Luxury glow-up
RH goes from sawdust to silk rugs
Good morning, acolytes of style. This is your Stock Market Rundown for September 11th, 2023. Thanks for joining me for another week of financial tomfoolery. Let’s dig in:
TODAY’S TOP STORY: THE SANCTURARY OF SOFAS 🛋️
When bougie urbanites need a $12,000 teak sofa-chaise, furniture retailer RH has been their go-to source. But lately, higher mortgage rates are crushing the business of selling desks, divans, and dining-room tables.
The stock tanked 15% after its recent quarterly report, as management warned that the “challenging” housing market is hampering growth. Who’s clamoring to buy furniture when they can’t afford to move?
RH was formerly known as Restoration Hardware, but changed its name to RH in 2017. Much like when Kentucky Fried Chicken rebranded to KFC to get rid of the greasy reference to “fried”, RH wanted to level up its vibe. “Hardware” kind of makes you think of sawdust, screwdrivers, and swearing as you putting together an Ikea bookshelf.
RH, by contrast, aspires to be “the arbiter of taste for the home”. They describe their products as “crafted by artisans”. Some locations even offer wine so you can booze while you peruse. Being drunk might help when pulling the trigger on a $10,000 rug.
The business was founded in 1979, but was on the brink of bankruptcy when the current CEO, Gary Friedman, arrived in 2001. A college dropout who’d started at the bottom as a stockboy at The Gap, Friedman took RH upmarket, with minimalist design, a neutral color palette, and prices jacked up enough to make you break a sweat checking the price tag.
To be sure, RH spares no efforts to convey luxury: it has two private jets for available for charter, and many locations have restaurants, with dishes like shaved ribeye and broiled salmon. A heck of a lot fancier than Ikea’s Swedish meatballs.
SO WHAT ELSE IS GOING ON?
In their evil era: Google has reached settlements with all 50 states after illegally exploiting its monopoly power via its app store. Congrats to the lawyers who racked up billable hours.
Nobody enjoys doing their taxes (aside from your one weird cousin who wears socks with sandals). So Intuit, makers of TurboTax, spent millions to embed AI into their products, exploiting their vast trove of data to help you minimize how much you cough up for Uncle Sam.
Your next apartment could be a former boardroom. Office vacancy is at a 30-year high, and with millions of square feet vacant, there are hundreds of office-to-residential conversions underway. I’m sure they’ll switch out those flickering fluorescents.
Time to put a down payment on a Tesla? Analysts at Goldman Sachs are warning the oil price could spike back up to triple digits soon, thanks to voluntary production cuts by major exporters. As ever, Saudi monarchs have a chokehold on truckers in Topeka.
The CEO of Walgreens has been shitcanned due to the stock being cut in half during her tenure. She came with an A+ pedigree, having been COO of Starbucks. But it turns out running a drugstore business is more complex than pumping out pumpkin spice lattes.
That’s it for today, folks; see you bright and early tomorrow. Yours in capitalism, The Axe