“I think the Fed finally really understands what they have to do. And it’s not going to be pretty when interest rates go up the way they are,” Friedman said.
That’s why you haven’t seen, and likely will not see, heavy discounts or red-line Labor Day sales at RH, even if that means losing market share to competitors like West Elm or Wayfair.
“While everybody is, like, running around, trying to pick up the apples on the ground, we figured out how to build an apple-harvesting company,” he said. “It’s just a different game we’re playing.”
RH, formerly Restoration Hardware, has a market cap of more than $6.2 billion, and has made a hard pivot as a luxury lifestyle brand, with an emphasis on hospitality. RH Guesthouse, the company’s new hotel, is certainly among the most expensive in city. There’s no online booking, no photographs allowed, and no lobby. Also no pets or children. Rooms start at $3,500 a night and suites start at $7,500 a night. The restaurant in the space will be RH’s 15th.
That’s where, according to Friedman, guests can find a good breakfast — something that he claims, rather controversially, is lacking in fair Gotham. “You usually can’t find good breakfast in this town. At least that’s what I believe,” he said on Thursday’s earnings call.
Friedman appears confident in his long-term strategy, saying the company is well-prepared to ride out the next year of economic turmoil.
“We’ve been through storms before … We’ve been through the Great Recession before,” he said. “A lot of other people are going to stumble and fall.”
And while economists are divided over whether the US is in a recession or not — officially, recessions are determined by a group of economists at the National Bureau of Economic Research — Friedman believes the downturn is already well under way.
“Anybody who thinks we’re not in a recession is crazy,” Friedman told analysts. “The housing market is in a recession, and it’s just getting started. So it’s probably going to be a difficult 12 to 18 months in our industry. But these are the times where you can really capitalize.”
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