RH's (RH) recent earnings troubles will likely be compounded by the recent Trump administration tariffs that will hit most of the countries from which it sources its products, as well as potential "demand destruction due" because of weaker consumer spending at home, according to Wedbush Securities.
However, Wedbush analysts Seth Basham and Matthew McCartney said that the company is "better positioned" than other similar retailers given its scale and customer base.
In a note to clients Thursday, the analysts said the company missed its Q4 sales expectations while both its Q1 and 2025 outlooks are "disappointing."
Furthermore, the analysts said the tariffs create "a large degree of uncertainty" impacting sales and profits and causing a nearly 30% increase in the costs of imports even if the company scrambles to adjust sourcing.
Wedbush reduced its target price on RH to $250 from $350, while maintaining an outperform rating on the stock.
Shares of RH fell more than 31% in recent premarket activity on Thursday.
Price: 171.00, Change: -78.35, Percent Change: -31.42
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