RH (RH) Shares Tumble After Another Guidance Cut, Analysts Lower Numbers

June 30, 2022 6:06 AM EDT
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Price: $283.06 -4.9%

Rating Summary:
    15 Buy, 17 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 8 | Down: 42 | New: 10
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Shares of RH (NYSE: RH) are down nearly 5% in pre-open Thursday after the luxury furniture company slashed its 2023 revenue forecast. This marks the second guidance cut by RH in just 4 weeks.

The company now sees FY revenues between -2% to -5%, worse than the prior 0% to +2%. Adjusted operating margin is now seen between 21% and 22% vs 23% to 24% earlier.

Gary Friedman, Chairman and Chief Executive Officer, commented, “The deteriorating macro-economic environment has resulted in lower than expected demand since our prior forecast, and we are updating our outlook, particularly for the second half of the year.”

Friedman added that RH hasn’t purchased any shares since announcing a new stock buyback program on June 2.

“While we anticipate the next several quarters will pose a short-term challenge as we cycle the extraordinary growth from the COVID- driven spending shift, shed less valuable market share as we continue to raise our quality, and choose not to promote our business while we navigate through the multiple macro headwinds, we continue to believe our long-term investments will enable us to drive industry-leading performance over a longer term horizon,” he concluded.

BofA analyst Curtis Nagle cut the price target to $410.00 per share from the prior $510.00 but remained positive on RH.

“We reiterate our Buy rating. Though RH is facing macro headwinds and tougher results for the balance of the year (now reflected in estimates), we remain confident on RH’s trajectory over the next several years including the potential for double digit revenue and EPS growth. The company has proven to be a consistent share gainer in a highly fragmented market with an increasingly aspirational brand and products that continue to improve in quality and design, in our opinion,” Nagle told clients in a note.

Barclays analyst Adrienne Yih added:

“The update shows how quickly the demand environment has shifted even from earnings in early June, with a lower back half outlook.”

Yih also slashed the price target, going to $300.00 per share from $400.00.

By Senad Karaahmetovic

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