RH Chairman & CEO Gary Friedman Addresses Organizational Changes and Expense Reductions in Response to Current Business Conditions
To Our People, Partners, and Shareholders,
I hope this note finds you and your family healthy and safe.
These are clearly unimaginable times. Never have we been faced with such a crisis that crosses communities, cultures and countries around the world. The COVID-19 coronavirus is impacting every aspect of life as we know it, and navigating through this from a personal and professional perspective is requiring us to make unprecedented changes.
As you are aware, we are entering the fourth week that our Galleries, Restaurants, and Outlets in
With the lack of clarity regarding when it will be safe to reopen, we have made the difficult decision to temporarily furlough approximately 2,300 team members, and permanently reduce our workforce by 440 team members. A furlough anticipates that team members will return to work at some point in the future. The exact timing of when our Galleries, Restaurants, and Outlets will reopen is uncertain. While we expect some portion of our business may resume on the basis of what state and local governments permit, the complete return to normal operations may occur over time rather than all at once.
Additionally, we are implementing temporary salary reductions for leaders across the Company ranging from 10% for Leaders and salaried Team Members, 20% for Directors, 30% for Vice Presidents, and 40% for Senior Vice Presidents and Chief titles. The Executive Leadership Team has chosen to forgo 100% of our salaries until business stabilizes.
To support our team members who are impacted by these decisions, we have provided information regarding unemployment benefits and the government sponsored assistance programs under the CARES Act in
We have also made decisions to significantly reduce capital expenditures and expenses by approximately
While the doors to our Galleries are closed, our interior design teams across
We would like to once again thank all of the brave individuals across health care, social services, sanitation, transportation, warehousing, delivery, law enforcement, pharmacy, grocery and government who continue to risk their health to protect ours, and keep some semblance of familiarity in our lives, in a very unfamiliar world.
Lastly, rest assured we will be doing everything in our power to overcome this crisis and bring our team members back together so we can continue our quest of becoming one of the most admired brands in the world.
We will use this period to once again reimagine and elevate the RH brand, ensuring this time is defined by our vision, not by a virus.
RH (NYSE: RH) is a curator of design, taste and style in the luxury lifestyle market. The Company offers its collections through its retail galleries across
This release contains forward-looking statements within the meaning of the federal securities laws, including without limitation, statements regarding the planned reductions in expenses and capital expenditures in fiscal 2020 including the amount of such savings and the breakdown of such savings by category; expectations regarding the delay in our Gallery transformation efforts and the potential timing for opening the RH Marin and RH Charlotte Galleries in 2020; expectations that our interior design teams are finding creative ways to engage our customers while our Galleries are closed; expectations concerning new consumer spending patterns and habits that are being formed as a result of social distancing and sheltering in place including that consumers are making their homes the center of their lives; our belief that we are well-positioned to take advantage of opportunities as a result of the COVID-19 crisis; our anticipation that we will be providing additional information about our outlook and expectations at some point in the future when business conditions begin to normalize; expectations regarding the furlough of our team members including the continuation of health benefits to furloughed associates and the timing of their potential return to work; the timing for the reopening of our Galleries, Restaurants and Outlets; the duration and scope of salary reductions for leaders across the Company; expectations about our ability to reimagine and elevate the RH brand; our quest to become one of the most admired brands in the world; 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 include the global outbreak of the coronavirus (COVID-19) virus, which poses significant and widespread risks to our business as well as to the business environment and the markets in which we operate our business. We have already experienced significant disruption to our business as a result of the rapid development of the COVID-19 pandemic. The Company has temporarily closed its retail locations for an indeterminate period of time and has implemented other efforts to reduce expenses including through the furlough and termination of a large number of our team members. The impact of these efforts is uncertain and we may not achieve the benefits that we seek from these initiatives. Changes in consumer behavior and health concerns as a result of the COVID-19 outbreak have had a negative effect on customer demand. A large number of states and municipalities in the