture because they have big yards and lawns and pools and so on and so forth. And so I just like that done to me, right? I hadn't really thought about it like that. I didn't think of the square footage expansion of the consumer. And the other thing they said was that the issue with getting a contractor right now is a huge issue that you could go out and buy a house. But if you have to remodel it or do anything to it, you have to wait six months to get a contractor. So they believe six months or longer and some are — there's this real lag.

And so this person believes that and they said this to me and I was like, I didn't even know how to respond. Like, they believe that our business was going to accelerate because of the lag, because of this massive shift, right, that the longer the pandemic went, the more people started moving permanently. I'm not talking about the people that kind of flew back to their place in the Hamptons. That's very different, right? Like think about New York. Everybody went to the Hamptons, they could. Anybody that had a house was at their Hamptons house, right? They relocated there for the year. Anybody that could rent a house in the Hamptons, rent, whatever, you could buy one like bought one.

So, but a lot of them are coming back and let it in. And at first everybody was like a temporal thing. And then all of a sudden then there's this shift of a different perception of how people wanted to live and it could be a more permanent kind of thing. So I think this moving thing could be a much longer tale and a much bigger move. And then you say to yourself, well how long does it last? It all depends on how permanent the move is, right? Like, so if you think about our business and I'll give you some numbers that I've never really talked about before. But our business prior to the pandemic was 80% suburbs,10% second home markets and 10% urban market.

So when I think urban market, I'm talking about the city, right? Like not Beverly Hills is not the city in Los Angeles, right. The city is the vertical part of Los Angeles, it's called Los Angeles City. So we have some vertical markets like Manhattan or Chicago, right? That really vertical that have a lot of high end homes and we have relatively big volume. But almost everywhere, our business is much more suburban driven and that makes sense. The homes are bigger, got backyards, you've got kids. You've got like more bedrooms, more spaces, more family rooms, etc, etc. And then the pandemic hit and it shifted things. And you have this explosion of second home markets.

And all that happened to our numbers really is the second home markets went from 10% of our business to 20%. Now the group spent exponentially faster and this is the percentage shipped, right? So you're — and 12% — 10% to 12%, yeah, 10% to 12%. And then and then suburbs basically stayed the same and cities just went down by two points to 8%. But if you think about our model of being 92% of our business and this is not where the demand generate, this is a shift to addresses. This is where the product was going, right? So if you think about 92% of our business is architected perfectly for whatever long-term change this pandemic has and there's another study about the kind of the big shifts in kind of moves when — I try to remember the data (Indecipherable) person was talking me about it.

I mean how every so many years, there's a shift here and there's a shift, people are moving in here and there's a big move into the suburb of the 50s and 60s and 70s and that kind of move back into the cities over the last 10 to 15 years, right? ReGentrification and all this kind of redo of cities. But the shift that might be happening, might really stick. That's the logic that certain people here are kind of sharing with me and they think this is not temporal. They think there's going to be a lot less people that go rushing back to the city and they think that the rush back to the city is going to be at a much younger consumer going back. And that the consumers that are 40, 50, 60 years old that moved out of the cities are going to stay out of the cities. They don't think they're coming back.

And then that becomes — when I think about it that becomes really good for a business long-term because that that also means even the moves within the place like not everybody. If you think about it you moved out to the suburbs, you scramble and got a second home during this pandemic rush there's kind of it's almost like a movie, right? Like everybody's got to leave the cities and all the cars are backed up and the kids get out and it's — the odds of you getting the house you really wanted in that moment is really low, right? And I got to believe there's a lot of people renting homes, I know we're doing a lot of quick design installs, people like need the furniture in two weeks, right?

And luckily and one of the advantage, here's another advantage this is like kind of a little side point to this but I think it's worth saying and sharing with everybody as we all try to figure out where things are going and what's happening here is. Like I thought about this and I thought. Why is our demand really accelerating right now? What is happening? And I think that there is just back up, this pent up demand just like people couldn't get contractors. People are out now and finally come. But for all the people, that are moving out and they need new furniture and they needed in 30 days. So they need it in three weeks or two weeks, I think we're benefiting now because we actually stocked furniture. We were one of the few places that actually stocks the product and you can get it quickly.

Not everything. We have a big special order business and we're in backwater now. But this is where times like this, is where I think our model is advantaged versus a Wayfair in Paragould, anybody else online. What I call our marketplace model where they did only the inventory, right? But that's — one of the beauties of a model like that, it's a low capital model and you should setup for high returns if you can get the earnings model to work right. But no one ever really thought about what's the inherent weakness of that model. If you go on Wayfair and like — and we mostly look at what they're doing on Paragould. We look at anybody who might be competing with us. And the amount of out of stocks and what you can buy there is unbelievable.

Because they're — then — their weaknesses, you've got a lot of these small and capitalized businesses trying to just sell shit on a platform like that — in a marketplace. They'll take anybody by the way. It's not a big approval process. You want to go sell some on Wayfair. So, actually you don't get to that many vendors that quickly if you have really high standards of who's selling on your platform. Ouais. You can't possibly talk to that many people. That means a lot of low level people are approving a lot of new vendors. But I look on there and I know some of the people and we know who the factories are all around the world. And again, those people don't have any money. They can't afford to have the inventory, right?

So I think in sustained things like this, we actually, I'd never thought of it, but we actually have the inventory. Like we actually, if you needed your house furnished next week we could pull it off if you live in a major market. So that's a big, big opportunity for us. But I want to go just go to that point about the 25% operating margin and what are the opportunities beyond 2021. Just scale this thing, right? Like we have a lot of a lot of strategies and initiatives that we think are margin-enhancing strategies initiatives. I think well, RH in your home is initially an investment. I think it's going to have a great return on investment. And we just have a lot like that. We keep fine tuning our model on our new galleries. And I think they're going to be more productive and less productive.

Our restaurant business is going to be massively better. Our waterworks business, we've got the — versus three years ago, I think we've got the EBITDA probably 12, 14 points better, 15 points better, something like that. So, and then you just scale this thing. Just — think about this like, we're $2.8 billion company. That could be so much bigger. And we've built a really smart and simple platform here that you can scale. And so the leverage as we scale, you think about like other — somebody brought up Sonoma to me last week as they obviously had great results and fantastic outcome. And I think they're doing a tremendous job and — but there are already $6.5 billion or something, what are they, $6.5 billion, $7 billion, say yeah, $6.5 billion, right. We're not even half the size of that. And we have the operating margins that we have today, right. So just do scale them up, pick up 20 basis points in like eight different places in the company. You get it to real leverage, right. And so yeah, that's why we think, yeah, we have a line of sight to 25% operating margins plus today, plus, and so far every margin target we've given you we've got there much faster, much sooner than later, right. So yeah, so we wouldn't be so confident and clear and tell you like, if we couldn't see it and we couldn't draw the straight lines to the numbers. So we just keep learning here and we're kind of always unsatisfied, always on the move, like we rarely celebrate like it's for a moment's, but not that we don't at all. We get super excited, but constant students we learn. And so, if you keep learning, if we keep seeing more and if you can see more than you're just never satisfied with where you are.

So and that's kind of in our culture. I think this is team and we've integrated about 10 new senior leaders into our leadership team, we've got some people I can't talk about yet because we went public with the ideas, but we've got leaders of international, leaders of international supply chain, we've got lots of new talent sitting around the room and that also allows us to do more. We've made a lot of human capital investments here. So anyway long rambling answer, sorry about that, but just some I think some of that stuff could be helpful. That was helpful me to think about how to think through this pandemic just like the moves and the move to the suburbs and how that might affect us and the square footage growth. I think the square footage growth is a really interesting because they that you could be selling 2 times to 3 times more furniture just because to the same consumer and it's interesting because our tickets going away higher, average orders are going way up. So it's kind of actually playing out like that.

Max RakhlenkoCowen and Company — Analyst

Great, thanks a lot. That's incredibly helpful. Best of luck.

Gary FriedmanChairman and Chief Executive Officer

Great, thank you, Max.

Opérateur

Your next question comes from the line of Steven Forbes from Guggenheim. Your line is open.

Steven ForbesGuggenheim Partners — Analyst

Good afternoon. Gary, you mentioned getting more control right in the business, and I was hoping you can maybe expand on that theme, right and where your mind is at, what other aspects of the business are you looking at gain more control over whether it'd be manufacturing, whether it'd be the whole design process, right. I think RH in your home experience. We'd love to hear your thought process on some of the ideas around control.

Gary FriedmanChairman and Chief Executive Officer

Ouais. So Steve, it is a good question. As we think about it strategically, right, like our model is going to throw off a lot of cash here and what are we going to do with that cash, I mean clearly there is — you can invest into the business. You could buy back your stock. You can pay dividends and so forth. But if you look at our model and look at it over the next five years, you got to kind of get out in front of it and say, what should we do and where do we see the biggest opportunities are to create more value and one of the biggest ones we're discussing is this idea of controlling more of the brand. I think we're realizing as we scale but (Indecipherable) there is just so much fragmentation and I always like to say product of this quality has never been made in these quantities and I think taking more control of the product pipeline, whatever that might mean whether it's the manufacturing, whether it's the sourcing, whether it's — there are so many aspects of it, whether it's raw material procurement like do we take like most of our furniture is made with four species of wood, right.

I don't know, do we take positions in certain woods to give us a competitive advantage, meaning like one like if, one, it's just something getting the raw materials, if you're as big of a platform as we are in outdoor furniture, securing peak is one of the challenges and should we owned outdoor furniture manufacturing, so we have access to have more control and more access to raw materials that could give us a massive competitive advantage. Other parts of the business we've done, we have tested. We have our own furniture poster manufacturing in North Carolina. It's not very big but we've learned a lot doing it and we've got thoughts about that, but also just thinking about if you keep climbing up that luxury mountain there is less and less scale in manufacturing as you get up there, it's more what I call a workshop business, very high-end, very, I should say, you're in bespoke and how do you scale that, how do you build a platform and scale that and/or just think about this, think about going global, right. I mean our goods tend to be bulky and heavy and it's not super-efficient shipping furniture all around the world. It works today and there is certain things that are — different countries are better producing than others. But the world is going to kind of keep.

I think with technology, world is going to keep getting smaller and smaller, competitive advantages between countries I think you're going to go away long term, and I think there'll be — there's going to be a more neutralness to the world, not going to be so easy to find cheap labor here or efficiencies here in some of the manufacturers. I think the world in 10 years from now is going to look very different than the world of today and we think about it is, what's the right way to build our platform. Should we have furniture made in America for America, should we have furniture made in Europe for Europe. Should we have furniture made in Asia for Asia. Is that the right model, so you build a supply chain that is country-centric especially where you think your biggest parts of your business is going to be and you replicate manufacturing capabilities.

And then also you don't have single points of failure. I mean what one of the things you can learn in the pandemic or something like this, right, like you have all this demand is like we got one person making that or you have tariffs happen and like, oh crap, we make all of this there and now as I said 25% tariffs and you're kind of got — you got no move, right. You only move this to kind of negotiate and try to figure out any way around it. But I think about just gives the situation has hit us is what does a global supply chain look like for a $25 billion brand. What should that look like. And by the way, no built one in our industry. So I think we've got a chance to completely white-board it and and and do something that's just never been done and we've got the capital structure to invest, right, to invest, to have even more strategic separation and capability than others and we're at the high-end, right. So we have a lot of leverage in what we do, right. There is a lot of leverage selling the things we sell versus selling those things other people sell at lower end of the market.

So yeah, we're thinking about kind of every aspect and whether it's the supply chain and home delivery, whether it is set manufacturing, whether it's raw material procurement and how do you control the raw materials and have leverage there, but also just leverage just have accessibility like if we have a run on peak and we can't get to the peak, like that's just, you are crippled, right. And so throughout there's going to be opportunities, strategic acquisitions we make that give us capabilities and things like that. How do you think about capital allocation over the next 10 years as we try to fulfill our vision, though it's the right things to think about. We have spent a lot of time thinking about all those things right now.

Steven ForbesGuggenheim Partners — Analyst

Thank you for that.

Gary FriedmanChairman and Chief Executive Officer

We've already with those with some of the things I can't tell you about yet, but you'll hear about soon.

Steven ForbesGuggenheim Partners — Analyst

But we anxiously await them. Maybe just a quick follow-up, given the unsolicited proposals for the residents out in Aspen. It sounds like you has you thinking rights that the ideas bigger maybe not bigger than you originally thought, but curious if those proposals indicate something bigger about the opportunity maybe a quicker maturation behind it or where the mindset is on, I'm just the residences as a whole.

Gary FriedmanChairman and Chief Executive Officer

Yeah, I don't think we've got kind of rush here. I think we've got to kind of rush to learn and kind of conceptualize the right model. I don't think it's going to be hard for us to build beautiful homes and sell them. I think that we can do, like what is the right model, how do you do it. Where would you go like it is, is this one where we're, let's say, we decided to really do this, let's say, we have some tests and we're like wow, this really works and we've also had strategic inbounds, people that want to partner with us and people that have read the Aspen press release. I've had CEOs of companies that reaching out wanting to know would we want to partner and build RH homes together and do a JV and there may be opportunities like that, right. There may be people that have what we don't have today, the ability to procure and secure land. know how to build homes at scale, but don't have our creativity, our taste, our style, don't have our brand, so to speak, and so there could be opportunities where you see us partner with a major home brand or acquire one, I don't know like, if we get really good at it. So there is lots of optionality here. I think we did — the great thing I've said for years here team that we're only in the 10% of the business and sometimes people, new people said to me, I mean what do you mean we're only in the 10% of the business, we are only the 10% of the business.

On average, at the high end, people spend about 10% on the furnishings of their house compared to the price of the house. So if you got a $10 million home, you spent about $1 million furnishing it, you spent a $5 million dollar home, you spent on average $500,000 furnishing it, right and that's just the math, $2 million probably $200,000, that's generally the allocation breakdown, not always perfect but it's directionally, right. So I've always said like we are in the 10% of the business. We don't sell the home yeah. And we're actually handicapped being in the 10% of the business where a lot of times furnishing a really crappy architecture homes like a patent designed home, a bad proportion home. And so, yeah, you guys even render our goods more valuable, right like all of our galleries are protected, beautifully proportionately in a way that it renders the goods more valuable. Most of the homes we do like most homes like you go on, again I say going to Zillow, go on Redfin going at whatever when you want like just click-through and tell me how many homes really have great architecture and how many have good interior design, it's like such a small number, it's like less than one in 100 like less than 1%.

So I love thinking about this market in that way like we could whenever, it's like that when the numbers look like that, you can create a new market, right, you can create an entirely new market and that's what our big idea is not just to sell some home, it's to create a new market at the high end for homes that people really want on RH home because they are just so well designed. That's furnished like the architecture, the logic, siding of the house that landscape architecture, the pool that everything like the whole thing is just well designed and then it is furnished incredibly and so you just go, like you just want to move in, right like it's we save you time and again, people with more money have less time, people with more time have less money, right. And what can you sell at the high end, you can sell time value, people will pay for time value. There's a lot of people on this planet that have more money than time. They've accumulated wealth and now they're — my age is 63, you think about how much time you have left and you look to buy time value, right. And I think that's if you said what do you really going to sell, we're going to sell time value and people will pay for that.

Steven ForbesGuggenheim Partners — Analyst

Thank you, Gary, and best of luck to the whole team.

Gary FriedmanChairman and Chief Executive Officer

Merci.

Opérateur

Your next question comes from the line of Anthony Chukumba from Loop Capital Markets, your line is open.

Anthony ChukumbaLoop Capital Markets — Analyst

Thank you so much for taking my question. And Gary, I'd just like to say, as they are, so far analysis had a buy rating on the stock for the last 300 points. I don't want you spending your time thinking about what you're going to tweet later today either, so I just wanted to kind of.

Gary FriedmanChairman and Chief Executive Officer

Thanks, Anthony. That's good.

Anthony ChukumbaLoop Capital Markets — Analyst

So these are more just kind of housekeeping question, probably more to Jack than Gary. Specifically, I just wanted to see if we could get a little bit of color in terms of specifically the gross margin drivers, the SG&A leverage drivers and then just what is your capex expectations are for 2021. Thank you.

Jack PrestonChief Financial Officer

Ouais. Anthony, so I think historically, we've talked about very strong results as far as on the product margin side as it relates to gross margin. And so Q4 is no different than we talked about in Q3. It's about three quarters of the pickup is in our product margin, which had a number of things that we've talked about the climate, the luxury mountain increasing the quality product, cycling the rug business, operating the rug business at a higher margin among other things, outlet business, as we talked about in MD&A in our filings is a lower promotional level. So that's where you're seeing the predominant amount of it.

And then as far as capex for the year is concerned, you'll see in the 10-K when it's filed next week, the range that we're getting is $250 million to $300 million that is a little higher than this year, we ended up with sort of adjusted capex, you need to look at, because a portion of it ends up putting it didn't op section of the cash flow, but this year we ended up at $180 million, so at the end what I'll say about the elevation of the capex is there's a number of sort of development deals that are happening this year that will monetize in the future period. And then just finishing one of the stores we're opening was on a land lease. So there's just a number of factors that are just driving higher capex this year including starting to spend money internationally.

Anthony ChukumbaLoop Capital Markets — Analyst

Got it. That's very helpful. Keep up the good work, guys.

Gary FriedmanChairman and Chief Executive Officer

Thank you, Anthony.

Opérateur

Your next question comes from the line of Michael Lasser from UBS. Your line is open.

Michael LasserUBS — Analyst

Good evening. Thanks a lot for taking my question. Gary, there's been a sharp increase in the profitability of many of the players in the home furnishing industry. So do you think that the sector is now just structurally earning higher margins and how does that inform how to think about RH profitability in the second half of the year when you talk about tailor to have in the second half you will be seeing some new factors and much more difficult comparison.

Gary FriedmanChairman and Chief Executive Officer

Sure. Ouais. Bonne question. I think to answer that question, you really got to look at what's the revenue growth that the business is experienced in 2020, right. And that's why I made the point and I kind of repeated the point in the letter that we hit 21.8% operating margin on 8% revenue growth, right. So we had 750 basis points of margin expansion on 8% revenue growth. So that's the first part of it, right. So you can kind of book that, all right. That's not going away because that's got nothing to do with the pandemic. That's got nothing to do with home furnishings tailwinds. 8% revenue growth, nothing to do with that. So that's all structural and we would have, by the way, it's about what we thought we were going to earn before the pandemic, OK.

Our model was about 22% what we thought we'd make and then the pandemic hit and with the pandemic hit, I mean what it did is it just turned it into two halves, now did we optimize a little bit here and there. We did, but our plan is to have revenue growth slightly higher, so but we came out right about there. So if you've got people that have grown faster in 2020 than they had historically, there you got to kind of say, how much of that sticks, how much of the leverage sticks and then there is a really important one to kind of figure out where everybody is going to land here is what the price structure and the promotional structure of the business, right. So we didn't get less promotional, we don't have promotions. The only thing we have is we have things that were the discontinuing out of the assortment, but we're not a promotional business, right.

So there is businesses if you study our industry, there's businesses that have they pulled back on promotions as they should, right. And they pulled back on promotions and we're able to have X amount of demand to revenues and when the world cycles at some point, can they maintain a non-promotional stance because I'm sure people have picked up 200 basis points, maybe 300 basis points of product margins because they used to be a really promotional and now they don't have any promotional because there is this increased demand, that's to me that's the open switch. How much of the revenues stick. So how much of the margin in our industry is tied to an increased revenues which ours is not because our revenues didn't shift.

So again if you would have saw the $150 million of revenues hit in this year and we would have been at 23% operating margin, 120 basis points of our model and we would appointed that to you. We just said, it is kind of in our view one-time and maybe not structural. But there is nothing about our revenues in 2020 that are pandemic assisted, there is nothing about our product margin that is pandemic assisted, we were not less promotional than we plan to be that we have a membership model. So the margin growth you saw on our product is real margin growth, it's not necessarily temporal at all. So that's what I'd say or if you said.

And then the other piece, the other one I'd point to you is advertising, right. So if you're looking, particularly if you're looking at somebody like Wayfair and I'm not taking a Wayfair, I think honestly it first I thought Wayfair was not going to make it and you know I thought like when I studied their S1 with their filing, I thought like, yeah, this doesn't look like a real thing, but I've grown to appreciate and respect the platform Wayfair has is built and their ability to generate a lot of revenue very quickly. The question in my mind with Wayfair is what's the real structural margin in the company and so with someone like Wayfair, I think it's — you are snow-blind right now, right. I'd like to think about every restaurant in America, and most of the world closed, so anybody selling kitchen stuff, the run on kitchen like to go by toasters and pipes and pans and other things like that because now you're not even out even people like my households because my girls are in college now, I mean I eat it ut every night like we out every night, my partner and she went out and did like a rate on this, just like we got a full branding kitchen, right because we are going to be home.

So we got all kinds of new stuff. She is cooking stuff she's never took before and so I look at kind of categories like that I go those those may not be sustainable and also those are the things where she was going to buy it whether is on sale or not, right. She was going to buy the cookware whether it's on sale or not and so the promotional aspects of some of these businesses, some of these categories are very, very different, right like when the pandemic first happened, I was analyzing everything and it's going to and everybody's website. I think I jumped around and I said Wayfair has 60 pages of toasters and they do it, might be more now is 60 pages a toasters I think 40 of 60 pages are sold out. And so you have a run on businesses like that. So when I think about the industry, and I think about where we sit in the industry. I try to understand the differences of what revenue was a gift like, you know, like we have a lot of demand that was a gift, no revenue that was I guess, right, we didn't ship any of it. So we have 8% growth and 750 basis points. And then the other one is advertising, excuse me, you got to think about advertising leverage someone like Wayfair got or other any every business, right. We all got some advertising leverage like we missed a catalog cycle, right, the source book cycle last year, so called that I don't know $40 million something like that, right.

Jack PrestonChief Financial Officer

Yeah, total on the year you can see in the 10-K is $49 million less in advertising.

Gary FriedmanChairman and Chief Executive Officer

Ouais. So $49 million less, so you've got, what is that — a little less than a $0.5 million, right. So you'd say, hey, Gary, can you guys sustain this, you got to put that advertising back into the model and that's a good question. I'm not sure yet. Yeah, I'm not sure, but that's something that like we think about like do we need to go back to mailing a book twice a year, can we may have less books or big galleries and our investments in restaurants driving more traffic and what do we need there I'd say those with the revenue the promotional structure and margin structure based on promotions. And then the advertising piece of it and then of course if people got a big lift they're going to get occupancy leverage and some things like that that might come back.

So I don't know how sustainable if I look across our industry the margin structure is as of today, everybody wants you to believe it is. That's why I made the point in ours like I'm kind of really happy we only had 8% revenue growth because if nobody can be snow blind here including us, right. So I like, do we have roughly 22% operating margin business today without a pandemic. That's what we got and how much pandemic booster we are going to have in 2021 if our revenues are up 15% maybe a little right because we're going to start growing internationally. And remember when we start growing globally, we're going to open countries, we're going to open in Europe and be able to take online orders and ship to all of Europe, so it's not like we're opening in a market like Sacramento or we are opening a new store in Vancouver, Montreal or something and we're opening in a huge country. I mean, in Europe should be the size for us close to the size of the United States in volume, right.

So that's big like it could be like us coming to America with the brand that people know. I guess some of the analysts, I don't know if they are on the phone or not like they tend to rate kind of negative things about us all the time. So then who they are, but like anything they could say, talk like their business is down in their New York restaurant like, oh, that's I mean they're not going to make their fourth quarter, like give me a break, but anyway in one of their notes they said like, yeah we have no market awareness like people don't know us, like don't look at some average market awareness study, our customers is top 1% in many cases the core of our business is the top half of 1%. Do that brand awareness go into London, go into Paris and go talk to the top 1% who all dressed in the same labels they all have Rolex watches and other things, they all go to the same restaurants, they all go on vacation to Ibiza, Aspen they all know each other and they all know us.

So like you want to know about brand awareness and why we're confident because the people that buy the other great luxury brand, they know about us, we're the only high-end brand of our kind in the world. Everybody else is just a category player. They just sell sofas or they sell lighting, we're the only one of our kind. And so the opportunity — for us when you think about growth long-term is when we start opening countries like that's like just coming to America and being relatively well known is at the market segment that you're targeting and opening a gallery in New York and opening a gallery in LA or something like I could maybe compare that to Paris and London right and and going like and then opening the whole Internet to the whole market and you go like you don't think about it is stores, you don't think about it as markets you think about what could the United States generate if I had a store in New York and LA, amazing stores in New York and LA they knew what my brand and all of a sudden, they have a website, and I've been wanting to shop from them from years and I've had to fly to America to buy stuff, find a container shipping company and ship it myself like I think there could be a run on the House here when we go international like, I think it's going to be better than anybody else's model who stepped across the pond.

Michael LasserUBS — Analyst

That's helpful. My follow-up question is I guess we are all trying to figure out what sustainable demand is and when will we know what sustainable demand is. So can you replay the we played the clock or the calendar for us last year, this year, February and that was core demand, it is up 7%.

Gary FriedmanChairman and Chief Executive Officer

February last year was 8%.

Michael LasserUBS — Analyst

And how did margin fall to give us —

Gary FriedmanChairman and Chief Executive Officer

Ouais. So February last year was 8%. We told everybody it was up 8%. I think before the world has gone hot, so February is up 8% and it was kind of like right where we thought it should be, and were up 73 and the core business on top 8% last year. In the first two weeks of March I think we are up for one week and down three the other week. So we are kind of flat or up one in those two weeks. So against the flat first two weeks of March, we are up 96%, OK. So the way to think about it if you said OK if you neutralize the 8 on February, you'd add 8 points to the 73% it would be up 81% and 96% if you want to kind of stabilize the two months. Then we're up against all the closed galleries and closed restaurants and closed outlets and remember our outlet business when it closed it doesn't have a website.

So we went to zero on the outlets. We went to zero on the restaurants and in our core business, RH core business and in our contract business we could still take orders and stuff. Obviously, the contract business, the longer we got into the pandemic and people realize that hotels and everything we're going to be closed for a long time that business really took a hit and then our our outlet business for a period of time with the zero and our restaurants, right went into zero. So think about big pickups in our restaurant business year-over-year, big pickup in our outlet business year-over-year and and a big pickup in our contract business year-over-year because the hospitality is now starting to spend again like they are now betting for the come back cycle, right. So hotels are reinvesting by new outdoor furniture, things like that.

Michael LasserUBS — Analyst

Do you think it will be kind of May, June, the economy will be reopened, you have some reasonable comparison then you'll get a sense for what the run rate of the business is.

Gary FriedmanChairman and Chief Executive Officer

I think you're going to, it might take longer than that, Michael, we started comping up pretty good in May and June, we kind of in the fall season we peaked I think August-September, Jack, 45, 47 or something like that in the core business.

Jack PrestonChief Financial Officer

47 in August, 46 in September with the core number.

Gary FriedmanChairman and Chief Executive Officer

Okay. Yeah, so we kind of peaked in there and then we had a bit of a slowdown in the Q4 period and some of that in Q4, we had more kind of clearance merchandise that we are moving through last year. So that that probably brought our growth rates down a bit year-over-year we said more. We are transitioning some of our floors and other things. So we had some things that we are moving through that gave us a little extra revenue. But yeah, I think the real question, Michael is this, this kind of accelerated lift that started in the last two weeks of January right. The last two weeks of January, we started to see an acceleration in the 50s and 60s and then it went into the 70s in February and and then first two weeks of of March into the 90s and that's kind of unexplained able, right. But this is how we think about it. We think about it more for the percentage lift, we look at the dollar trend of the business.

So we've got $1 trend of the business and the dollar trend of the business unless there is a real economic move here like if nothing happens, my sense is the dollar trend in the business could soften in the second half, but I don't think it's going to collapse, right. And I think that that's probably other people in the home business are looking at that and saying like, yeah, the dollar trend might swing 10, 15 points, maybe even up to 20, so I said if we roll this dollar trend out we think the year it could be unbelievable, right. But we think there's going to be some kind of slowdown, it's not so much the comp slowdown. It's the dollar trend. The dollar trend right now is much higher than last year's dollar trend when we are running up 40, right. Like in February, March, right.

So that means it could be a really good year for everybody in the home sector and that might just means some people like the headline you know like stronger for longer and if that one is yours. So someone has got the stronger for longer thing and I think that could be true, this thing could carry us through 2021 and it could go through 2022, none of us know like we're not building a cost structure for that. We got to say inside our company let cost chase sales, don't ever have sales chase cost or you'll always be behind. And I think that's the other positive people are going to get out of this is for the most part I don't think too many companies are building the cost structure based on the trend, so everybody is going to get kind of more leverage during this period of time. But we're all trying to figure it out. I mean we're all trying to figure it out. And just for us is just understanding where is our fundamental business with or without a pandemic. So we can think long term and invest long term and and kind of be ambivalent about the pandemic, kind of like we are ambivalent between online or stores or what not. We don't care about the channels that we really shouldn't care about the pandemic, we need to look through the pandemic, pass this pandemic to invest intelligently for the future.

Michael LasserUBS — Analyst

That's very helpful. Merci.

Jack PrestonChief Financial Officer

And Michael, it's Jack. I did want to just add one point when you asked about H2 profitability just not giving specific direction here, but if you think about advertising just want to clarify. In 2020 we mail books in the spring, but not in the fall. So most of the spend happened in H1 versus H2. Obviously the opposite is going to happen this year. Clearly mail outdoor book but the books, the main books are going to be mailed in the fall, you are going to have a flip-flop of advertisers.

Gary FriedmanChairman and Chief Executive Officer

It's a big shift of advertising that we should probably kind of map that out for people, they can get their models right. Ouais.

Opérateur

Your next question comes from the line of Brad Thomas from KeyBanc Capital Markets. Your line is open.

Bradley ThomasKeyBanc Capital Markets, Inc. — Analyst

Hi, thanks for taking my question. Gary, I was hoping you could tell us a little bit more about the world of RH and is this going to be a redesign of the RH website, is this separate, how do you think about making your web presence better as a transactional side and importance of that. Just any more color on leverage.

Gary FriedmanChairman and Chief Executive Officer

Ouais. It's really a rebuild of the entire website kind of digital platform of the business. So it's just starting from scratch thinking about it across all the dimensions of these kind of new aspects of our business and brand and think about it beyond just a website, but we think about it, it's a portal into The World of RH right that can take you through to our products, our places, our services, our spaces. And so it's you know, all the products and categories, right. We have RH Interiors RH Modern we have RH Contemporary coming. We have RH Baby & Child, we have RH team, we've got RH Outdoor. We have RH Beach House Ski House, RH Color is coming, RH bespoke is coming. So when we look out and we think about just the product World of RH, how do you architect, how do you have somewhat navigate through that, how do you get credit for all of that on a flat screen, right.

And then when you think about our places, it's really our galleries, our guest houses, our restaurants, and our residences, right. And so those are all our places. So thinking about how someone can navigate through those areas. How do you get a reservation at one of our restaurants. How do you connect to the Guest House, how do you learn about the residences that were either selling right now or we have in development, how do you look at our our galleries. And you know what are the aspects of the different galleries and explore galleries online and maybe thre dimensional way, walk through gallery, walk through the New York gallery like through there be able to shop, the New York gallery online like you're in the store. We're looking at technology on multiple levels available to hit or keep the right kind of experience in interaction. So that's our product, our places. Our services as we think about them today we have interior design services. We also have our contract business right, which is a kind of a service-driven business and long-term we think we can be in the architecture services business in the landscape architecture services business as we think about services as a services platform, installation services business, all kinds of things we can do that can kind of amplify the brand.

And then our spaces are kind of a unique view into kind of spaces of RH which deal with RH3, our luxury yacht RH1 and RH2 or are today, it's our corporate planes, but they will soon be on the website and you'll be able to charter our RH1 and RH2 and no one has really even seen our planes, but we design them with the vision of, they are going to be part of the ecosystem, because again we're trying to build a luxury brand and you think about the very top of the pyramid and I say, you kind of go from buying homes and then you go up it up the luxury mountain and you buy a lot of homes and then you get really, really rich and you buy a jet. And then you get kind of silly rich and you buy yacht, right.

And so those are, it's the hierarchy of kind of spending in that world and so you're going to see RH and RH2, which if you ask Gulfstream they would tell you that our RH1 is must beautiful plan they've ever built, and they've done things that have never been done because we challenged them and help them think through how to do things. In fact when the Head of Gulfstream tell me after a long, but we have a 12-hour meeting there till 2 in the morning with their engineers and everybody in the said OK, Gary, what we're doing a recap. I'm going to send you the up-charge for that custom gallery that you design and I said like that's great and I'm going to send you my designs fee for that customer gallery that you're going to want to sell to other clients. So, but we know a lot about like, plane design right now.

We know how to design a beautiful plane. We have just kind of kind of redesigned RH3 and it will be ready for prime time here at about a month, and you are going to see a beautiful yacht, you'll see other things and other spaces will evolve in this kind of really rich world and content. I mean, but, yes, your basic documentaries on the World of RH talk about the building of or the designing of something and things that are people are really interested about who are into design and into spaces lots of layers to it and then if a massive upgrade in just the consumer experience for just buying product, right, massive leapfrog as it relates to that.

Bradley ThomasKeyBanc Capital Markets, Inc. — Analyst

C'est super. Thank you, Gary. And a modeling question for Jack, just as we think about rising raw material prices and freight prices that many in the industry are seeing. Could you give us any sense of how we might think about that impacting the model. Obviously you all have pricing power you demonstrated that, but does that have any impact on how we should be thinking about the models this year.

Gary FriedmanChairman and Chief Executive Officer

Let me just jump in for a second. Again I'd point you to the fundamental point that our goods are a lot more expensive, right. So as a percentage of our sales, those factors are going to be a lot less, right. So start with we sell you know a cloud sell of $10,000 to $12,000, $10,000 to $14,000 the freight on a $10,000 to $14,000 sofa is a lot lower than the freight on a $2,000 sofa as a percent to sales, righ. So you got to start with will we be impacted, sure. Will it be to a much smaller degree, then if you're CB2 or West DeLome or something like that or Pottery Barn Crate & Barrel or places like that. Yeah, like you have to look at that price structure of the goods and again if we're using about the same amount of wood, but ours product is just designed much better and it's a higher quality product and it's going to be a smaller percentage. So that's why you don't hear us talking about it as much because the impact at this point is less and it is been our model.

Bradley ThomasKeyBanc Capital Markets, Inc. — Analyst

Merci beaucoup.

Opérateur

Your next question comes from the line of Tami Zakaria from JPMorgan. Your line is open.

Tami ZakariaJPMorgan Chase & Co. — Analyst

Thank you so much for taking my questions and congrats to the team on the very strong results. I do have two quick questions. The first one is could you share some details on the distribution center that's coming on live in terms of what would be the incremental rent or incremental operating expense to run it or the incremental CapEx to build it? Any details around that would be helpful.

Gary FriedmanChairman and Chief Executive Officer

Yes, it's all in our model. I don't know if we're disclosing individual rents of DCs and stuff like that but it's all in our models. It's all in our projection. It's all in our plan. So —

Jack PrestonChief Financial Officer

And the capex is modest as it relates to the 250 to 300 —

Gary FriedmanChairman and Chief Executive Officer

Yeah, nothing —

Jack PrestonChief Financial Officer

I gave you. It's a non-event. Like anytime you have a DC, there's a little step up here. So we're in a step up here but we're absorbing that cost. And so we'll it's probably in the first year it's a bit of a drag on occupancy. But by year two, year three, we'll start getting leverage on the property, right, versus the step-up.

Gary FriedmanChairman and Chief Executive Officer

But so it's in our model and in our projections.

Tami ZakariaJPMorgan Chase & Co. — Analyst

So that's a great segue to my second question. I did want to go back to the comment that you saw 750 basis points of operating margin expansion in 2020 on 8% of revenue growth. So for this year you're guiding to 100 basis points to 200 basis points on top-line growth of 15% to 20%. So are you being conservative because there should be I would think there should be natural leverage from all the results of sales going through? So is that just for being conservative, or are there any onetime expenses that are pressing this year and should go away next year and the years to come to help us sort of understand why operating margin expansion would only be 100 basis points to 200 basis points on 15% to 20% sales growth?

Gary FriedmanChairman and Chief Executive Officer

Oui. I would just kind of look at the history here and ask yourself, are we generally conservative, are we generally aggressive on our projections, right? So you can draw that conclusion, right? And with the comments I made earlier, I mean we wouldn't say a minimum of 15% to 20% growth and 100 basis points to 200 basis points unless like I said, obviously, history would tell you here is look at the last — I don't know X number of years that we're relatively conservative in how we guide.

And we generally outperformed our expectations, especially the ones we give at the beginning of the year. The question here is will there be a big economic change? Like, nobody knows that. Like, will there be a recession, will there something else happen? Nobody knows that. But if not, we feel more optimistic than pessimistic about things right now. But we tend to under promise and over deliver, so.

Tami ZakariaJPMorgan Chase & Co. — Analyst

Got it. That's super helpful. So, there's really nothing onetime or sort of unnatural something impacting this are, it's just being prudently conservative.

Gary FriedmanChairman and Chief Executive Officer

You can frame it that way. Yes, essentially.

Tami ZakariaJPMorgan Chase & Co. — Analyst

Got it. Great. Merci beaucoup.

Gary FriedmanChairman and Chief Executive Officer

I wouldn't say that was wrong.

Opérateur

Your next question comes from the line of Cristina Fernandez from Telsey Advisory Group. Your line is open.

Cristina FernandezTelsey Advisory Group — Analyst

Two questions and hopefully a quicker one. The RH In Your Home which you commented a couple of times, you've been testing it for some time now only in California. I guess, what do you think you still need to improve to be able to roll that out across the US?

Gary FriedmanChairman and Chief Executive Officer

Ouais. I think we've only been testing RH In Your Home for how long, Fernando, a year?

Jack PrestonChief Financial Officer

Three months.

Gary FriedmanChairman and Chief Executive Officer

Three months. So now full tests, three months. Oui. So, like this is a whole another level of kind of, yes, we've been talking about it for year, testing for three months. Oui. We've never really talked I don't think we really talked to you in a detailed way about RH In Your Home and furniture ambassadors and then anything the Teslas or anything other?

Jack PrestonChief Financial Officer

No, no.

Gary FriedmanChairman and Chief Executive Officer

No, no. Oui. But we'll soon have — you're going to have this gray RH truck and furniture ambassador in a separate Tesla car, gray car. Oui. And they don't have a Teslas yet, I thought they might have the Tesla. But I got him an order. But it's a whole different experience, right. It's like sending a highly trained furniture ambassador into the home with our delivery team, right. That is managing the whole process with the customer that is upselling in the home, that is doing all kinds of things if there's a problem, we solve it immediately, the stress for the customer goes down, it's a completely different experience. It's a different investment so we're testing it. It's obviously you're putting another person on the road and another person and a relatively high paid person we're sending in the home, right, so kind of it almost an interior designer quality person furniture ambassador in the home.

Cristina FernandezTelsey Advisory Group — Analyst

Okay. Merci. And then the other question was some of the new businesses, RH Couture and RH Bespoke, I feel like today's the first time you've talked about those. Can you give us some detail sort of what your vision for those businesses are?

Gary FriedmanChairman and Chief Executive Officer

It's all I'm giving you. I would just take the words themselves and use your imagination.

Opérateur

Your next question comes from the line of Peter Benedict from Baird. Your line is open.

Peter BenedictRobert W. Baird & Co. — Analyst

Listen, most of my questions have been asked and answered. I just wanted to wish Gary a Happy Anniversary.

Gary FriedmanChairman and Chief Executive Officer

Thanks, Peter.

Peter BenedictRobert W. Baird & Co. — Analyst

Well, let me just take one in Gary, just very quickly. The new DC in Southern Cal, I know you guys are closed a few years ago. I just don't know if this is just — this is now getting bigger so you need it now. Is there anything different you're doing with that DC versus what may have not yet previously that's my only question? Merci beaucoup.

Gary FriedmanChairman and Chief Executive Officer

Ouais. t's really kind of an investment. I think about it as an investment into the outdoor furniture and special order business. So it's architected for those two businesses, design for those two businesses, and building to leverage those two business and run them in a more focused way to kind of get better customer experience, grow those businesses, and services business is better. So before we just had a full DC in Southern California with kind of redundant DCs in Northern and Southern California, yes. But each have things like for example all that — most of our outdoor furniture is coming out of — teak is coming out of Indonesia and metal furniture coming out of different parts of Asia, Vietnam, China and things like that.

So every major container ship that's coming in is first stopping in Southern California and then going up to Oakland — the port of Oakland. So you pick up seven days immediately right there and then just the way we're going to handle and process thought crosstalk businesses, this is speed to the consumer and then if you think about the outdoor furniture business Southern California is our largest outdoor furniture market by far. And then the southern states are a lot of our strongest very, very logical. So the ability to get the goods delivers faster in the biggest markets and hit the southern states faster and think about the trucking lines and our businesses — the reason we can do this not everybody can do this is our businesses are really big, right? I think these are — like, our outdoor furniture businesses are real businesses — I mean I think our outdoor furniture business is bigger than some of our biggest competitors today at the high end, right?

I think some of the — by far but they're just outdoor against their entire business. C'est tout. Like, we're having an internal conversation here. I think about, like — you might think about, like, a higher quality national brand or something like that. So it's a real business, right? That's the great thing about starting to have scale like this. It allow you to kind of segment and focus on businesses in a very unique way and optimize businesses like you only ran that business. And then if you think about the special order business, it's a completely different business, got a different model. And how do we run that business at a much more efficient way, better customer service, faster delivery, things like that? So it's really an investment. We've been talking about this internally for a long time, investing into those two businesses.

Opérateur

Your next question comes from the line of Zach Fadem from Wells Fargo. Your line is open.

Zachary FademWells Fargo Securities — Analyst

Quick one. One thing you haven't mentioned today is the art curation initiative with General Public. Just curious if you can talk about this a little bit, and how you see fine art as a potential opportunity for your business.

Gary FriedmanChairman and Chief Executive Officer

Oui. Well, this is an idea that Portia de Rossi came to us with and she's really the entrepreneur behind it. She figured out the technology and the 3D printing or — what does she call it? It's called xenograft yes, xenograft. It's like a 3D printing. You can look at a beautiful textured hand painted piece of art. And this-it replicates it perfectly. Like, you'd need a real art expert to be able to tell the difference. And her and her partner, Ellen, Ellen DeGeneres, they're big art collectors. They've got great taste and style. Their homes are fantastic. And they just have incredible taste in art. And I think Portia is art history major. It was one of the things she studied. And she's just very, very smart entrepreneur. And she had a big idea about this. And she kind of came through some friends, made a connection to talk to me about, here's my idea and it's what I'm doing. She just kind of got it started. And we loved the idea. We loved her taste and style. And we said look, we think we can be the platform that can amplify your idea. We can be your best partner. And that's what we've done. And she's working on ramping production and expanding the assortment.

And the great thing about Portia like you just always know like what she's going to show you, you're going to want to buy because she's got such incredible taste. Except I'd say, she's probably listening to this conference call, there's dog pacing but she came to me a few years ago. I know, I was joking around. So it's better actually, now I really like them and we're going to probably ask them. But I'm just joking around in case she ever hears this conference call.

But no, I think it's an incredible opportunity for us. When you think about all the walls in a home and all the opportunity, there's more square footage on the walls than there is on the floor. And so yes, and it's one of the reasons why initially years ago some of you may remember, we tried RH Contemporary Art and then we pulled back and we may try it again. The tough thing about we RH Contemporary Art was you only get to sell the item one time. So if you had it like a best seller, you had a great piece, you use that transfer of happiness happens one time. And then you're like, OK, we sold it and then now what do we do? Like I got a thousand people that want that piece of art and they sold it. So, the great thing about Portia's strategy, she said-what was her line? Great art for general public-I can't remember. She has this whole great view about it is-like her thing is this, imagine if the great books in the world there was only one that you couldn't publish another copy. Like that was her whole-I thought that was just brilliant. Droit.

Like imagine, like every book was just a collector's item and only one person could have that book. It makes no sense. Droit? And so her idea and what-and the great thing about her, she's just tremendously persuasive. So she's great with all the artists. Because a lot of the artists are trapped in the old school of like I've made this and that's my piece. And now like this one person in the world owns that piece. It's kind of goofy. Like when you think about it. If he like, a fashion designer designed like one dress or one coat and no one else could enjoy that except for one person. So she's got this different view and the way she's framing it. And because she's a credible — her and Ellen are really credible art collectors and they've got incredible taste. And they've been advocates for the art community for a long time. That people trust her, and I think she's breaking through and she's getting better and better people on the platform. And she's convincing them like why only print one copy of your work. Like great novels there's not just one copy, right. And so people are starting to get that. And I think it could fundamentally change the art world permanently. So, that's the idea.

Opérateur

And there are no further questions at this time. I will turn the call back over to management for some closing remarks.

Gary FriedmanChairman and Chief Executive Officer

Great. Thank you very much everybody for your time and attention today and your interest in our business and brand. We know it's been a crazy and difficult year and we just want to thank all of you, thank all of our customers, thank all of our people around the world that not only just work for our company that work on behalf of our company and making the products and delivery in the products and making the supply chain work. This is just a year like none of us could have imagined and a lot of people made a lot of sacrifices to the lot of risk to kind of keep everything going in this world and we sure are thankful and we couldn't be more excited about the future and about the opportunity.

So thank you, everyone, and we look forward to talking to you at the end of the first quarter.

Opérateur

(Operator Closing Remarks)

Duration: 125 minutes

Call participants:

Allison MalkinInvestor Relations

Gary FriedmanChairman and Chief Executive Officer

Jack PrestonChief Financial Officer

Steven ZacconeCiti — Analyst

Steven ForbesGuggenheim Partners — Analyst

Adrienne YihBarclays — Analyst

Curtis NagleBofA Global Research — Analyst

Max RakhlenkoCowen and Company — Analyst

Anthony ChukumbaLoop Capital Markets — Analyst

Michael LasserUBS — Analyst

Bradley ThomasKeyBanc Capital Markets, Inc. — Analyst

Tami ZakariaJPMorgan Chase & Co. — Analyst

Cristina FernandezTelsey Advisory Group — Analyst

Peter BenedictRobert W. Baird & Co. — Analyst

Zachary FademWells Fargo Securities — Analyst

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Il n’a jamais été aussi facile de lancer un site e-commerce de nos jours, il assez de voir le nombre de websites e-commerce en France pour s’en remettre compte. En effet, 204 000 plateformes web actifs en 2016. En 10 ans, le taux le montant le pourcentage de websites a été multiplié par 9. Avec l’évolution des technologies, les média à grand coup d’histoire de succès story, (si si nous-mêmes vous assure, moi c’est aussi tombé dans le panneau) le e-commerce a longtemps été vu comme un eldorado. Du coup, une concurrence accrue est vu le jour dans de nombreuses thématiques.