What Happened?
Shares of luxury furniture retailer RH (NYSE:RH) jumped 10.8% in the afternoon session after the company reported impressive first quarter 2025 results, which significantly blew past analysts' EPS and EBITDA estimates, though revenue missed slightly.
While second-quarter revenue is expected to slow due to tariff-related disruptions, RH reaffirmed full-year guidance, projecting EBITDA margins above 20%. The company highlighted strong demand in Europe, with double-digit growth across its flagship Galleries in England, Munich, and Dusseldorf, indicating growing global appeal.
It also provided constructive updates on how the tariff exposure was being managed, adding, "We have continued to shift sourcing out of China and expect receipts to decrease from 16% in Q1 to 2% in Q4, with a meaningful portion of the tariff absorbed by our vendor partners. We have also resourced a significant portion of our upholstered furniture to our own North Carolina factory. We are now projecting that 52% of our upholstered furniture will be produced in the United States and 21% will be produced in Italy by the end of fiscal 2025."
Overall, this was a strong quarter, underscored by resilient margins, profitable growth, and strategic expansion in tough market conditions.
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What The Market Is Telling Us
RH’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for RH and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 23.3% on the news that the company reported strong second-quarter earnings results. RH beat analysts' gross margin expectations. In addition, its revenue and EPS narrowly outperformed Wall Street's estimates.
The result was encouraging, especially in a challenging housing market that has been frozen by high interest rates and waiting to thaw. Interestingly, the top line reflected market share gains in North America for RH's business.
Also, the company was expanding to other regions, with plans for new locations in Paris, London, and Milan by 2026. The expansion underscores investments in growth opportunities that could benefit the business as the macro environment improves. Overall, this was an impressive quarter for the company.
RH is down 50.8% since the beginning of the year, and at $194.27 per share, it is trading 57.3% below its 52-week high of $454.52 from January 2025. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at an investment worth $790.34.
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