RH (RH) is a Zacks Rank #5 (Strong Sell) that operates as a retailer and lifestyle brand in the home furnishings market. The company offers products in various categories, including furniture, lighting, textiles, bath ware, décor, outdoor and garden, baby, child, and teen furnishings. 

The company faces headwinds from tariffs and a slumping stock market. And if that was not enough, the stock just dropped over 40% and earnings last week.

While this might be a bargain in the long-run, investors should be cautious as the stock likely is in store for a rough 2025.

About the Company

RH, formerly known as Restoration Hardware Holdings, Inc., rebranded in 2017 and is headquartered in Corte Madera, California.

Founded in 1980, the company markets its luxury home furnishings through multiple channels, including its website, hospitality spaces, sourcebooks, trade and contract programs, and a network of RH Galleries, outlet stores, guesthouses, Interior Design offices, and Waterworks showrooms.

RH is valued at $3 billion and has a Forward PE of 15. The stock holds Zacks Style Scores of “F” in Growth and “D” in Value.  

Q4 Earnings

RH reported earnings on April 2nd, seeing a17% EPS miss. The company also posted a revenue miss and guided FY25 revenue growth +10-13%.

Management struck a cautious tone looking forward, pointing to a riskier business environment shaped by macroeconomic pressures and ongoing tariff uncertainty. Tariffs from key sourcing countries like China, Canada, and Mexico remain a major headwind, with the potential to shift quickly. Some rates may drop from 45% to 25%, but timing and policy direction remain unclear.

While RH is attempting to mitigate these pressures through supplier negotiations and by leveraging its scale, the unpredictability of tariffs continues to weigh on margins and adds complexity to near-term planning.

The stock dropped from the $240 level all the way to $123 the next day. It has since bounced 40 points, but investors might want to take off risk as analysts lower their earnings estimates.

Earnings Estimates Falling

Since reporting earnings, estimates have fallen off a cliff.

Over the last 7 days, analysts have taken numbers down a staggering 79% for the current quarter. The drop, from $1.43 to $0.30, reflects the short-term pain.  

But the trouble continues, with next quarter's numbers falling 10%, going from $3.95 to $3.56.

The current year’s estimates go from $13.26 to $11.00, or a drop of 17%.

Next year, numbers over the last 7 days have gone from $19.89 to $15.92, a 20% reduction in the consensus.

Technical Take

The stock is trading at lows not seen since COVID. From those lows in 2020, the stock shot to $744, but has fallen to the $150 area. This 80% drop from highs looks like a bargain, but investors should watch the technical levels before feeling comfortable getting on the long side.

The 21- day MA is $220, while the 50-day $302 and the 200-day is $318. Those levels are likely going to come down over time so keep an eye on those long-term for an entry.

But for now, the stock just fell into a “Death Cross” which is when the 50-day falls below the 200-day. If there is further pressure on the market and RH, the COVID lows under $80 could be in play. So with that risk on the table, investors need to shy away.

In Summary

While RH may eventually present a long-term value opportunity, the near-term outlook remains highly uncertain. Tariff volatility, falling earnings estimates, and technical weakness—highlighted by a recent death cross—paint a bearish picture for the stock in 2025.

With analysts slashing forecasts and macroeconomic headwinds mounting, investors are likely better off staying on the sidelines until clearer signs of stabilization emerge.

For those interested in the consumer products space, a better option might be WK Kellog (KLG). The stock is a Zacks Rank #2 (Buy) that is trading higher so far in 2025.     

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This article originally published on Zacks Investment Research (zacks.com).

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