Shares of luxury home furnishings retailer RH experienced a steep decline in after-hours trading on Tuesday, March 31, 2026, following the release of disappointing fourth-quarter financial results and a cautious near-term forecast. The company, which is in the midst of a significant brand transformation, reported figures that fell short of analyst projections, sending its stock price tumbling.
Earnings and Revenue Shortfall
For the fourth quarter, RH posted revenue of $842.6 million. This result not only missed the Wall Street consensus estimate of $873.5 million but also represented a 3.7% increase compared to the same period last year. Adjusted earnings per share came in at $1.53, significantly below the $2.24 analysts had anticipated. Despite the quarterly miss, the company's net income showed substantial year-over-year growth, more than doubling to $28.8 million.
In its commentary, management pointed to specific headwinds that hampered performance. CEO Gary Friedman identified approximately $30 million in revenue impact due to tariff-related supply chain resourcing issues, which contributed to higher backorder and special-order balances. An additional $10 million in revenue was reportedly lost due to weather disruptions late in the quarter.
Concerning Guidance for the Current Quarter
Looking ahead, RH provided a sobering outlook for the first quarter of its 2026 fiscal year. The company projects revenue will decline between 2% and 4% year-over-year. Furthermore, it expects its adjusted EBITDA margin to compress to a range of 5.5% to 6.5%. The guidance incorporates a significant 4.2 percentage-point drag on the adjusted EBITDA margin specifically for Q1, attributed to pre-opening and startup costs associated with the company's international expansion efforts.
For the full 2026 fiscal year, however, RH maintained a more optimistic view. The company reiterated its call for revenue growth of 4% to 8% and projected adjusted free cash flow in the range of $300 million to $400 million. The full-year outlook already factors in a 2.7 percentage-point headwind to the adjusted EBITDA margin from expansion-related expenses.
Market Reaction and Financial Context
The market's reaction was severe. After closing the regular session up 6.0% at $139.98, RH's stock plummeted to $114.07 in after-hours trading following the earnings release. The report arrives as RH continues its ambitious push to evolve from a furniture seller into a comprehensive luxury lifestyle brand, a strategy involving expansive gallery spaces, hospitality ventures, and global growth.
Financially, the company ended January with total net debt of $2.38 billion, a figure that represents 4.0 times its adjusted EBITDA. In its earnings materials, RH sought to provide context by highlighting its two-year revenue growth stack of 15%, which it contrasted against competitors like Arhaus (7%), Wayfair (4%), and Ethan Allen, which saw a 15% decline over the same period.
Analyst Sentiment and Annual Performance
Wall Street sentiment was cautious even before the report. On Monday, TD Cowen analyst Max Rakhlenko maintained a Buy rating on RH but lowered his price target to $200 from $265, suggesting that a potential earnings miss was already reflected in the stock's valuation at the time.
Despite the disappointing quarterly update, RH's full-year results for fiscal 2025 told a stronger story. Annual revenue increased 8.1% to $3.44 billion, net income jumped 72% to $125 million, and free cash flow reached $252 million. The key question for investors now is whether the company can navigate persistent challenges—including tariffs, unpredictable weather, and the costs of its luxury expansion—to translate that annual momentum into a more stable and profitable 2026.
