‘The housing market is collapsing’
RH (RH) CEO Gary Friedman is known to have never kept his outspoken views on business and life on earnings calls, and his latest factual commentary deals directly with the markets. housing in the United States.
“There’s a lot of uncertainty right now,” Friedman told analysts on the company’s latest earnings call. “But I’m sure of one thing: The housing market is collapsing at a rate I haven’t seen since 2008. I haven’t seen a drop like this since 2008.”
The impact of the housing market downturn is not hard to see in RH’s Q3 results.
Revenue fell 13.6% from a year ago to $869 million, net profit halved, inventory grew $85 million year-over-year, and sales of expensive home furnishings RH drops sharply.
Previously-owned home sales across the country fell for a ninth straight month in October as escalating mortgage rates continued to dent the housing market.
New home construction also continued to decline as builders coped with a decline in housing demand. Residential housing began to decline 4.2% in October to an annualized 1.43 million, according to government data. Single-family homes starting to build fell to an annualized 855,000, the lowest since May 2020.
Friedman’s dire warning about the housing market has some Wall Street analysts concerned not only about RH’s profit potential in 2023 but also the home furnishings sector as a whole.
Guggenheim analyst Steven Forbes wrote in a note to clients: “Combined with the fact that RH will operate under tough demand conditions for years through the first half of 2023, we see a risk significant risk to consensus expectations”.
Dani Romero contributed to this post.
Brian Sozzi is an editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn.
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