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Tredu Team | Insights

RH Shares Plunge 22% After Earnings Miss and Weak Near-Term Outlook

RH (NYSE: RH) reported fourth-quarter results that missed analyst expectations, sending shares down more than 22% intraday Wednesday. The luxury home furnishings retailer posted adjusted earnings per share of $1.53, falling short of the $2.22 consensus estimate by $0.69. Revenue totaled $842.6 million, below the expected $873.48 million, though it increased 3.7% from the prior-year period. The company said fourth-quarter and full-year 2025 results were negatively impacted by approximately $30 million due to higher-than-anticipated backorders and special order balances tied to tariff-related sourcing challenges, as well as about $10 million in weather-related disruptions at the end of the quarter. Looking ahead, RH’s first-quarter fiscal 2026 guidance disappointed investors, with revenue projected to decline between 2% and 4% and adjusted EBITDA margin expected in the range of 5.5% to 6.5%. For the full fiscal year 2025, RH reported net revenue of $3.44 billion, up 8.1% year over year, while GAAP net income increased 72% to $125 million. The company also generated $252 million in free cash flow during the year. For fiscal 2026, RH forecast revenue growth of 4% to 8%, with a midpoint of 6% that it described as conservative. The company expects adjusted EBITDA margins between 14% and 16% and adjusted free cash flow of $300 million to $400 million. The outlook includes an estimated 270 basis point headwind to adjusted EBITDA margin from pre-opening and startup expenses associated with international expansion efforts.