Latest news with #RHOutlet
Forbes
13-06-2025
- Business
- Forbes
Q1 Profit Can't Justify RH's $180 Price Tag
GRAYS, ENGLAND - FEBRUARY 5: A general view of an RH Outlet furniture retail store at Lakeside ... More Retail Park on February 5, 2024 in Grays, United Kingdom. (Photo by) Note: RH FY'24 ended on February 1, 2025 RH stock, the luxury home furnishings retailer formerly known as Restoration Hardware, surged over 15% in after-hours trading on Thursday after the company reaffirmed its full-year forecast and discussed strategies to address rising tariffs. RH anticipates revenue growth of 10% to 13% for FY 2025, demonstrating resilience in the face of macroeconomic challenges. Yet, the excitement quickly subsided—shares fell 1.18% in after-hours trading to $178.84 following a mixed Q1 earnings report that exceeded EPS expectations but fell short on sales forecasts. For investors looking for growth paired with lower volatility, the Trefis High Quality Portfolio has outperformed the S&P 500, delivering 91% returns since its inception, providing a steadier experience during turbulent times. RH generates revenue through a combination of high-touch showrooms and lavishly curated catalogs, available both in print and online. Its product offerings include furniture, lighting, textiles, bathware, garden products, and even teen furnishings—aimed at affluent consumers with a focus on design-forward aesthetics and premium prices. The company reported a net income of $8.04 million ($0.40 per share) for Q1, reversing a loss of $3.63 million ($0.20 per share) from the previous year. Revenue increased 12% year-over-year to $814 million, coming just short of analyst expectations. Adjusted operating margin hit 7%, with EBITDA margin at 13.1%. Nevertheless, RH contends with significant obstacles: a sluggish housing market—characterized by CEO Gary Friedman as the 'toughest in almost 50 years'—and escalating tariff pressures threaten future earnings. The company detailed aggressive supply chain changes: RH is shifting production away from China, with imports from the country expected to decrease from 16% in Q1 to just 2% by Q4. The company aims to produce 52% of its upholstered goods domestically in the U.S. and 21% in Italy by year-end. However, these adjustments come with costs—tariffs are anticipated to impact Q2 revenue by approximately six percentage points. RH has also postponed the introduction of a new concept to spring 2026 amid tariff uncertainties. Despite these challenges, it is advancing with global expansion plans, with a flagship store set to open on Paris' Champs Élysées in September. The company intends to launch 7–9 new galleries each year, focusing on major cities such as London and Milan. Investors should be wary of RH's historical performance during downturns. The stock fell 71% during the 2022 inflation shock—nearly three times the S&P 500's 25% drop—and 68% during the 2020 pandemic crash. While it bounced back quickly post-COVID, it has yet to regain its 2021 highs. RH's heightened sensitivity to macroeconomic shocks raises questions about its sustainability during a potential recession. Our dashboard How Low Can Stocks Go During A Market Crash captures the performance of key stocks during and after the last six market crashes. With a valuation of approximately 45× forward earnings, RH trades at a significant premium compared to both its five-year average (38×) and the S&P 500 (26×). Its price-to-free-cash-flow ratio is particularly concerning (>200x, versus 21x for the S&P index), indicating that investor expectations may be outpacing the underlying fundamentals. Following a post-pandemic demand boom in FY 2020, RH experienced a turbulent stretch from FY 2021 through FY 2023 as rising mortgage rates, inflation, and declining housing markets pressured results. FY 2024 provided a degree of recovery, however, investor confidence remains fragile. Tariffs and the weak housing market continue to impact the outlook, despite operational enhancements. RH is undertaking a significant shift—restructuring its supply chain, expanding globally, and enhancing margins. However, the stock remains volatile and highly valued, with a history of significant declines during challenging times. Trefis partners with Empirical Asset Management—a wealth management firm in the Boston area—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has integrated the Trefis HQ Portfolio into its asset allocation framework to deliver better returns and reduced risk for clients compared to the benchmark index—a smoother experience as evidenced in HQ Portfolio performance metrics.
Globe and Mail
03-04-2025
- Business
- Globe and Mail
We're Not Allowed to Tell You What RH's (NYSE:RH) CEO Thinks of the Recent Share Price Plunge
Just recently, upscale furniture retailer RH (RH) put out its earnings report. And as is commonly the case, the CEO, Gary Friedman, was on an earnings conference call providing visibility to analysts. But Friedman provided way, way too much visibility with his shockingly visceral reaction to the share price plummet that followed the announcement of earnings. It was sufficiently visceral, in fact, that it was unprintable. And shares are in free-fall to this moment, with shares currently down over 41% in Thursday afternoon's trading. Don't Miss Our End of Quarter Offers: Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks. Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter. This earnings report came out right about the same time that President Trump was unveiling the 'Liberation Day' tariff plans, and you can about imagine what that meant for RH. But the extent of the damage proved a shock to Friedman, during the call itself, when he delivered a four-letter word for 'barnyard leavings,' and noted that RH's own 10-K report makes it clear that it is about to walk into a tariff nightmare. Thus, the combination of an already-poor earnings report, consolidated by the fact that RH is an upscale furniture operation in an uncertain economy, followed up by tariffs that would hit much of what RH sells like a bus dropped off a building would ultimately prompt the four-letter epithet from Friedman during the earnings call. Reports note that, if current trading trends hold through Thursday's session, this would be the worst day in RH's entire history of being publicly-traded, which now goes back about 13 years. Going Down Swinging But RH will not be taking this lightly. In fact, reports note that RH will be opening a new store this week, part of a former Target (TGT) store. The RH Outlet store will be opening in Commack, on Long Island. That is not all, either, as RH also plans to open a full-price version, an RH Gallery, in Manhasset later on. The RH Outlet store is an 'off-price' option, which offers '…the opportunity to bring home overstock, past-season, or slightly imperfect pieces at significantly reduced prices.' Which will likely be helpful, because with economic uncertainty ruling the roost right now, 'significantly reduced prices' are likely on the top of wish lists for a lot of shoppers out there. Is RH Stock a Good Buy? Turning to Wall Street, analysts have a Strong Buy consensus rating on RH stock based on 10 Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 48.31% loss in its share price over the past year, the average RH price target of $426.75 per share implies 187.72% upside potential. See more RH analyst ratings Disclosure
