RH (NYSE:RH) saw its shares drop significantly Thursday. The high-end furniture chain reported adjusted earnings per share of $2.88 for the fourth quarter, missing a StreetAccount forecast of $3.32 per share. RH’s first-quarter and full-year guidance also missed expectations.
Meanwhile, a 14.4% decline year over year in revenue to $772.5M also came up narrowly short of consensus expectations.
“It’s clear that the stay-at-home restrictions of the pandemic created an exponential lift for home-related businesses, and it’s also clear the lift, like the pandemic, was a temporal isolated event versus something structural or systemic,” a shareholder letter explained. “Additionally, inflation that was thought to be “transitory” is now deemed “persistent” by the Federal Reserve, resulting in a record rise in interest rates triggering a dramatic decline of the housing market, with luxury homes sales down 45% in the most recent quarter versus a year ago. Add to that an underperforming stock market, and a banking crisis no one saw coming and the data points
Moving forward, the company expects fiscal 2023 revenues in the range of $2.9B to $3.1B and adjusted operating margin in the range of 15% to 17%. Analysts had anticipated $3.46B in revenue for the full year ahead. A global expansion across a number of major European cities is expected to drag on margins in 2023.
For the first quarter of fiscal 2023, management is forecasting revenues between $720M and $735M, well short of the $827.49M consensus expectation, and adjusted operating margin in the range of 13% to 14%.
RH shares were down 21 cents to $245.50.
