RH Provides Clarification on Product Sourcing from China

RH (NYSE: RH) today provided clarification in response to inaccurate
reports regarding the percentage of the Company’s product sourced from
China.

The Company expects to source approximately 35% of its product from
China in fiscal 2018, and that imports from China will be approximately
25% to 30% in fiscal 2019. In fiscal 2017, approximately 40% of RH
product was sourced from China.

The Office of US Trade Representative announced on July 10th a proposed
10 percent ad valorem duty on a subset of products imported from China,
inclusive of various furniture and lighting product categories. The
Company has evaluated the supplemental list issued by the US Trade
Representative on July 10th and believes that a significant subset of
the Company’s furniture and lighting sourced from China would be
impacted by the proposed tariff.

The Company believes that it can mitigate the impact of the proposed 10%
tariff on its business to the point that there would be an immaterial
impact on its fiscal 2018 and 2019 financial results. RH is a
significant source of volume for its vendor partners and believes that
its vendor partners would work collaboratively with the Company in an
attempt to neutralize the potential tariff as well as potentially
evaluate sourcing alternatives. In addition, due to the Company’s
differentiated product offering and scale in the luxury home furnishing
market, RH is well positioned to make pricing adjustments if necessary.

The Company is providing this commentary solely to provide clarification
regarding its product sourcing as well as provide its initial assessment
of the proposal and recognizes that the US Trade Representative’s latest
Chinese tariff proposal is highly preliminary and likely subject to
significant alteration over the coming months.

About RH

RH (NYSE: RH) is a curator of design, taste and style in the luxury
lifestyle market. The Company offers collections through its retail
galleries, Source Books, and online at RH.com, RHModern.com, and
Waterworks.com.

Forward-Looking Statements

Some of the statements in this press release are “forward-looking” and
are made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These “forward-looking” statements
include statements relating to, among other things, the expected
percentage of the Company’s product to be sourced from China in fiscal
2018 and 2019, the impact of the proposed tariff on the Company and its
fiscal 2018 and 2019 financials, the Company’s related mitigation
activities, the Company’s vendor partners working collaboratively with
the Company to neutralize the impact of the tariff, the Company’s
ability to make pricing adjustments and any statements or assumptions
underlying any of the foregoing. You can identify forward-looking
statements by the fact that they do not relate strictly to historical or
current facts. These statements may include words such as “anticipate,”
“estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,”
“will,” “should,” “likely” and other words and terms of similar meaning
in connection with any discussion of the timing or nature of future
events. We cannot assure you that future developments affecting us will
be those that we have anticipated. Important risks and uncertainties
that could cause actual results to differ materially from our
expectations or the assumptions set forth in this release include, our
ability to obtain our products in a timely fashion or in the quantities
required or at a favorable cost as well as those risks and uncertainties
disclosed under the sections entitled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in RH’s most recent Form 10-K and Form 10-Q filed with the
Securities and Exchange Commission, and similar disclosures in
subsequent reports filed with the SEC, which are available on our
investor relations website at ir.rh.com and on the SEC website at www.sec.gov.
Any forward-looking statement made by us in this press release speaks
only as of the date on which we make it. We undertake no obligation to
publicly update any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as may be
required by any applicable securities laws.

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