By Maria Armental 
 

Luxury-furniture retailer RH's stock gained 14% to $242.29 after releasing Chief Executive Gary Friedman's annual letter to shareholders that showed a bullish tone despite recent business challenges tied to the coronavirus pandemic.

"Our ecosystem will come full circle as we begin to conceptualize and sell spaces, moving the brand beyond the $200 billion home furnishings market into the $1.7 trillion North American housing market by offering beautifully designed and furnished turnkey homes and condominiums with the introduction of RH Residences," Mr. Friedman wrote. He pointed to market opportunities as RH expands internationally and deeper into the so-called experiences market.

The CEO mentioned RH3, a luxury yacht that customers can charter in the Caribbean and Mediterranean.

RH, formerly known as Restoration Hardware, still expects operating margins to expand this year, Mr. Friedman said, despite the current setbacks from the pandemic.

Company officials "now see a clear path to 20% operating margin over the next few years," he said.

RH's stock has outperformed the market, having more than doubled in value over the past 12 months. The company has drawn interest from Warren Buffett's Berkshire Hathaway Inc., which is among RH's top five investors, according to FactSet.

J.P. Morgan raised its December price target to $270 from $135.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

June 02, 2020 14:05 ET (18:05 GMT)

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