RH Q4 EPS Misses by $0.68, Shares Tumble 23% on Profit Shortfall
RH's fourth-quarter adjusted EPS of $1.53 fell 31% short of forecasts and revenue of $842.6 million missed expectations, triggering a 23% share plunge. RH also faces a securities fraud investigation alongside J.Jill and Viridian Therapeutics over potential tariff-related backorder disclosures and holiday assortment performance.
1. Q4 Results Miss Expectations
RH reported adjusted EPS of $1.53 versus a $2.21 consensus and delivered $842.6 million in revenue below the $873.5 million forecast, with revenue still up 3.7% year over year. Shares plunged almost 23% in early trading following the double miss on top and bottom lines.
2. Guidance and Expansion Headwinds
For fiscal 2026, RH projects 4%–8% revenue growth, an adjusted EBITDA margin of 14%–16%, and $300 million–$400 million in free cash flow. First-quarter 2026 revenue is expected to decline 2%–4%, with a 5.5%–6.5% EBITDA margin, reflecting startup costs for new international locations.
3. Impact of Tariffs and Weather
Higher-than-expected backorder and special order balances related to tariffs reduced fourth-quarter and full-year net revenues by about $30 million, while adverse weather cost roughly $10 million at quarter end. GAAP net income rose 107% to $29 million, with a GAAP operating margin of 11.5% and an adjusted EBITDA margin of 17.7%.
4. Securities Fraud Investigation
Johnson Fistel, PLLC is investigating potential securities fraud claims involving RH, J.Jill and Viridian Therapeutics. The probe focuses on disclosures around holiday assortment performance, competitive promotions and tariff-related backorder impacts.