Key Takeaways
- Q4 earnings per share of $1.53 fell short of analyst expectations by $0.71
- Quarterly revenue totaled $842.6M, missing the $873.48M Wall Street forecast
- Company executives identified tariffs as approximately a 190 basis point headwind on Q4 profit margins
- First quarter 2026 revenue projected to contract between 2% and 4%
- Short positions in RH increased roughly 28% during March
Luxury home furnishings retailer RH delivered disappointing fourth-quarter results, falling short on both profit and sales metrics. The company recorded earnings per share of $1.53, significantly below the Street’s $2.24 consensus estimate—representing a $0.71 deficit. Quarterly sales reached $842.6M, trailing analyst projections of $873.48M.
Interestingly, shares managed to climb modestly during the session, potentially supported by end-of-month portfolio rebalancing as market participants positioned themselves entering the fresh quarter.
Looking at the complete fiscal year 2025, performance showed mixed signals. Total revenue expanded 8% compared to the prior year, with a two-year cumulative growth rate of 15%. Adjusted EBITDA reached $597M, translating to a 17.3% margin. The company generated $252M in free cash flow, marking a significant improvement from negative territory in 2024.
Management characterized fiscal 2025 as their “peak investment year,” highlighting approximately $289M in adjusted capital investments alongside $37M allocated to brand acquisitions. These expenditures have created near-term margin compression.
Tariff policies emerged as a significant challenge. Company leadership noted that tariffs created roughly a 190 basis point margin headwind during the fourth quarter, with particular impact on metal outdoor furniture, lighting fixtures, area rugs and various furniture segments. Additional pressure stemmed from supply chain reconfiguration efforts.
Looking forward to Q1 2026, management projects revenue will decline between 2% and 4%. Full-year guidance anticipates revenue growth of 4%-8% with adjusted EBITDA margins landing in the 14%-16% range.
Wall Street Weighs In
Analyst sentiment turned more cautious following the results. TD Cowen maintained its “buy” recommendation while reducing its price objective from $265 down to $200. UBS lowered its target from $188 to $160 alongside a “neutral” stance. Stifel retained its “hold” rating but slashed its price target dramatically from $320 to $165.
The consensus analyst rating currently stands at “Hold” with an average price target of $211.07. Coverage breaks down to seven buy ratings, ten hold recommendations, and three sell ratings.
Betting against the stock intensified with short interest climbing approximately 28% throughout March, adding additional downward pressure.
Growth Initiatives Continue
Despite near-term challenges, RH maintains aggressive expansion plans. The company plans to unveil RH Estates in mid-May, introducing new sub-brands RH Bespoke and RH Couture. These launches follow strategic acquisitions including Michael Taylor, Formations, and Dennis & Leen.
International growth remains a priority with flagship gallery openings scheduled for Paris, Milan and London. The company currently operates 26 in-gallery dining concepts and targets expanding to 40 locations by 2027.
Regarding insider transactions, executive Eri Chaya divested 7,000 shares on March 24th at $129.42 per share, totaling approximately $905,940. Director Mark Demilio sold 2,254 shares in January at $220.00 per share. Company insiders have collectively offloaded $2.86M in stock value over the trailing 90-day period.
RH shares reached a 12-month peak of $257.00 but have declined 41.51% over the past year, touching a 52-week low of $123.03.
