Luxury furniture brand RH, formerly Restoration Hardware, has lifted its sales; however, heavy investments dented its margins. 

In its Q4 and full-year results, the company’s revenues reached $842.6 million and $3.4 billion, respectively. Both these figures were improvements year-on-year.

But gross margins across both timeframes fell, as the renamed company continues to invest heavily in its global expansion. At the end of the fiscal year, RH said it had $89 million worth of assets under construction, up from $51.5 million the year prior. 

Adjusted EBITDA for the year was $597 million, representing a margin of 17.3 per cent.

In an earnings call, CEO Gary Friedman told investors of his lofty aims for the company.

“We believe our goal to position RH as the arbiter of taste for the home will prove to be both disruptive and lucrative as we continue our quest to build one of the most admired brands in the world,” he said.

“Our brand attracts the leading designers, artisans, and manufacturers, scaling and rendering their work more valuable across our growing global platform. Our product is both categorically and stylistically dominant, enabling RH to address the largest market of any brand of its kind.”

The share price, however, fell by nearly 20 per cent after the earnings report was released, with analysts saying it missed revenue expectations.

“We’ve made big investments to position the brand not only in North America, but also in Europe for the long term,” Friedman added.

“Once you get past those cycles, we’re gonna have great leverage. Opening galleries like we’re opening and restaurants like we’re opening are high costs, especially when you’re doing them in a different country, there’s just more travel, more expense from hiring people and building new organizations, and so on.”