RH (RH) CEO Gary Friedman has never been known to hold back his blunt views on business and life on earnings calls, and his latest matter-of-fact commentary directly involves the U.S. housing market.
“It’s just a lot of uncertainty right now,” Friedman told analysts on the company’s latest earnings call. “But one thing I’m certain of: The housing market is collapsing at a level I haven’t seen since 2008. I haven’t seen this kind of drop since 2008.”
The impact of the housing slowdown wasn’t hard to spot in RH’s third-quarter results.
Sales tanked 13.6% from a year ago to $869 million, net profits were about cut in half, inventories have risen by $85 from the start of the year, and sales of RH’s pricey home furnishings plunged.
National sales of previously owned homes fell for a record ninth consecutive month in October as climbing mortgage rates continued to pummel the housing market.
New home construction also continued to drop as builders deal with a retreat in housing demand. Residential housing starts decreased 4.2% in October to a 1.43 million annualized rate, according to government data. Single-family homes started for construction dropped to an annualized 855,000 rate, the lowest since May 2020.
Friedman’s dire warning on the housing market left some Wall Street analysts concerned not only RH’s profit potential in 2023, but also the entire home furnishings sector.
“Combined with the fact that RH will be operating against difficult multi-year demand comps through 1H 2023, we see meaningful risk to consensus expectations,” Guggenheim analyst Steven Forbes wrote in a note to clients.
Dani Romero contributed to this post.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Read More:‘The housing market is collapsing’
2022-12-09 13:36:24
