RH’s (RH) shares continued to tumble on Wednesday, plummeting over 22%. This came as Wall Street analysts trimmed their price targets following the luxury furniture retailer’s fourth-quarter fiscal 2025 earnings miss and below-expectations 2026 guidance.
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RH Blames Sales Hit on Tariff-Linked Changes
During the three-month period that ended on January 31, the Corte Madera, California-based retailer saw its quarterly sales rise by 3.7% year-over-year to $842.6 million. This is below analysts’ consensus of $873.7 million.
Furthermore, RH reported adjusted earnings per share of $1.53 for the quarter, falling short of the Wall Street consensus of $2.20. For the full year, the retailer’s revenue grew by 8.1% to $3.44 billion.
RH blamed its lower-than-expected revenue for the quarter and full year on a $30 million hit to its earnings from making a shift to its resourcing strategy in response to U.S. tariffs. The move created a backorder and special order backlog larger than anticipated, the retailer noted.
Furthermore, the company said it took a $10 million hit from adverse weather conditions during the quarter.
Looking ahead, RH projected revenue growth of 4% to 8% for fiscal 2026. It also said it expected its revenue for the first quarter, which ends on May 2, to decline between 2% and 4%.
Analysts Weigh in on RH’s Forecast
Reacting to the move, Goldman Sachs analyst Kate McShane reaffirmed her Sell rating on RH and trimmed her price target by 30%, from $144 to $101, implying about 8% downside risk. McShane said the earnings and guidance fell short of expectations.
Similarly, Wells Fargo’s Zachary Fadem slashed his price target by 20%, from $225 to $180, suggesting about 64% upside. However, Fadem maintained his Buy rating on RH, noting that the retailer’s leverage, inventory, and free cash flow all improved.
In addition, the analyst pointed to expectations of a pickup in revenue growth during the second half of the new fiscal year as well as new product launches.
Is RH Stock a Good Buy?
Across Wall Street, analysts have a Moderate Buy consensus rating on RH’s shares. This is based on five buys, four Holds, and one Sell assigned over the past three months.
In addition, the average RH price target of $168.11 implies about 54% upside.
