Overview
- RH shares, which fell roughly 20% Wednesday, dropped after Q4 adjusted EPS of $1.53 and revenue of $842.6 million missed Wall Street forecasts.
- Management said tariffs cut Q4 margins by about 190 basis points and reduced revenue by roughly $30 million, while late-quarter storms cost another $10 million.
- Guidance calls for Q1 2026 revenue to decline 2% to 4%, with full-year 2026 growth of 4% to 8%, an adjusted EBITDA margin of 14% to 16%, and $300 million to $400 million in free cash flow.
- RH flagged preopening and startup expenses tied to its European rollout as a key drag, estimating a 270-basis-point hit to full-year margins and a steeper 420-basis-point impact in Q1.
- The company is pressing ahead with a peak investment year that includes an RH Gallery opening in Milan during Design Week, further Paris and London buildouts, and the mid-May launch of RH Estates, even as analysts cut price targets and short interest rose about 28% in March.