The WORST Earnings Call I've EVER Heard | Recession Warning.

oh this has to be the worst earnings

call I've ever gone through in my career

and look I'm a licensed financial

advisor I read earnings calls almost

every single day and this one's bad I

don't know if this is a sign of what's

to come in the economy but that is not a

Nike Swoosh style earnings call it's bad

let's talk about it this video is going

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below Steven Forbes an analyst ask the

CEO can you talk about an inflection

point within the business and here is

are some of his responses

sure I think based on the times we're in

and uncertainty we're facing whether

it's the continued rise of interest

rates or the next bank or two that get

hit it's hard to be anything but

conservative right now I think it would

be foolish to be not just from the

perspective of disappointing investors

but disappointing ourselves and possibly

making decisions and investments before

we could see around the next corner you

hear this reign in don't spend more on

capex reign in get small get scared is

what he's saying because we haven't seen

around the corner yet because instead he

talks about it's a very unsettling

feeling it's like the days of Bear

Sterns and Lehman Brothers and we're

just waiting for the next shoe to drop

it's very unknown right now so we

believe that there will be an inflection

point in the second half notice he

doesn't say good

we don't know what it is what will what

will the economic environment be in the

second half what would be the condition

of the banking industry in the second

half where will interest rates what

would be what if inflation is persisted

all one has to do is Google the history

of the fed's funds rate and zoom into

the 70s and 80 80s and look how many

times the federal resolve Reserve

brought inflation under control yes yes

Mr CEO let's completely ignore that in

the 70s we left the gold standard and we

let inflation expectations on anchor and

the FED had a start stop mentality that

led to a lack of confidence for the

Federal Reserve let's completely ignore

those things and let's just talk about

the fear of the 70s and 80s how

basically we have to not spend money

anymore because we don't know what's

around the corner this is literally a

CEO that wakes up it probably loses

sleep at night and then wakes up in the

morning trembling that this company is

going to poopsie doopsy this is

Restoration Hardware by the way and I

mean if you just look at their earnings

uh right here you can see their margins

are starting to get hit you know over

here on the right side you've got uh

their past margins and their income from

operations at 14.5 percent way down from

the over 20 percent we used to uh see

their net income is down about an

average of about three percentage points

over here compared to the Past reporting

quarters so you could tell there's

probably there's a numbers reason why as

well but let's keep going with what he's

saying because he starts getting a

little angrier

there's not there's not oh my God hello

grammar uh there are not many people do

you know they should really have a word

thereer right like it should be there

like that that should be a word it

should be pronounced there there are not

many people on the planet see that would

be good grammar a shortening of there

are but that's how it should be written

but that doesn't exist instead people

get lazy and then they just say theirs

because there's no contraction for there

are that's kind of weird isn't it uh

anyway uh in in this context okay so

continuing uh I don't know why we go on

these grammar tangents there's

there are not many people on the planet

in levels of authority and

responsibility that we're old enough to

experience those times and I think

having a conservative you and being

prepared having a strong balance sheet

and trying to see the whole board and

all the moves is basically prudent okay

that's fine so he's making the argument

that we're so scared at Restoration

Hardware we're gonna basically compare

this to the 70s and 80s and and try to

buckle up as much as possible which is

not a bad idea it is not a bad idea to

say uh hey let's let's pause uh and

let's make sure we can reign in to make

sure we're not running away and spending

all of our money and not being

conservative to where then we have to

get emergency that debt right that would

be very bad

I'm sorry if you're sending me

promotional emails every day uh if not

every day multiple times a day calling

them different things you want to call

your promotion something different

that's interesting

he's starting his little lash out right

now we're not pushing the Panic buttons

on promotion I wouldn't call it Panic

kind of promotions it's really trying to

hang on to the illusion of where the

business was in the pandemic right okay

now this one's pretty emotional but

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get a special discount you not like it's

on promotion I wouldn't call it Panic

kind of promotions it's really trying to

hang on to the illusion of where the

business was in the pandemic right so in

other words he's starting to elude to

how they are different from other

businesses they're saying we're not

going to do promotions because we're

Restoration Hardware and we're fancy and

better than promotions and then he's

starting to compare to other businesses

that are sending promotional emails

every day sometimes multiple times a day

he could smell the fear that other

companies because they're freaking out

and they got to get more sales well take

a look at this I have never ever seen a

CEO pull this one so listen to this so

and that's even in this environment and

the product that's on its way is by far

the best work we've done talking up

their business okay great how they're

not how they have a value proposition

and they don't have to send all these

disruptive promotions to people that are

below us uh it is wait what and I think

that will be disruptive not only to the

high end it's going to be disruptive to

the people that are below us in the

market just because we have the scale to

buy in stock inventory and many people

don't in other words you really have a

CEO who's literally like we don't spam

people with promotions we aren't going

to be suffered like the people who are

below us because we are the high-end

Corporation and then listen to this

literally goes on

to name a company by name and bag on

them you ready for this here we go

the platforms that are out there today

whether it's a Wayfair or others again I

understand they don't take the position

we have on inventory so they can't

really Buy in volume because they're the

poppers they're the poor normies so

continuing with the quote here so they

because they can't buy in volume they

can't drive efficiency so a lot of

people say well aren't you worried about

platform so I think platforms ought to

be worried about us you know like those

website platforms they should be worried

about Restoration Hardware there's not a

lot there's not a platform that made a

dollar yet or anything I mean Wayfair

made money during the peak of the

pandemic for God's sake no and look May

Wayfair be able to hike their prices and

make it I don't know all I know is we've

got a really great model we've got I

think the most compelling Vision in the

industry

the guy is literally dumping on Wayfair

saying they only made money

during the pandemic and basically

Restoration Hardware is so much better

because they have scale and and they

have a reputation and they have a brand

and uh but at the same time we're

worried about the 1970s recession and

we're worried that listen to this I

think it's more uncertain today than

2008 and 2009. if you didn't have the

inflation problem that we had today and

you didn't have the political unrest

maybe it would be interesting but but

you do and so uh if there isn't a

complete crash uh which a complete crash

would look like the 70s or 80s which

would ultimately mean it would take over

a decade to recover from the recession

uh then then maybe we could pray for not

a complete crash but this is what we

want to prepare for so I kid you not

Restorations Hardware CEO is losing his

sh9t he is literally losing it lashing

out at the competition lashing out at

promotional emails and lashing out that

basically we're walking into the 70s and

80s and as a result they're going to

pull back on spending that's crazy

so look at this in a typical environment

in a slowing Market there's usually one

thing to hit us at once but multiple

things are hitting us at once now look

at this listen to this yeah I think

you've got you've got about a 20 margin

floor not in the worst housing market

though right now we're in the worst

luxury housing market I've ever seen the

one of the worst housing markets anybody

has ever seen I think in the third

quarter luxury housing fourth quarter

luxury if you think about where luxury

housing has been it was down eighteen

percent of the first quarter down 28 in

the second quarter down 38 in the third

quarter and now reportedly down 45

percent in the fourth quarter which

means because you're talking about

months they're kind of going down it

probably means the last month of the

fourth quarter was down close to 50

percent

damn

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you've got the refinance Market which

nobody's refinancing so nobody's able to

buy new furniture and that means the

Market's really down like 80 or 90 or 70

or 80 percent

oh man this is by far the most comical

but also kind of scary earnings call

I've ever seen this is the CEO of

Restoration Hardware but then but then

listen to this

we're cutting through the noise that's

what we're doing we're not panicked

we're not nervous

joke ever and that then he even he even

goes on to say this

do I wish yelling we'll just tell

everybody we're gonna backstop

everybody's savings and dance in other

words do I wish we could just go back to

the stimulus days of course

but I think instead we might be facing

more of the 1970s

this is by far uh

uh the uh I I don't know whether to be

to be scared uh or or to think the guy

has just lost it now after I went

through the earnings call I took the

entire script the transcript and I put

it into chat GPT and I asked Chachi P

some questions about it I asked Champion

chatgpt specifically hey does the

housing market affect Restoration

Hardware and it replied of course it

does well essentially it said yes the

CEO suggests the housing market is

affecting Restoration Hardware he

mentions that the luxury housing market

has experienced a record falloff which

has impacted their business he also

mentions that when the housing market is

down it takes about three months for it

to completely hit them and for that

damage to settle in I thought that

three-month delay was actually pretty

insightful I personally missed that in

the transcript he also talks about how

building a luxury brand takes time now a

chat GPT refused to imply that this CEO

was bashing Wayfair he says that a

Wayfarer is not implied illicitly

discounting I kind of think that's

pretty much exactly what the CEO here

was saying just saying in a different

area so maybe that's where artificial

intelligence just not yet is in the

context awareness space like if you go

from talking about how bad discounting

is making fun of people who are

discounting and then all of a sudden you

talk about Wayfair who did great during

the pandemic the AI is not realizing

okay he come on it's a direct slam okay

it's basically a direct slam so it's

kind of interesting to test the chat GPT

and what I did with this is I read it

first obviously I made my commentary

first and then after all of that I put

this all into chat jpt uh I even tried

asking chat GPT to see if I could trip

it up hey did the CEO make fun of anyone

no they just talked up their own

strengths okay all right Chachi PT so

there were some things that chat GPD

found specifically that three month lag

time that I missed but when it came to

that actual human element that

implication element tragic didn't quite

get there yet so if you found this video

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