RH Posts Bigger-Than-Expected Loss as Tough Housing Market Hurts Demand
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Key TakeawaysRH reported a quarterly loss and current-quarter sales guidance that missed estimates as the tight housing market pulled down demand.The upscale home furnishings retailer said it faced the toughest housing market in three decades, and that Federal Reserve monetary tightening will impact it through 2024 and possibly into next year.The news sent RH shares to their lowest point since last November.
Shares of RH (RH) sank Friday, a day after the upscale home furnishings retailer posted a bigger-than-expected loss and gave soft guidance as the tight housing market squeezed demand.The company formerly known as Restoration Hardware reported an adjusted first-quarter loss of $0.40 per share, wider than estimates. Revenue fell 1.7% year-over-year to $727.0 million, although that beat expectations. RH CEO Calls It 'Most Challenging Housing Market in Three Decades'Chief Executive Officer (CEO) Gary Friedman wrote in a letter to shareholders that the company faced “the most challenging housing market in three decades,” and that it anticipates “business conditions to remain challenging until interest rates ease and the housing market begins to rebound.”He explained that may take some time, since the Federal Reserve’s efforts to fight inflation “will continue to weigh on the housing market through the second half of 2024 and possibly into 2025.”However, Friedman said that RH believes demand trends will accelerate throughout this year.The company predicts current-quarter sales growth in a range of 3% to 4%, short of forecasts. It reiterated its outlook of full-year revenue to increase by 8% to 10%. RH shares tumbled more than 16% as of 10 a.m. ET Friday to $231.34, their lowest level in seven months.
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