By Mackenzie Tatananni

RH stock plunged Thursday as tariffs hit the stock and the luxury furniture retailer reported fourth-quarter earnings that failed to impress investors.

Shares of RH sank 28% to $180.02 in premarket trading, marking the largest percentage decrease on record, according to Dow Jones Market Data. Stock futures tracking all three major U.S. indexes were in the red, with S&P 500 futures slumping 3.4% following an announcement from President Donald Trump on tariffs the U.S. would be levying on trading partners that were higher than expected.

The sharp decline came after the home-furnishings company reported adjusted earnings of $1.58 a share in its fourth fiscal quarter, below analysts' calls for $1.92, according to FactSet. Revenue came in at $812 million, missing the $829 million Wall Street expected.

The company also issued current fiscal-year guidance, saying it expects revenue growth of 10% to 13%, adjusted operating margin between 14% and 15%, and adjusted Ebitda margin of 20% to 21%.

In addition to the underwhelming fourth-quarter print, macroeconomic pressures also weighed on the shares. Management pointed to "a higher-risk business environment this year due to the uncertainty caused by tariffs, market volatility and inflation risk," but asserted that RH has stayed afloat "operating in the worst housing market in almost 50 years."

RH reported its latest financial results just hours before Trump's tariff announcement sank the stock market. On the subsequent earnings call, CEO Gary Friedman made a spate of comments seemingly in support of the president's decision, calling him "impressive" and saying Trump "knows how to use leverage."

"Leverage is how you win negotiations, not bluffing," Friedman said. "My view is, I don't think these tariffs are going to completely stick. I think if you're these other countries, you're going to start playing the few cards you have." He argued that tariffs would be "a really good thing long term."

The company said it plans to reposition its supply chain this fiscal year, including exiting from China-based manufacturing and transitioning Mexico-based manufacturers.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 03, 2025 07:57 ET (11:57 GMT)

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