Motley Fool: RH wants to become a luxury lifestyle brand

 RH, the high-end home furnishings chain formerly known as Restoration Hardware, isn’t your typical home furnishings company. It’s a luxury brand known for selling things like $3,000 armchairs and $4,000 coffee tables. While the home furnishings industry is highly competitive, RH faces much less competition at the luxury price point than midrange retailers like Wayfair do.

Along with its designer products, the company distinguishes itself with an enormously successful membership model that offers customers a discount of 25% and other benefits for a $175 annual fee. As of January 2021, RH had 434,000 members who drove 97% of its revenue in its core business. The membership program should also help cushion the company from economic volatility, as it essentially creates a built-in customer base.

Management plans to keep growing the company by expanding abroad and widening the scope of its offerings. It’s opening its first hotel in New York City, and will make two Gulfstream airplanes and a yacht available to be chartered, as it works to make RH a luxury lifestyle brand beyond home furnishings.

With a clear track record of success and a CEO who aims to push the boundaries in luxury home goods, RH still has a lot of room to grow. Long-term investors may want to take advantage of a recent drop in share price. (The Motley Fool owns shares of and has recommended RH.)