RH (NYSE:RH) shares dropped 5% in intraday trading Friday after the luxury home furnishings retailer reported second-quarter earnings that missed analyst expectations, even as revenue grew from a year earlier.
Adjusted earnings came in at $2.93 per share, below estimates of $3.18. Revenue rose 8.4% to $899.2 million, short of the $906.58 million consensus. The company said demand grew 13.7% during the quarter.
Net income surged 79%, while free cash flow totaled $81 million. Operating margin held at 15.1%, and adjusted EBITDA margin improved to 20.6%, both up 340 basis points year-over-year.
RH revised its fiscal 2025 outlook due to tariff-related uncertainty, now guiding for revenue growth of 9% to 11% and operating margins between 13% and 14%. For the third quarter, revenue growth was expected in the range of 8% to 10%.
Management said sourcing from China would fall from 16% in the first quarter to 2% in the fourth, while recently imposed 50% tariffs on India would affect 7% of business.
