RH continues to expand with showcase destinations; developing smaller model
RH (formerly known as Restoration Hardware) reported first-quarter earnings above Street expectations and upped its guidance as it continues to expand in high-end brick-and-mortar.
RH will open four new stores (“Galleries”) this year, with locations in Portland, Oregon (opened in March); Nashville, Tennessee; Yountville, California; and New York City. The latter three will include a dining experience.
The New York City site, in Manhattan’s Meatpacking District, will feature 90,000 sq. ft. of indoor and outdoor space, with a transparent elevator that goes up to a glass-encased rooftop restaurant with retractable doors that open out to a landscaped park. (Also in Manhattan, in summer 2019, RH will open its first-ever hotel, called RH Guesthouse.)
“RH New York provides us the rare opportunity, in arguably the most important city in the world, to develop a ground up retail experience like no other,” stated RH chairman and CEO Gary Friedman. “Currently, our plan is to open in September pending the city completing the infrastructure and street work that has been massively disruptive to businesses in the neighborhood.”
In addition to its expansive gallery locations, RH is developed a new, smaller-sized prototype that will range in size from 33,000 sq. ft. inclusive of a hospitality experience to 29,000 sq. ft. without one. The company expects the smaller galleries will enable it to ramp from three to five new locations per year, to five to seven. RH is also looking at global expansion.
“We also believe there is tremendous potential for the RH brand internationally, and we continue to explore opportunities to open our first Gallery in London,” Friedman said.
RH earned $28.1 million, or $1.11 a share, in the period ended, versus a loss of $3.4 million, or 9 cents a share, in the year-ago period. Adjusted for one-time items, RH said it earned $33.5 million, or $1.33 a share. Analysts had expected adjusted earnings of $1.01 per share.
Sales fell 0.8% to $557 million, less than expected.
“We articulated at the beginning of the year that we will be managing the business with a bias for earnings versus revenue growth in fiscal 2018,” stated Friedman. “We will restrain ourselves from chasing low-quality sales at the expense of profitability like many in our industry, and instead focus on building an operating platform that will enable us to compete and win over the long term.”
Looking long term, Friedman said he saw a clear path to $4 billion to $5 billion in North American revenues.
Friedman said that company’s effort during the past year to consolidate its distribution center network from four facilities to two while streamlining operations throughout its supply chain, has resulted in a “significantly more efficient cost and working capital model.”
“We believe this new model will prove to be a long-term competitive advantage that will separate and distinguish RH’s operating results for years to come,” he said.
Displaying his signature bravura, Friedman noted that the strategies RH is pursuing — from opening the largest specialty retail experiences in the industry to continuing to mail catalogs to moving from a promotional to a membership model — are in direct conflict with the plans many other retailers are currently undertaking.
“We believe when you step back and consider: one, we are building a brand with no peer; two, we are creating a customer experience that cannot be replicated online; and three, we have total control of our brand from concept to customer, you realize what we are building is extremely rare in today’s retail landscape, and, we would argue, will also prove to be equally valuable,” he said.
First Look: New retail concept aims to be the holy ‘grail’ for sneaker fans
Sneaker enthusiasts—regular fans and serious collectors—are the target audience of Grail, a new retail concept financially backed by footwear retailer DSW Inc.
Launched in Vancouver (British Columbia), Grail offers an immersive retail experience that celebrates sneaker culture, art and community. The 3,100-sq.-ft. store carries a vast assortment of men’s and women’s sneakers from such leading brands such as Nike, Adidas and Puma along with a selection of hard-to-find niche global brands — some of which are exclusive in North America to Grail. There is also a smattering of accessories and shoe-care products.
The store has a sleek, high-tech feel. A digital clock is displayed in a front window, showing the countdown to exclusive, limited-edition sneaker drops. The entryway features a state-of-the-art, high-res LED ceiling with surround sound, creating a theatre-like experience for entering shoppers.
The interior pairs minimalist and textured design elements with technology. Sneakers are displayed on perforated steel panels on the slatted cement board walls. Exposed conduits and caged LED tube lights mix with liquid crystal wall projections that switch from clear to opaque in a moment.
At this time, DSW has no plans to open a Grail store in the U.S., a spokesperson told Chain Store Age, “but we’re excited to take a read on the Vancouver store and learn more about this audience.”
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Cover Girl to open flagship in Times Square
Cover Girl is moving into freestanding retail—and not in a small way.
The mass makeup brand will open a 10,000-sq.-ft. flagship in the heart of Manhattan’s Times Square. Due to open in fall 2018, the location will include an experiential “beauty play room” with interactive elements, full-service makeup applications, on-the-go services, digital experiences and more. It will also sell product.
The design of the store will reflect the dynamic and energetic locale, according to the company. It will also serve as an interpretation of CoverGirl’s “I am what I make up” brand philosophy.
“At CoverGirl, we believe that makeup is a powerful tool for creativity and self-expression,” stated Ukonwa Ojo, senior VP, Cover Girl, which is owned by Coty. “Opening a concept store will help bring this brand purpose to life in an immersive, elevated and multidimensional way.”
The upcoming flagship is the latest in a series of moves related to Cover Girl’s major re-branding initiative, which debuted last September.