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RH (NYSE:RH) Q4 2018 Earnings Conference CallMarch 28, 2019 5:00 p.m. ET
Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:
Operator
Good afternoon. My name is Erica and I will be your conference operator today. [Operator instructions] RH fourth quarter and fiscal 2018 earnings Q&A conference call. [Operator instructions] After the speaker's remarks, there will be a question-and-answer session. [Operator instructions] Thank you. Miss Cammeron McLaughlin, RH investor relations, you may begin your conference.
Cammeron McLaughlin -- Investor Relations
Thank you. Good afternoon, everyone. Thank you for joining us for RH's fourth quarter and fiscal 2018 Q&A conference call. Joining me today are Gary Friedman, chairman and chief executive officer; Ryno Blignaut, president, chief financial, and administrative officer; and Jack Preston, our incoming chief financial officer.
Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook for our business and other matters referenced in our press release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our press release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of [Audio gap] statements in light of new information or future events.
Also during our call today, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results press release. A live broadcast of this call is also available on the Investor Relations section of our website at ir.rh.com. With that, I'll turn the call over to Gary for some brief opening remarks and then we'll begin our Q&A session.
Gary Friedman -- Chairman and Chief Executive Officer
Right. Thank you, Cammeron. Thank you for joining us today. Before we start, I'd like to congratulate Jack for his appointment to CFO and welcome him to his first earnings call. Based on how the stock's trading in after hours, Jack it's a little baptism by fire but he's up for the task. As you know, Jack has been in senior positions with RH for six years most recently as our senior vice president of finance and our chief strategy officer. In reality, Jack and I have been working together for almost nine years now.
Jack Preston -- Incoming Chief Financial Officer
That's right.
Gary Friedman -- Chairman and Chief Executive Officer
As he was a key advisor to the company for, I think, three years prior in preparation for our IPO. So it seems like it's almost 10 years. But in the six years that Jack has been with RH, he's had a seat at the table, participating that the most senior levels of the entire time including many of our board meetings. And I believe I speak for the entire team that, Jack, we're so proud of you and so excited to have you in this position. You have earned it. So welcome.
Jack Preston -- Incoming Chief Financial Officer
Thank you.
Gary Friedman -- Chairman and Chief Executive Officer
I'd also like to thank Ryno for the past eight months and especially for the past several weeks as he's worked to ensure a seamless transition with Jack. Ryno and I were dating for a long, long time and probably longer -- longer than we get to work together and so -- well, I feel it's unfortunate. I know it's really best for Reno and his family and I want to thank Reno and wish you and your family nothing but the best from all of us on our team RH.
Ryno Blignaut -- President, Chief Financial, and Administrative Officer
Great. Well, thank you. Gary. Thank you for the opportunity you gave me. Clearly this was a very hard and unfortunate decision. But as you just said, it is the right one for me and for RH. You and the team deserve somebody who can give 150%. Unfortunately, I can't do that at the moment but we're very fortunate to have somebody as experienced as Jack, who can do that, and be able to step in for a smooth, smooth transition. So with that, I think we'll hand it over to the operator for questions.
Questions and Answers:
Operator
[Operator instructions] And our first question comes from Steve Forbes with Guggenheim Securities.
Steve Forbes -- Guggenheim Securities -- Analyst
Good afternoon. So I mean maybe, Gary, I wanted to start with the change in the revenue growth outlook for '19. Obviously, a lot has transpired over the past three months but it is a short three months. So maybe just help us understand your confidence in the renewed outlook. What could go wrong from here as you kind of think about end demand for your consumer and sort of like how have you got everything now, right, because it appears to me that the implied comp would be very modest if you think about everything that's sort building from the real estate transformation effort and potentially some outlook growth.
Gary Friedman -- Chairman and Chief Executive Officer
Yeah, well, one where we're as confident that we can -- as confident as we can be with our outlook, look, we gave our last outlook on December 3rd and after market closed and on December 4th, as many of you know, we launched a convert. And our stock was, I think, trading after hours in the $1.60s and closed that day at $1-40-something. We started a conference call with the convertible debt. I think we had 40 people on the call.
I gave a 20-minute presentation and asked for questions and it was crickets and the bankers asked for questions and it was crickets. And we found out in the 20 minutes we were talking, the market dropped 400 points on its way to down 800 points and on its way to down 4,000 points in the month of December. And, look, our business is tied to the high-end consumer. It's really the top -- if we've got some echo in the background.
Cammeron McLaughlin -- Investor Relations
I mean, it's on Steve's maybe?
Gary Friedman -- Chairman and Chief Executive Officer
Yeah. [Inaudible] But we deal with the high-end consumer. They're tied to the stock market. It shouldn't be any new news to anybody that like severe volatility in the stock market is going to sway a business like ours, especially a high ticket business like ours that can be pretty discretionary.
So for what we can control, we're super confident. Look we -- I mean, yes, let's step back for a minute and start with the fact that we we guided 2018 for 9% to 10% operating margins and many people thought we couldn't make it and thought we're too aggressive guiding 9% to 10%. We raised guidance four times during the year from an earnings point of view and we beat guidance all four times after -- including the fourth quarter. And we told everybody we're in to manage the business with a bias for four earnings versus revenue growth as we try to optimize this model and build the most differentiated and profitable business in our space.
And so, look, if we were playing the old game, in the fourth quarter, ifour business would've dropped 10 points, we would have pulled a bunch of promotional levers and we would've done a lot of things like everybody else does and you would've seen a zillion emails that are at the end of the day downward spiral and it's detrimental to a brand and to your long-term positioning. And we're just not playing that game anymore. So we took the hit on the top line. We think that the business remain tough all the way through January and into February, and we've seen our business now picking up.
We feel confident about the outlook but I can't control -- and none of us can. Yeah, I mean, anybody on this call, did they forecast what was going to happen in December? I mean, I sure couldn't on December 3rd. So look, we just have the best year in the company's history. We had -- $2.5 billion company making 12.1 % operating margins. Name another home furnishings company that's expanding operating margins like we are, that's building a model like we are. We feel great about where we are. I mean, it's -- the stock goes down, we'll buy more stock. I'll buy more stock.
It's that's OK. We'll take advantage of this on both sides. So it is a great day for Team Resto. We're indifferent that the stock's bouncing around. I don't know. What is it down? 20 points? We're the best earnings in our sector by far. And so that's what we feel proud about. Do I feel bad that we took earnings guidance up on Dece