Key Highlights
- Q4 earnings per share landed at $1.53, falling short of estimates by $0.71
- Quarterly revenue totaled $842.6M, missing the $873.48M analyst consensus
- Company executives identified tariffs as approximately 190 basis points of margin pressure in Q4
- First quarter 2026 revenue projected to contract between 2% and 4%
- Short positions in RH increased roughly 28% during March
The high-end home furnishings company delivered underwhelming fourth-quarter results, falling short on both profit and sales metrics. RH recorded earnings per share of $1.53 compared to Wall Street’s expectation of $2.24—representing a significant $0.71 gap. Quarterly sales reached $842.6M, trailing the anticipated $873.48M.
Interestingly, shares managed to climb modestly during the trading session, potentially supported by month-end portfolio rebalancing as market participants positioned themselves for the upcoming quarter.
Looking at the complete fiscal year 2025, performance showed mixed signals. Annual revenue advanced 8% compared to the prior year, representing a two-year cumulative increase of 15%. Adjusted EBITDA reached $597M with a margin of 17.3%. Free cash flow totaled $252M, marking a positive reversal from the previous year’s negative position.
Executives characterized 2025 as a year focused on significant capital deployment, with approximately $289M allocated to adjusted capital projects and an additional $37M directed toward brand acquisitions. These investments are creating short-term margin compression.
Trade policy emerged as a notable challenge. Company leadership attributed roughly 190 basis points of margin erosion to tariff impacts during the fourth quarter, particularly affecting metal outdoor collections, lighting products, area rugs, and various furniture lines. Supply chain reorganization efforts compounded these difficulties.
Looking to the first quarter of 2026, management projects revenue will contract in the range of 2% to 4%. For the complete fiscal year, guidance anticipates revenue expansion of 4% to 8% with adjusted EBITDA margins landing between 14% and 16%.
Wall Street Response
Sell-side analysts expressed caution following the report. TD Cowen maintained its “buy” recommendation while reducing its price objective from $265 down to $200. UBS lowered its target from $188 to $160 while keeping a “neutral” stance. Stifel maintained its “hold” rating, slashing its target to $165 from a previous $320.
The consensus analyst rating currently stands at “Hold” with an average price target of $211.07. The coverage universe includes seven buy ratings, ten hold recommendations, and three sell opinions.
Bearish positioning intensified as short interest climbed approximately 28% throughout March, adding additional downward pressure.
Growth Initiatives
Despite near-term challenges, RH continues advancing its expansion strategy. The retailer plans to introduce RH Estates in mid-May, accompanied by new subsidiary brands RH Bespoke and RH Couture. These initiatives follow the strategic acquisitions of Michael Taylor, Formations, and Dennis & Leen.
Global expansion remains a priority with flagship gallery openings scheduled for Paris, Milan, and London. The company currently operates 26 in-gallery dining concepts and aims to expand this footprint to 40 locations by 2027.
Regarding insider activity, executive Eri Chaya divested 7,000 shares on March 24th at $129.42 per share, generating proceeds of $905,940. Director Mark Demilio sold 2,254 shares in January at $220.00 each. Collectively, company insiders have sold approximately $2.86M in stock value over the previous 90-day period.
RH reached a 12-month peak of $257.00. The stock has declined 41.51% over the trailing year, with a 52-week low of $123.03.
