RH Plunges as Q1 Experiencing Soft Demand, Q4 Revenue Fell Short By Investing.com

By Dhirendra Tripathi

Investing.com – RH (NYSE:) stock plunged nearly 12% Wednesday after the high-end furniture retailer said it had experienced softening of demand in the first quarter so far.

First quarter net revenue is seen growing 7-8% compared to the 78% growth in the same period last year. The company said the weakening coincided with Russia’s invasion of Ukraine in late February and the market volatility that followed.

The company said, “it is prudent to remain conservative until demand trends return to normal.”

The company flagged its concerns after its revenue in the fourth quarter through January 29 fell short of estimates.

Net revenue in the current year is seen growing 5-7%, compared to the 32% growth in financial year 2021. Adjusted operating margin could go either way compared to last year’s, according to the company’s forecast. It is seen between 25% and 26% compared to 25.6% in 2021.

The company just about met the lower end of its annual revenue outlook in 2021. In its third revision of the year, the company had, in December, said its annual revenue would grow 32-33% compared to the previous forecast of a 31-33% rise. Annual revenue rose 32% to $3.76 billion while was up 11% at $903 million.

The company’s online businesses continue to lose money while adjusted operating margin expanded by 1.5 percentage points to 25.2% in the quarter.

Adjusted profit in the fourth quarter rose 14% to $164 million.