Shares of RH (Restoration Hardware) plummeted 9.01% in pre-market trading on Friday, as the luxury furniture retailer faced a perfect storm of negative factors. The company's stock price was hit by a combination of disappointing earnings results, significant analyst downgrades, and growing concerns over the impact of tariffs on its business model.

RH reported fourth-quarter fiscal 2025 adjusted earnings per share of $3.92, falling short of analyst expectations. This earnings miss was quickly followed by harsh assessments from multiple financial institutions. Citigroup downgraded RH from Buy to Neutral and slashed its price target from $437 to $200. Even more drastically, Bank of America Global Research cut its rating on RH from Buy to Underperform and reduced its price objective from $410 to $130, representing a substantial reduction in the stock's perceived value.

Adding to the company's woes are escalating worries about the potential impact of tariffs on RH's operations. As a high-end furniture retailer that sources a significant portion of its products from countries like China, Vietnam, Indonesia, and India, RH is particularly vulnerable to trade tensions. Analysts have suggested that the company is "fully at the mercy" of tariff-related challenges, which could lead to increased production costs and pressure on profit margins. The uncertain consumer reaction to potential price increases due to tariffs may also put additional strain on big-ticket discretionary purchases, further complicating RH's business outlook. With these mounting challenges, investors are reassessing their positions in the company, leading to the sharp decline in stock price.