Cramer: The greatness of Restoration Hardware
The blowout vision of this company's earnings call painted a bright picture of a revolution in the brick-and-mortar and catalog businesses.
If you are a stock junkie like me, you have to be on a gazillion conference calls. They become chore-like. You have to go through the quick preamble about how everything is fabulous, even from companies that seem to be flailing or even failing.
Then you have to have a 30,000-foot description of the business from the CEO, followed by a boots-on-the-ground exposition by the CFO, culminating in the obligatory guidance paragraph that tends to determine the fate of the stock, no matter what else was said earlier.
Of course, then you have the Q&A, and that's usually the stuff of analysts trying to figure out their model, meaning they want to fill that spreadsheet that takes up about two-thirds of their analyst reports, the other third being split equally between analysis and worthless disclosures that waste a lot of paper when you print them.
Occasionally, you will get a conference call with some variant. You might get a little entertainment or pizazz from the CEO -- but not too much, because then he or she is being silly and nobody likes a silly CEO. You might get a longer-term view, a five-year plan, something that makes you feel there's some continuity here.
And, of course, you might get the code words of the era like "challenging" and "competitive," which means we screwed up and we really disappointed you but it's not our fault. Of course, there's always the two-worded real kiss of death of "promotional environment," which means we have to bring down numbers in the future because we have way too much inventory and budgeted totally wrong. That gets distilled into the headline buzz phrases "cuts earnings, sales below forecast," meaning "bang bang, you're dead."
And then, every once in a while, you are on a conference call and you say: Wait a second, I think there's something different going on here. I think I am hearing something I am not hearing from anyone else. Let me take this slower. I might be in the presence of, well, greatness.
I found myself in the presence of greatness in last night's Restoration Hardware (RH) conference call.
Now, let me say from the get-go that I came in with two perceived biases. One, we are huge customers of Restoration Hardware and use their stuff whenever we remodel anything. Two, I had to get someone to carry up the stairs the darned source book, the new catalog that arrived two weeks ago, because it's really heavy and I have a bad L-5 thing going on with my lower back. It still sits on the kitchen table. I promise myself to get to it.
But I wasn't ready for the blowout vision of a call that started with CEO Gary Friedman saying he had recently pulled up with someone who said, "You might be the most misunderstood company in Wall Street." Friedman recognized something I have heard only from Starbucks (SBUX) CEO Howard Schultz. He said he has to define his company or else the industry-best 18% comparable sales numbers and the dramatic guide up would be dismissed as a fluke.
He knew he had to explain that the company is revolutionizing the brick-and-mortar and catalog businesses in a way that could be multiyear and long lasting, so that the increase in the stock doesn't seem like one big short squeeze.
And I think he did it, laying out a series of strategies about delivering the best, whether it be Belgian linens or Italian bedding -- he's the biggest importer of those -- or Thai silk. And doing it in a way that's much lower priced but with much higher quality than everyone else. He's delivering the product in a setting that's unique, to say the least. He's got a showroom-to-source-book-to-website strategy that might have every other retailer beat.
You put it all together and you recognize that Friedman is, literally, reinventing the model of luxury. His "We are like a $1.6 billion startup" line midway through his opening comments wasn't hyperbole. He has created the home brand for luxury, the one place people who are wealthy or aspirational will shop and shop with gusto.
Let's play baseball for a minute. How many times have you heard a CEO say we are in "the early innings" of these changes? This transformation is truly in maybe the second or third. I don't say first, because there have already been too many beautiful galleries opened to be dismissive and say we are in inning one.
Is it lasting? I think it is, because Restoration Hardware might be the savior to the part of the real estate investment trust industry devoted to luxury malls. This company basically wants that department store space, that anchor designation that so many others no longer crave or can't afford or can't live up to. For Restoration, it's strictly the bigger and the more beautiful the better.
That's why, at the conclusion of the call, I understood why Restoration Hardware has been able to outperform the industry for four consecutive years, generating revenue growth of more than 25 percent, and why it could continue to do so. It's why I get that this will not be the last accelerating revenue growth quarter and that there might be many more. It's why the stock's rally Thursday is not a fluke at all.
Oh, and that catalog that's so heavy? Turns out it's a dramatic decline in paper use, 10 source books a year down to one, a 70 percent cut in page circulation, something only 0.1 percent of recipients have squawked about in the social media that RH monitors. Looks like they've figured that one out, too.
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"I found myself in the presence of greatness...."
aren't they actually coming to the online sales game a bit late?
$80.74 a share?
Earnings per share of 45 cents?
Maybe next year.
Geezus Christ....3 Articles about Restoring your Hardware...And nobody's really talking much about them anyway...An "overpriced loser"...
Never even heard about them, until 4 days ago...?
Anyone that sends out a 17# catalogue, has got to be nuts also...IMO.
We need another 4th. Article on the Front page MSN, then we will never forget the name...
Yeah, how about writing "something about Conoco Phillips...COP.? Much more interesting...
Nobody buys hardware online. You gotta touch it with your tape measure in hand.
COP briefly trading above $83.00 a share.
I love gasoline.
A great day for the good guys, bad day for the scum bags.
Conoco closes up 91 cents a share.
Southwest Airlines down $1.22 a share because of the fuel thing.
Pinnacle West closes up 21 cents a share, but it has been dropping steadily ever since the President announced he wanted to clean up the air. Pinnacle has some coal-fired power plants out in the Arizona desert. Not sure of their pollution levels.
And Airbus is having a Father's Day sale on A350's.
CGT....The Markets or DOW have been dropping "big time" since yesterday's (6/11) open...
And then overnight and on the opening this a.m. @ 09:30....hrs.
And you think it has something to do with the President...??
You need to come up out of Mommies basement, eat your PB&J and cup of soup...
Then walk down to the playground, and kick sand in some 'little kids" face...
Then all the kids gang up on you; You know, the "scumbags", and they beat the chit out of you...
CGT, got fed by the Babbling Village Idiot....What did he do, meet Fatty Cakes out under the Bridge, near the 101....??
Heard Mr. Brucey might be sick..?? And Ms. Bambi has an STD or something.?
Here I thought she just got punctured too much, and flew away.
A Florida debt broker was held without bond Thursday on dozens of federal charges that he scammed banks and other financial institutions out of $76 million in taxpayer-backed mortgage bailout funds.
The man, Leonard G. Potillo III, could face 600 years in prison if he's convicted of the 33 counts of wire fraud, bribery and money laundering charges, prosecutors said. He was arrested Monday at his home and was detained pending trial Thursday in U.S. District Court in Orlando.
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