No sooner do I share the RH Bullish margin set-up analysis than do we get a product recall.
There are two the past week. This happens...
- I’m not concerned about the 1,400 mirrors that got recalled due to laceration risk. Consumers won’t care about that.
- I do care about the 2,400 Dining Tables with metal top due to lead concerns.
Financially, both of these combined are not material.
They’re small and isolated incidents.
But that’s not what matters.
All we need is the word “lead” and ‘elevated levels in kid’s blood” to cause people to shoot before they aim.
This COULD hurt financially if the company does not flex its PR mojo and quell ANY concerns.
At this exact time last year the company had about $0.35 per share in extra costs to make Modern customers happy w free product.
I’m not worried about RH doing the right thing in servicing the customers.
I’m sort of concerned about whether we see the company squash this pronto – and release sales numbers for the quarter that are already in the books.
Based on RH’s PR/IR track-record, I gotta think they preannounce sales and/or make some kind of comment. It did so last year on Feb 24th, and in '15 on Feb 4th. Clock is ticking.
RH needs to stop people’s imagination from running wild as it relates to the amount of product that comes from the vendor – and coupled with Border Tax concerns, why this will not be like LL, a cruise line with a bug, or CMG.
This is nowhere near in the ballpark w seriousness. But the market needs to be told that.
So…punchline is that I’m only concerned about it financially if the consumer perception changes as it relates to the brand – which impacts top line. The company can quell that. And I’ve gotta think they do well before the print. Sooner than later. Until then, VERY #frustrating.