Key Highlights
- Q4 earnings per share of $1.53 fell short of the $2.24 estimate by $0.71
- Quarterly revenue of $842.6M missed the $873.48M analyst forecast
- Company executives identified tariffs as a roughly 190 basis point headwind on Q4 margins
- First-quarter 2026 revenue projected to fall between 2% and 4%
- Short positions in RH jumped approximately 28% during March
The luxury home furnishings company RH delivered underwhelming fourth-quarter results, falling short on both profit and sales metrics. Earnings per share registered at $1.53, significantly below the Wall Street consensus of $2.24—representing a miss of $0.71. Sales totaled $842.6M, trailing the anticipated $873.48M.
*RH FALLS 9% AS OUTLOOK DISAPPOINTS$RH Q4 EPS $1.53, consensus $2.20$RH Q4 net revenue. $842.6M, estimate $873.6M
3 certainties: Death, taxes, and $RH wetting the bed https://t.co/cnm6lWOER3 pic.twitter.com/Slxtjqwjme
— Negligible Capital (@negligible_cap) March 31, 2026
Interestingly, shares managed to tick upward during the trading session, potentially buoyed by end-of-month portfolio rebalancing as market participants repositioned for the upcoming quarter.
Looking at the complete fiscal year 2025, the picture wasn’t entirely grim. The company achieved 8% revenue growth year-over-year, with a two-year comparison showing a +15% increase. Adjusted EBITDA reached $597M with a margin of 17.3%. Free cash flow improved to $252M, marking a reversal from the negative territory seen in 2024.
However, company leadership characterized 2025 as a year of heavy investment, pointing to approximately $289M in adjusted capital expenditures alongside $37M deployed for brand acquisitions. These outlays are creating near-term margin compression.
Trade tariffs emerged as a significant obstacle. Executives highlighted that tariffs created roughly a 190 basis point drag on fourth-quarter margins, with the impact most pronounced across metal outdoor furniture, lighting fixtures, rugs, and various furniture lines. Supply chain adjustments compounded these challenges.
Looking forward to Q1 2026, management projects revenue will contract by 2% to 4%. For the full fiscal year, guidance anticipates revenue expansion of 4% to 8% with adjusted EBITDA margins landing between 14% and 16%.
Wall Street’s Take
The analyst community responded with tempered enthusiasm. TD Cowen maintained its “buy” recommendation but slashed its price objective from $265 down to $200. UBS reduced its target from $188 to $160 while maintaining a “neutral” stance. Stifel preserved its “hold” rating with a price target of $165, significantly lower than its previous $320 forecast.
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” calls.
Betting against the stock intensified, with short interest climbing roughly 28% throughout March, adding downward pressure on shares.
Growth Initiatives
Despite facing challenges, RH continues advancing its expansion strategy. The retailer plans to unveil RH Estates in mid-May, introducing companion brands RH Bespoke and RH Couture. These initiatives follow the company’s acquisitions of Michael Taylor, Formations, and Dennis & Leen.
Global expansion remains on track with flagship locations scheduled to open in Paris, Milan, and London. The company currently runs 26 in-gallery dining venues and targets reaching 40 locations by 2027.
Regarding insider activity, executive Eri Chaya offloaded 7,000 shares on March 24 at $129.42 per share, generating proceeds of $905,940. Director Mark Demilio sold 2,254 shares in January at $220.00 apiece. Company insiders have collectively disposed of $2.86M in stock value over the trailing 90 days.
RH shares reached a 12-month peak of $257.00. The stock has declined 41.51% over the past year, touching a 12-month bottom of $123.03.
