RHS remains a bleeding business due to collapsed operating income and rising SG&A; entry timing is likely premature.

Very briefly to look at Restoration Hardware, because we looked at it and I got to you know, we got to mention it somewhere. Small mention on Restoration Hardware.

Initially, we look at it's like, oh, they beat earnings. This is cool. But I want you to see what's happening on operating income. Operating income has collapsed year over year. We went from $141 million to $107 million.

Their income before bull crap adjustments went down from $72 million to 58. And just think about that. 58, it was 72. We're down almost 20%, 19.5%.

Their interest expense is down, which I am grateful for. Their interest expense is down because they're paying off some debt. But look at this. Net revenue is up 2 and 1/2%. And their What do we got here?

What do we got here? Their SG&A up 20.2% so a little bit of a red flag here.

Now, uh let me see actually their cost of goods sold cuz I think they're still grabbing from inventory. Uh cost of goods sold ooh cost of goods sold actually went down year-over-year right here.

I think that's because they're still grabbing from inventory. That's pretty decent right here.

So that cost of goods sold went down and they still were able to grow revenue at 2.5% but I will say their actual operating costs are still rising. So their overall PP is still shrinking.

But and some of this cost of goods sold might be coming from the fattening that they have done. In other words, some of their margin protection can come from fattening up. How does that work?

Well, how that works is you hear tariffs get announced so you blow all your cash. You go down to $41 million of cash which is very little. You build up inventories and now you slowly reduce your inventories over time and increase your cash again.

So I call it they're the bear that got ready for winter. They fattened up and now they're leaning out and they're turning some of that inventory to cash.

I think that's still helping insulate them but their operating costs are still going up as a percentage of rev so you still have a pricing power issue. Uh I think they're having trouble you know really getting prices and growth up.

I mean after all we see this over here revenue on a 6-month period is only up half a percent. Well, SG&A is up 9%. Gross profit in fairness was up 1.5% right here. Okay, so you know, they are able to absorb some of the margins there.

When we look at this a little bit more detailed, they're absorbing a little bit from by using their inventory. That's good. Their balance sheet right here suggests they have bills to pay at $630 million.

We only have $125 million bucks. So we really need to go through and sell more and their current assets are relatively illiquid.

So you know, the more and more I look at it, the more I go, it's still a bleeding business. We still haven't gotten to sort of peak pain, it seems like. And I think peak pain gets realized when the company goes out and actually buys market rate cost of goods sold, and they don't just absorb inventory.

That said, they are paying off debt. So, they're doing a good job, they're paying off their bills, good for them. There's some hope here, but I still think it might be a little too soon on this one.

Ironically, I actually like Oracle better here than Restoration Hardware.