Restoration Hardware Holdings, Inc. (NYSE:RH) Q2 2019 Earnings Conference Call - Final Transcript
Sep 10, 2019 • 05:00 pm ET
look at it.
Right. So nothing idiosyncratic call out. And then maybe for you, Gary, because I don't -- I didn't fully get to digest whole release yet. But if you think about the comments around international opportunity last quarter, I think during the pre-announcement, I don't know if you can help us right as we start conceptualizing the international expansion opportunity. Can you update us on the timeline and maybe discuss sort of the infrastructure needs of the business for a successful transition into one or more international markets over the next few years there?
Yeah, let's go back to your first question, because I think that there is confusion and has been confusion about sometimes how to landscape the business year-over-year, you're not paying attention to it. So the biggest thing year-over-year is we used to book advertising and advertise it to our -- in our catalogs and the curve of our catalogs and now we book advertising based on we mail the books. And so if you're trying to model the business, you could be, kind of, surprised to see. We have -- how much of our advertising expense for the second half is in the third quarter. It's like 80%. 80% of our advertising costs are hitting in the third quarter because of the timing of our books and only 20% is hitting in the fourth quarter. So you've got that kind of landscaping that can sometimes make the numbers look a little funny.
But I think if you just look at the second half, I believe we took the second half above everybody's numbers, pretty meaningfully. So what -- how it exactly landscapes is going to sometimes be effective by different changes in accounting policies and so and so forth. As it relates to international, I could tell you that -- I don't know if I've ever been more excited about anything, any idea or any opportunity. We just -- actually just got back Sunday night from another trip overseas to look at opportunities and locations and I think a couple of things becomes clear as we get closer to the opportunity and kind of look at it at a micro and a macro level. There really is a complete void in the market for a concept like ours and for a higher end, kind of, dominantly positioned in assorted home business.
And in the US, retail's a lot more uniquely developed than especially in all of Europe. So we just see the opportunity as so significant. The fragmentation in our marketplace in Europe is exponentially greater than the fragmentation in North America. And it hit us several months ago we went to the [Indecipherable] salon show in Milan. It shows that it would generally be commercial attendees and B2B attendees are attended really by the open public and almost act like a pop-up store. And it -- I kind of stood back and looked at it, and I said, wow, this is interesting. There's