![](\"https:\/\/www.thestreet.com\/.image\/c_fit%2Ch_800%2Cw_1200\/NDA6MDAwMDAwMDAyOTI5NzEy\/rhgallery_tb_040126.jpg\")
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RH (RH) gave investors two very different stories in the same earnings release.<\/p>\n
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.<\/p>\n
RH\u2019s 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.<\/p>\n
Those are not terrible numbers. They look even better next to RH\u2019s 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.<\/p>\n
The market sold the outlook, not the quarter<\/p>\n
The problem was the guidance.<\/p>\n
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%.<\/p>\n
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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.<\/p>\n
Wall Street had been looking for more. Investopedia said RH\u2019s adjusted EPS of $1.53 missed estimates near $2.22, while revenue of $842.6 million came in below expectations around $873.5 million.<\/p>\n
Smith Collection/Gado / Contributor via Getty Images<\/p>\n
RH gave investors a reason for the miss<\/p>\n
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.<\/p>\n
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.<\/p>\n
RH by the numbersFourth-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 millionFiscal 2026 revenue outlook: 4% to 8% growthFirst-quarter fiscal 2026 revenue outlook: negative 2% to negative 4%
\nSource: RH
\nRH is still asking investors to look beyond the next quarter<\/p>\n
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.<\/p>\n
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\u2019s said Gary Friedman continues to describe the current environment as the worst housing market in almost 50 years.<\/p>\n
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.<\/p>\n
Related: Massive KitKat heist sparks big Easter candy question<\/p>\n
#47yearold #luxury #home #retailers #stock #tanks<\/p>\n","protected":false},"excerpt":{"rendered":"
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