Benzinga | Dec 9, 2020 04:12PM EST

RH Says 'we believe it's safe to assume that some level of elevated spending on the home will remain through 2021, and possibly beyond.'

From Earnings Release:

"2021 OUTLOOK -- DOUBLE DIGIT REVENUE GROWTH AND EXPANDING OPERATING MARGINS Regarding our outlook for next year, we believe it's safe to assume that some level of elevated spending on the home will remain through 2021, and possibly beyond. The booming real estate activity in second home markets, an accelerated shift of families moving to larger suburban homes, the uptick in homebuilding, and a record equity market should drive increased spending for an extended period of time as the cycle for purchasing and furnishing a home is anything but quick. We also tend to believe that the longer we remain in this new, forced reconsideration of how and where we spend our time, consumers will develop new priorities and habits that could favor home-focused businesses indefinitely. Our plan is for significant growth in the first half of 2021 as we anniversary closed galleries and restaurants, the abrupt pullback in our Contract business, and Outlet revenues going to zero for a period of time without an online channel. 3 THIRD QUARTER 2020 FINANCIAL RESULTS AND SHAREHOLDER LETTER While the accelerated demand in the second half of 2020 presents tough comparisons in 2021, we anticipate we will have meaningful revenue growth in our restaurants, which have not operated at full capacity the entire year, and our Contract business, which has not yet recovered. We also expect a significant pick up as we return to mailing our Fall Interiors and Modern Sourcebooks, and introduce substantially more new product year over year. As previously mentioned, we also expect to benefit from approximately $80 to $100 million in revenues from the unfilled orders placed in fiscal 2020 that will be delivered in fiscal 2021, as well as from a better in-stock position in the second half of next year. We have multiple new growth initiatives in the pipeline, including new collections, new concepts, new galleries, new guesthouses, and new businesses. In addition to mailing our Spring RH Interiors and RH Modern Sourcebooks with significant new product after a long hiatus, we will be introducing RH Contemporary, a new collection that bridges the gap between RH Interiors and RH Modern, while elevating our brand and expanding our market. RH Contemporary will launch late spring with a dedicated Sourcebook, web presence and national advertising campaign. We also plan to introduce RH Color in the near future, a unique and architectural approach to using color throughout a home, which we believe will open up an entirely new market for the brand. Our strategy to disrupt the luxury outdoor living category will be supercharged this spring as we significantly expand our RH Outdoor offering, and continue to transform our legacy galleries into Design Galleries with a year round presentation of over 20 collections versus only 1 collection in our current format. Additionally, we are making investments to grow our newly reinvented RH Rug business. The initial response to our new designs and higher quality offering has been tremendous, and we plan to rapidly expand the assortment and presentation across our multi-channel platform. Our plan is to open 4 new Design Galleries in North America in 2021: RH San Francisco, The Gallery at the Historic Bethlehem Steel Building; RH Dallas, The Gallery on Knox Street; RH Oak Brook, The Gallery at the Center; and RH Jacksonville, The Gallery at St. Johns Town Center. All of the new Galleries will include our integrated hospitality offering. 2021 will mark the unveiling of our first RH Guesthouse in New York City. It is not an accident that we are opening our first Guesthouse in what is considered by many, the most important and visited city in the world. There were those who tried to encourage us to start somewhere safer and smaller, that the bar in New York is too high, that there are too many critics, and we were opening ourselves up to be judged by the world. We on the other hand, see and believe the opposite. We believed opening in New York City, where the bar is highest, would bring out our very best work. We believe, you don't get a second chance to make a first impression, and we plan to leave everything on the field, to leave no doubt. As the legendary Frank Sinatra sang, "If you can make it there, you can make it anywhere, it's up to you, New York, New York." Due to the continued uncertainty in the shopping center and retail development industry as a result of the pandemic, and the difficulty getting project approvals from local municipalities who have delayed meetings due to shelter-in-place restrictions, we are not providing specific dates for Gallery openings until we have better visibility. Additionally, due to the COVID-19 related travel restrictions enacted in the UK this summer and continuing for the foreseeable future, we have made the decision to push the opening of RH England to 2022. This decision also reduces the risk of carrying the expense and overhead of the European infrastructure without the revenues. Our current plan is to open RH England in spring 2022, followed by RH Paris in the fall. We also have signed leases for Galleries in London, Munich and Dusseldorf, and are close to finalizing deals for Galleries in Brussels and Madrid. We are also developing a digital portal that will enable new and existing clients to experience the immersive and multi-dimensional World of RH, inclusive of Our Products: Interiors, Modern, Contemporary, Color, Beach House, Ski House, Baby & Child, Teen, and Waterworks; Our Places: Galleries, Guesthouses, Restaurants, and Residences; Our Services: Interior Design, Architecture, and Landscape Architecture; and Our Spaces: Plane and Yacht Design and Charter. Our plan is to roll out the portal in phases over an 18-month period beginning spring 2021.