RH Stock Slips On Q4 Profit Miss, Tariff Concerns: Retail Sees Further Woes
Synopsis
Based on the total dollar volume of purchases for fiscal 2024, 72% of its products were sourced from Asia
RH's stock slumped 26.1% in extended trading on Wednesday after the company’s fourth-quarter earnings missed Wall Street’s estimates amid concerns over tariffs.
According to FinChat data, the home furnishing firm reported adjusted earnings of $1.58 per share for the fourth quarter, while analysts expected it to post $1.91 per share.
The company reported revenue of $812.4 million for the three months ended Feb. 1, which fell short of Wall Street’s expectations.
RH also posted a net income of $13.9 million, or $0.69 per share, for the fourth quarter, compared with $11.4 million, or $0.57 per share, a year earlier.
The company said that RH Brand’s fourth-quarter demand rose by 21%. However, demand softened in mid-December after mortgage rates spiked and mortgage applications fell 22% after hawkish commentary from the Federal Reserve.
Based on the total dollar volume of purchases for fiscal 2024, 72% of its products were sourced from Asia, including 35% from Vietnam and 23% from China.
On Wednesday, U.S. President Donald Trump unveiled fresh tariffs on imports, including 46% on Vietnam and 34% on China.
“We will be working with our manufacturing partners to mitigate the impact to both our margins and costs to our customers,” CEO Gary Friedman said.
RH projected a fiscal 2025 revenue growth between 10% and 13%.
Retail sentiment on Stocktwits plunged to ‘extremely bearish’ (3/100) territory from ‘neutral’(54/100) a day ago, while retail chatter jumped to ‘extremely high.’
One retail investor speculated that the stock might drop below $150 by Friday in a “deep red market.”
Another retail trader pointed out that this was the fourth earnings miss in the past five quarters and wondered whether people would buy its products amid economic concerns.
RH shares have fallen nearly 37% year-to-date (YTD).
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