RH CEO Gary Friedman watched the luxury furniture retailer’s stock tank during its earnings conference call with analysts Wednesday amid the unveiling of President Donald Trump’s tariff policy.
Two words summed up the situation:
“Oh, sh–. OK. … I just looked at the screen. I hadn’t looked at it. It got hit when I think the tariffs came out. And everybody can see in our 10-K where we’re sourcing from, so it’s not a secret, and we’re not trying to disguise it by putting everything in an Asia bucket.”
Shares are down 28% as investors responded to the double-whammy of RH releasing its poor earnings report and Trump’s levies on foreign countries. If that move holds through Thursday’s session, it would mark the California-based company’s worst day in its 13-year history on the public market.
RH, 1-day
Directly following Friedman’s expletive, the chief executive’s explanation of where the hit came from alluded to Trump announcing his controversial tariffs on imports to the U.S. Wednesday afternoon.
Stock market futures were hit Wednesday night as Trump’s tariffs were announced. The Dow was set to open down 1,000 points Thursday.
Friedman said it’s “not a secret” that RH sources from Asia, but noted that most other large players in the home sector did the same.
Notably, Trump slapped levies of 46% on Vietnam and 32% on Taiwan. China’s true tariff rate rose to 54% following the new increases unveiled during the White House announcement.
“Anybody of scale in the home business has a high percentage of their content coming out of Asia,” he said. “Anybody who says they don’t, that would just shock me.”
‘Worst housing market in almost 50 years’
These duties offer yet another challenge for the seller of products like rugs and dinning tables. RH, whose stock capped off its worst quarter since 2020 this week, has already been contending with what Friedman described as the toughest housing market in around half of a century.
Specifically, Friedman pointed out to analysts that there were 4.09 million existing homes sold in the U.S. in 1978, when the country had a population of 223 million. In 2024, while the population shot up to 341 million, just 4.06 million homes were sold.
“The fact is we’ve been operating in the worst housing market in almost 50 years,” he said.
Still, Friedman said RH has been able to perform “at a level most would expect in a robust housing market.” Despite this statement, the company provided weaker fourth-quarter earnings and revenue guidance than Wall Street expected, with Friedman telling analysts to prepare for a “higher-risk business environment” due to market volatility and inflation risks in addition to tariffs.
Gary Friedman, CEO, Restoration Hardware
Scott Mlyn | CNBC
RH earned $1.58 per share, excluding items, on $812 million in revenue for the fourth quarter. Analysts surveyed by LSEG predicted $1.92 in earnings per share and $830 million in revenue.
Looking forward, the company told investors to expect revenue growth of between 12.5% and 13.5% in the current quarter and within a range of 10% and 13% for the full year. Both missed consensus forecasts of analysts polled by FactSet, who penciled in growth at 16.2% for the first quarter and 14% for the year.
While Friedman attributed some of the stock’s decline to the threat of tariffs, he said the company wasn’t caught without a plan. Though RH hasn’t yet shared details, Friedman said there’s a long-term strategy for sourcing that is “big and bold” — and could see its timeline moved up as a result of the new policy.
“This move is quite stunning,” Friedman said of Trump’s trade announcement. “It’s going to force everyone to just play a different game.”
