CORTE MADERA, Calif., March 31, 2026, 14:05 PDT
After the closing bell Tuesday, RH shares slid as the luxury home goods retailer posted disappointing fourth-quarter numbers. Revenue landed at $842.6 million, missing Wall Street’s $873.5 million call, and adjusted earnings per share came in at $1.53, also short of the $2.24 analysts wanted. RH also warned investors that sales will decline again in the current quarter.
RH’s earnings shortfall comes at a tricky juncture. The retailer has been working hard to recast itself from just a furniture business into a full-scale luxury lifestyle brand, with splashy galleries, hospitality ventures, and international ambitions. Yet in Tuesday’s update, tariffs, weather, and startup expenses still weighed on those efforts — though the company maintains its long-term vision hasn’t wavered.
RH reported a 3.7% increase in fourth-quarter revenue versus the same stretch last year, while net income shot up, more than doubling to $28.8 million. Still, the company pointed to higher backorder and special-order balances—tied to tariff-related resourcing—as a drag on sales growth. CEO Gary Friedman pegged the tariff-driven hit at about $30 million, adding that late-quarter weather tacked on another roughly $10 million in lost revenue.
RH is projecting a 2% to 4% revenue drop for the first quarter, with adjusted EBITDA margin expected in the 5.5% to 6.5% range. For the full 2026 fiscal year, the company stuck to its brighter outlook—calling for 4% to 8% revenue growth and adjusted free cash flow between $300 million and $400 million.
RH shares surged 6.0% to finish the day at $139.98, but the after-hours mood turned abruptly. By 4:56 p.m. Eastern, the stock had slumped to $114.07 in extended trading.
RH leaned on its relative strength, highlighting in its earnings materials that two-year revenue growth hit 15%. That stacks up against 7% at Arhaus, just 4% at Wayfair, and a drop of 15% for Ethan Allen. The comparison was meant to soften the blow.
Wall Street’s tone was already wary. On Monday, TD Cowen’s Max Rakhlenko lowered his price target to $200 from $265, but he stuck with a Buy rating. He argued that even a slight earnings miss looked “embedded in current valuation.” Investing.com
Still, risks haven’t gone away. RH wrapped up January carrying $2.38 billion in total net debt—that’s 4.0 times its adjusted EBITDA. The company flagged that its 2026 guidance already bakes in a 2.7 percentage-point drag on full-year adjusted EBITDA margin and a 4.2-point hit in the first quarter, both linked to pre-opening and startup costs for its push overseas.
On the year, things looked considerably better than the latest quarter let on: 2025 revenue increased 8.1% to $3.44 billion, net income jumped 72% to $125 million, and free cash flow finished at $252 million. The focus for investors narrows to one thing—can RH carry this rebound into a more stable 2026, or do tariffs, unpredictable weather, and expansion costs bite again?
