RH Stock Slides After Mixed Earnings and Tariff Concerns

RH NYSE: RH stock is down more than 4% after delivering its second-quarter earnings report. However, immediately after the report, the stock was down 13%, which suggests that investors may believe the post-report sell-off was overdone. The luxury retailer in high-end home furnishings, decor, textiles, lighting and outdoor living products was in the spotlight for several reasons. First, the company’s report is seen as a broad overview of the state of the luxury consumer. The results were mixed. Revenue of $899.20 million was up 10% from the first quarter and 8.4% year-over-year (YOY). However, it missed expectations for $905.36 million. RH anticipates revenue growth between 8% to 10% in the current quarter and 9% to 11% growth for the full year. The full-year estimate was down from the prior estimate of 10% to 13% full-year revenue growth. Another key theme in RH’s quarter was profitability. The company reported an adjusted operating margin of 18.3%, down from 19.6% in the same quarter a year ago. Management attributed the margin compression largely to higher freight costs and incremental expenses tied to its new business initiatives. Gross margin was 49.2%, compared with 49.7% last year, reflecting the impact of higher promotional activity and the early effects of tariffs. On the bottom line, RH delivered adjusted net income of $147 million, or $7.78 per share, down from $153 million, or $8.48 per share, in the prior-year period. While earnings were solidly profitable, the dip reflected the combined effect of softer-than-expected revenue and expense pressure. Tariffs Continue to Add Uncertainty Investors should also pay attention to what the company said about tariffs. RH announced it would incur a $30 million cost of incremental tariffs in the second half of the year. However, the company admitted that the number is murky because of the new tariffs on the furniture industry proposed by the Trump administration. As it works on its pricing strategy, the company also announced a $40 million revenue shift from Q3 2025 to Q4 or into the first quarter of 2026. Why RH Stock Might Be Off the Lows Despite those near-term challenges, RH continues to emphasize its long-term growth strategy. The company pointed to the rollout of RH England as an important milestone in building a global luxury brand. It also highlighted the upcoming openings of RH Paris, RH Milan, and RH Madrid, which it believes will serve as brand-defining galleries that elevate European awareness. In North America, RH is expanding with new design galleries slated to open in Miami, Palo Alto, and Montecito. The balance sheet remains relatively strong. RH ended the quarter with $2.48 billion in total debt and $1.26 billion in cash, giving it flexibility as it manages tariff-related uncertainty and executes its gallery expansion. The company repurchased 450,000 shares during the quarter at an average price of $277, reflecting confidence in its long-term outlook. Management reiterated that while tariffs and shifting revenue timing will weigh on results in the second half, RH remains confident in its ability to grow sales, maintain industry-leading margins, and pursue its vision of becoming one of the most admired luxury brands in the world. RH Stock Has a Bullish Bias Before the earnings report, RH stock was down on a day when the broader market raced to new highs. The stock is consolidating near its 50-day simple moving average (SMA) around $230. The RSI reading around 42 suggests that momentum is leaning toward the bearish side but not yet oversold, leaving room for a potential rebound. The stock has been grinding sideways since July, forming a base above $220, which indicates that buyers are stepping in at lower levels. This action, combined with the stock’s ability to hold the 50-day SMA, does lend some credibility to a cautiously bullish bias. Key support appears to be near $222, where the stock has tested and bounced multiple times over the last two months. If that level breaks, the next downside support comes in around $210, which coincides with the June consolidation zone. On the upside, immediate resistance sits around $240, followed by a more significant ceiling near $250, where the stock has repeatedly failed to break out. A move through that level could trigger further upside momentum, especially if accompanied by improving volume. Overall, RH looks to be in a consolidation phase with a slight bullish tilt as long as it holds the $220–$222 support area. A decisive break above $240–$250 would confirm a stronger bullish trend, perhaps to the consensus price target of $273.47, while a failure to hold $222 could shift the bias back to bearish. Should You Invest $1,000 in RH Right Now?Before you consider RH, you'll want to hear this.MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and RH wasn't on the list.While RH currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here