Business of Home Podcast: The Thursday Show – Looking Back on the Biggest Stories of 2024 & RH Picks Up Steam

Release Date: December 19, 2024

Hosted by Dennis Scully, the Business of Home Podcast delves into the pivotal events and trends that shaped the interior design industry in 2024. In this episode, Dennis and executive editor Fred Nickelhaus analyze major news stories, including layoffs at Sotheby's, Restoration Hardware's (RH) latest earnings, the resurgence of colorful bathrooms, and significant industry consolidations. Additionally, the episode touches on the rise of furniture banks and the ongoing debate over design duplications.

1. Recap of Previous Episodes

At the outset, Dennis and Fred briefly reflect on their previous discussions, highlighting their engaging conversation with Hatta Bing, the editor of House and Garden. They emphasize Bing’s commitment to featuring "believable" homes that reflect actual living spaces rather than idealized fantasies.

Fred Nickelhaus [01:24]:

"She is, like many British magazine editors, charm personified. So worth a listen for a variety of reasons."

2. Layoffs at Sotheby's

Fred Nickelhaus [04:12]:

"Last week, the auction house laid off more than 100 employees and closed two regional offices, an effort to cut costs amid an art market in decline."

The discussion centers on Sotheby's recent cost-cutting measures amidst a struggling art market. The hosts explore whether the layoffs are due to broader market trends or Sotheby's internal financial strategies, including the significant debt from its 2019 $3.7 billion privatization deal involving the Abu Dhabi Wealth Fund.

Dennis Scully [05:11]:

"They were quite extended, and they were hoping that they were going to be timing this to a much stronger market than we've seen in the past few years."

3. RH's Earnings Report

The conversation shifts to RH’s third-quarter earnings, which showed an 8.1% increase in net revenue and a 13% rise in demand. Despite these positive figures, concerns about RH’s high debt and growing inventory levels are discussed.

Fred Nickelhaus [07:59]:

"The retailer formerly known as Restoration Hardware released its third quarter results last week, reporting a boost in revenue that sent RH stocks surging two quarters in a row."

Dennis Scully [08:23]:

"Gary Friedman had such a long laundry list of initiatives and things that were going on. Most importantly, I think was the overall vibe was demand is seeing a strong uptick."

Key Concerns:

• RH’s substantial inventory increase by $200 million.
• Plans to exit manufacturing in China by mid-next year.

Fred Nickelhaus [11:32]:

"They also have great video content. I mean, their YouTube channel is very fun as well."

4. Return of Colorful "Granny Bathrooms"

Addressing the trend of vibrant bathroom designs, Dennis and Fred discuss the resurgence of nostalgic elements like pastels and patterned tiles inspired by the 1970s.

Dennis Scully [21:46]:

"People are excited about this one. Much to my surprise, I have to say people are energized by the thought of granny bathrooms."

Fred Nickelhaus [22:07]:

"I think kitchens and bathrooms are tied together. And so I think this is a thing."

The hosts highlight designer feedback, noting a mix of enthusiasm and client resistance toward adopting bold bathroom colors.

Fred Nickelhaus [25:39]:

"It was interesting to hear more talk about Europe and the excitement there."

5. Furniture Banks and Industry Philanthropy

The episode underscores the importance of furniture banks in supporting families in need and reducing industry waste.

Fred Nickelhaus [18:31]:

"These organizations are certainly doing a great job of it. We need more of them."

Dennis Scully [20:04]:

"It's something that a lot of designers might not have even realized exists and can make such a meaningful impact in people's lives."

Highlighting specific initiatives like Jessica Halgerson's One Percent Project, the hosts advocate for increased designer involvement in philanthropic efforts.

6. Industry Consolidation and Acquisitions

A significant portion of the episode examines the trend of consolidation within the home furnishings industry, particularly through acquisitions by companies like Havenly and Kravit.

Fred Nickelhaus [43:22]:

"Havenly this year alone acquired Citizenry, St. Frank, and Borough. I mean, it feels like it's more than that."

Kaitlyn Peterson [47:30]:

"There are good deals and there are bad deals, but there are good deals."

The discussion also touches on private equity's role in acquiring and stabilizing brands struggling with operational and financial challenges.

Warren Shohlberg [48:53]:

"And you do have to make a distinction between good, healthy companies like Kravit that have been bought and some of the more distressed fire sale guys."

7. Duplication and Design Copycats

The rise of design duplications, or "dupes," becomes a focal point, especially in light of high-profile cases involving celebrities like Kim Kardashian.

Fred Nickelhaus [51:55]:

"Dupes are a big part of the design conversation right now. And I don't see that changing in 2025."

Kaitlyn Peterson [53:17]:

"John Edelman at Heller made a really interesting point that you could argue that sustainability is one of the most important things to a lot of these shoppers who are buying dupes."

The hosts debate the impact of dupes on original design and discuss strategies designers can employ to protect their creativity and sustainability efforts.

8. Media Shifts in the Design Industry

The podcast addresses changes within design media, including leadership shifts and the rise of independent platforms like Substack.

Fred Nickelhaus [57:06]:

"Substack allows you to spin up a newsletter or build an audience and monetize it very quickly."

Kaitlyn Peterson [57:52]:

"Elizabeth Rawls purchasing Atlanta Homes and Lifestyles and starting her own media company is another great example of how... focusing your efforts on a smaller group of people that you are deeply connected to."

9. Predictions for 2025

Looking ahead, the hosts share their expectations for the upcoming year, considering economic, political, and technological factors.

Warren Shohlberg [59:33]:

"The worst is over, but the best has long since come and gone. And so I think 25 is going to be better than 24 on a whole lot of levels."

Fred Nickelhaus [60:19]:

"My prediction is that everyone on this call right now is going to have a Substack in six months."

Dennis Scully [61:11]:

"I think one of the things we're going to be talking about a lot more... is bitcoin."

The predictions cover areas such as continued market volatility, the impact of political changes on the furniture industry, the potential rise of IPOs, and the growing influence of cryptocurrency in real estate transactions.

Conclusion

As the episode wraps up, Dennis expresses gratitude to listeners and reflects on the year's challenges and achievements. The hosts emphasize the importance of community support and look forward to continued discussions and innovations in 2025.

Dennis Scully [62:33]:

"I really did... a great big thank you to this community for all that you have shared with us in the past year."

For more insights and updates, listeners are encouraged to visit businessofhome.com and engage with the community through various platforms.