Upscale homeware brand RH, which sells $5,000 dining tables and $10,000 couches, admits its pricing was 'arrogant' (2024)

• RH, known for selling pricey furniture, says its prices have been "too aggressive" in the past.
• The CEO says its addressing this by lowering prices in its new collection, RH Contemporary.
• Analysts say this strategy could help it to woo aspirational shoppers who were priced out.

RH knows it is too expensive, but it wants to do something about it.

Gary Friedman, the CEO of the upscale homeware store — formerly known as Restoration Hardware — admitted to investors that the company has become "too arrogant" and "too aggressive" in its pricing in recent years.

Friedman's comments were made during a call with investors on Thursday after the company reported its first-quarter earnings results, which saw sales drop by 22.8% this quarter versus last year.

But Friedman, who is also a majority shareholder of the brand, said he has a plan to address its pricing problem to drive growth at the brand.

"We looked at the sourcing. We challenged everything. And I think ... what's coming, whether you're looking at interiors or contemporary or modern, you're just going to see a real meaningful value equation connected to design and quality leadership that will change the trajectory of everything," he said.

While Friedman said there would be promotions on discontinued items, this won't apply to new stock. But its newest collection, dubbed "RH Contemporary," will have a "value proposition that will be disruptive across multiple markets," he said.

He wouldn't comment on how much it would scale back on prices — despite being pressed by analysts to do so — but said the company will be "more competitive" with its new assortment.

UBS analyst Michael Lasser said its new pricing strategy suggests that the brand is looking to court aspirational shoppers, which it may have alienated by previous price increases, in order to drive growth.

These prices change could have a broader impact on the homeware market.

"This move by RH has the potential to spark a similar reaction from others or increase overall promotions at the mid to high end of the market," Lasser said.