Key Takeaways
- RH reported earnings and revenue that missed estimates as it was hurt by U.S. tariffs.
- The upscale furniture and home accessories retailer also lowered its full-year guidance.
- RH said it is taking steps to try to mitigate the impact of tariff costs.
Shares of RH (RH) sank 7% in premarket trading Friday, a day after the upscale furniture and home accessories retailer posted weaker-than-expected results and lowered its guidance on uncertainty about the impact of tariffs.
The company reported second-quarter adjusted earnings per share of $2.93 on revenue that rose 8% year-over-year to $899.2 million. Analysts surveyed by Visible Alpha were looking for $3.22 and $904.6 million, respectively.
RH said its performance was hurt by “the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years.” A bright spot was its RH Gallery location in England, which saw demand up 76%, and online demand 34% higher.
The company noted that because of the tariffs, it has continued to move production out of China, and was now “aggressively responding” to the 50% duties the Trump administration has slapped on imports from India, which constitutes 7% of RH’s business. In addition, the company has increased operations at its North Carolina plant.
RH explained that both macroeconomic uncertainties and its belief that inflation will increase significantly the rest of this year and next have led it to revise its outlook. The company now sees full-year adjusted EBITDA margin of 19% to 20%, down from the previous forecast of 20% to 21%. It anticipates revenue growth of 9% to 11%, compared to the earlier estimate of 10% to 13%.
Going into today’s session, RH shares had lost 42% of their value year-to-date.
