By Shaina Mishkin
Home goods retailer RH has an ambitious expansion plan. It's happening at the same time as what the company's CEO described as "the most dire housing market in decades."
Stock of RH, the furniture retailer formerly known as Restoration Hardware, was down 23% in late Wednesday morning trading after fourth-quarter results fell short of analyst expectations. The stock, trading at $107.13, is on track for its lowest close since April 2020, according to Dow Jones Market Data.
RH reported fourth quarter net income of $29 million on about $843 million in revenue, falling short of the $43.6 million in net income on $873 million in revenue that analysts had expected, according to FactSet. The company expects revenue to fall between 2% and 4% in the first quarter, and anticipates revenue growth between 4% and 8% in 2026.
It hasn't been smooth sailing in the furniture space. "Compounding clutter from tariffs, global discord as a result of war, and the most dire housing market in decades can make it difficult to separate the signal from the noise," CEO Gary Friedman said in a video message that opened the fourth-quarter conference call.
The company, which is investing in a global expansion and launching a new luxury product line, RH Estates, outlined its plans to ramp up revenue growth and pay off debt by 2029.
"While one might look at the current market discord and argue that RH has been in the wrong place at the wrong time, I would argue we've used this period to position our brand to be in the perfect place at the perfect time," Friedman said, citing a potential tailwind of strong spending from wealthy consumers and a generational transfer of $30 trillion to $38 trillion in the next decade.
Jefferies analysts Jonathan Matuszewski and Randal Konik restated their Hold rating in a Tuesday note. "We appreciate the long-term potential from the recent multiyear investment cycle, but we have difficulty getting beyond the combination of negative growth near-term, ongoing margin drag from international investments, financial leverage, and pricing power that may have tapped out given an increasingly promotional stance," they wrote.
The housing market isn't helping. The worst housing market in decades is entering its fourth year this year, the CEO said on the call. Existing home sales in 2025 logged their third straight year of the slowest sales since the mid-1990s.
A combination of high home prices and higher mortgage rates have weighed on home sales since the middle of 2022. Homeowners with low financing costs -- or no mortgage at all -- have little reason to trade up, while first-time buyers face higher financing costs for fewer options.
The tough environment for buying a new home creates headwinds for companies linked to residential purchases, such as builders, housing services providers, and home goods retailers. With housing costs high, the metros attracting new residents are largely those with plentiful home supply, Barron's reported recently.
While hopes were high that 2026 would bring a rebound in sales, mortgage rate fluctuations brought about by the war in Iran has been a wild card for the typically busy spring season.
Economists surveyed by FactSet expect existing-home sales in March will rise about 5% from the month prior to a still-low 4.11 million annualized rate.
RH isn't banking on the market improving. "Call today the new normal and build out from here," Friedman said. A dramatic jump in interest rates, he says, could hurt the housing market further. But if rates decline by a percentage point and prices move lower, "you're going to see a housing market acceleration," he said.
Still, the current time period is a relative anomaly. "It's hard to believe it gets worse than this," he said.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 01, 2026 13:39 ET (17:39 GMT)
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