Shares of RH, formerly Restoration Hardware (RH), tumbled over 7% in premarket trading after the retailer cut its annual revenue outlook, citing pressure from tariff-related costs. The company now expects revenue growth of 9% to 11% for the full year, down from its earlier forecast of 10% to 13%. Year-to-date, RH stock is now down about 42%.
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For context, RH is a high-end home furnishings retailer. Yesterday, the company reported a profit of $51.7 million, up from $29 million a year earlier. Meanwhile, adjusted earnings came in at $2.93 per share, slightly below the $3.21 expected by analysts surveyed by FactSet. Revenue rose 8.4% to $899.2 million, just short of the $905.4 million forecast.
Tariff Costs Force RH to Trim Outlook
Despite the mixed results, tariff concerns weighed on investor sentiment. CEO Gary Friedman warned that the company expects a riskier business environment ahead due to tariff uncertainty, market volatility, and inflation. He stated that the company continues to navigate what he calls the worst housing market in nearly 50 years.
The company added that its updated outlook factors in $30 million in additional tariff costs, after mitigation, for the second half of the year. RH also expects some revenue to be delayed into next year after postponing the launch of its fall sourcebook by eight weeks. The delay came as the company waited for clarity on tariff rates to finalize pricing.
As a result, RH now anticipates that about $40 million in revenue will be pushed out of the current quarter and spread across the next two quarters.
Is RH a Good Stock to Buy Today?
Overall, analysts have a Moderate Buy consensus rating on RH stock based on seven Buys, seven Holds, and two Sells assigned in the last three months. The average RH price target of $262.0 per share implies a 15% upside potential on current levels.
