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RH Provides Clarification on Product Sourcing from China

CORTE MADERA, Calif.--(BUSINESS WIRE)-- RH (NYSE: RH) today provided clarification in response to inaccurate reports regarding the percentage of the Company’s product sourced from China.

The Company expects to source approximately 35% of its product from China in fiscal 2018, and that imports from China will be approximately 25% to 30% in fiscal 2019. In fiscal 2017, approximately 40% of RH product was sourced from China.

The Office of US Trade Representative announced on July 10th a proposed 10 percent ad valorem duty on a subset of products imported from China, inclusive of various furniture and lighting product categories. The Company has evaluated the supplemental list issued by the US Trade Representative on July 10th and believes that a significant subset of the Company’s furniture and lighting sourced from China would be impacted by the proposed tariff.

The Company believes that it can mitigate the impact of the proposed 10% tariff on its business to the point that there would be an immaterial impact on its fiscal 2018 and 2019 financial results. RH is a significant source of volume for its vendor partners and believes that its vendor partners would work collaboratively with the Company in an attempt to neutralize the potential tariff as well as potentially evaluate sourcing alternatives. In addition, due to the Company’s differentiated product offering and scale in the luxury home furnishing market, RH is well positioned to make pricing adjustments if necessary.

The Company is providing this commentary solely to provide clarification regarding its product sourcing as well as provide its initial assessment of the proposal and recognizes that the US Trade Representative’s latest Chinese tariff proposal is highly preliminary and likely subject to significant alteration over the coming months.

About RH

RH (NYSE: RH) is a curator of design, taste and style in the luxury lifestyle market. The Company offers collections through its retail galleries, Source Books, and online at RH.com, RHModern.com, and Waterworks.com.

Forward-Looking Statements

Some of the statements in this press release are “forward-looking” and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These “forward-looking” statements include statements relating to, among other things, the expected percentage of the Company’s product to be sourced from China in fiscal 2018 and 2019, the impact of the proposed tariff on the Company and its fiscal 2018 and 2019 financials, the Company’s related mitigation activities, the Company’s vendor partners working collaboratively with the Company to neutralize the impact of the tariff, the Company’s ability to make pricing adjustments and any statements or assumptions underlying any of the foregoing. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future events. We cannot assure you that future developments affecting us will be those that we have anticipated. Important risks and uncertainties that could cause actual results to differ materially from our expectations or the assumptions set forth in this release include, our ability to obtain our products in a timely fashion or in the quantities required or at a favorable cost as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in RH’s most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, and similar disclosures in subsequent reports filed with the SEC, which are available on our investor relations website at ir.rh.com and on the SEC website at www.sec.gov. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

RH
Cammeron McLaughlin, 415-945-4998
SVP, Investor Relations & Strategy
cmclaughlin@rh.com

Source: RH

Released July 13, 2018