Why the CEO of This Buffett Stock Is Playing the Long Game
Just as many companies thought they were past the period of pandemic-induced sales declines and starting to climb back up, they are now faced with supply chain woes, too much inventory, and high inflation. Many retailers have been responding to these issues by slashing prices to sell down inventory so they can start over with improved supply chain processes in place.
Luxury furniture retailer RH (NYSE: RH), though, is going against the grain. It's sticking with its long-term brand strategy and shunning price cuts despite the sales declines that may result from diminishing demand. Investors should cheer this decision.
For RH, 2022 started out looking like it would be a strong year. Sales increased 11% year over year in the first quarter to a record $957 million, and earnings per share jumped 190% to $12.16. Its gross margin expanded by 4.8 percentage points to 52.1%, but its operating margin narrowed by 0.4 percentage points to 21.4%. Adjusted operating margin, which accounts for expenses related to certain store openings, expanded by 2.1 percentage points to 24.7%.
Source Fool.com
