RH (RH) gave investors two very different stories in the same earnings release.
The first was a company that improved through fiscal 2025. The second was a company warning that the next quarter is likely to worsen before it improves. The market cared much more about the second one. The stock closed April 1 at $112.85, down 19.29%, per Yahoo Finance.
RH’s fourth-quarter revenue rose 3.7% to $842.6 million, while GAAP net income more than doubled to $28.8 million. For the full year, revenue climbed 8.1% to $3.44 billion, GAAP net income rose 72% to $124.8 million, and free cash flow reached $252.4 million.
Those are not terrible numbers. They look even better next to RH’s balance-sheet progress. Inventory fell to $818.6 million from $1.02 billion a year earlier, and cash and cash equivalents rose to $41.2 million from $30.4 million. Operating cash flow for the year came in at $452.2 million.
The market sold the outlook, not the quarter
The problem was the guidance.
RH told investors to expect first-quarter fiscal 2026 revenue growth of negative 2% to negative 4%, along with an adjusted EBITDA margin of 5.5% to 6.5%. For the full year, the company guided to revenue growth of 4% to 8% and an adjusted EBITDA margin of 14% to 16%.
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That full-year outlook still points to growth, but it was not enough to offset the weak first-quarter setup. The company also said the full-year view includes a 270-basis-point margin hit from pre-opening and startup costs tied to international expansion, with a steeper 420-basis-point impact in the first quarter.
Wall Street had been looking for more. Investopedia said RH’s adjusted EPS of $1.53 missed estimates near $2.22, while revenue of $842.6 million came in below expectations around $873.5 million.
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RH gave investors a reason for the miss
RH said fourth-quarter and full-year 2025 revenue were negatively affected by about $30 million from tariff-related resourcing that pushed backorders and special-order balances higher. The company also said adverse weather late in the quarter cost another $10 million.
Those details matter because they show the miss was not driven by one clean demand collapse. Tariffs, weather, and supply timing all played a role. Investors still chose to focus on the weaker near-term guide, which suggests the market is not ready to dismiss the slowdown as temporary noise.
RH by the numbers
- Fourth-quarter GAAP revenue: $842.6 million, up 3.7%
- Fourth-quarter GAAP net income: $28.8 million, up 107%
- Full-year GAAP revenue: $3.44 billion, up 8.1%
- Full-year GAAP net income: $124.8 million, up 72%
- Full-year free cash flow: $252.4 million
- Fiscal 2026 revenue outlook: 4% to 8% growth
- First-quarter fiscal 2026 revenue outlook: negative 2% to negative 4%
Source: RH
RH is still asking investors to look beyond the next quarter
The company said its two-year revenue growth of 15% has outpaced peers, including Arhaus, Wayfair, La-Z-Boy, West Elm, Pottery Barn, and Ethan Allen. Management is also still pointing to international expansion and a larger long-term revenue opportunity, including plans that target $5 billion to $6 billion in North America and $20 billion to $25 billion globally.
RH is still selling a long-term luxury platform story. Investors, at least for now, are stuck on a weaker first quarter, tariff friction, and a housing market that still is not giving premium home-furnishing names much help. Barron’s said Gary Friedman continues to describe the current environment as the worst housing market in almost 50 years.
That is why the stock got hit so hard. The bigger vision is still there, but the next few months are what investors are pricing.
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