RH (NYSE:RH) stock plunges 40.45% (As on April 3, 12:22:04 AM UTC-4, Source: Google Finance) after the company reported fourth-quarter earnings below Wall Street expectations, with revenue also missing analyst estimates amid a challenging macroeconomic environment. RH has faced macro headwinds affecting the high-end housing and luxury spending markets, though the company remains focused on long-term expansion plans. RH also posted a net income of $13.9 million, or $0.69 per share, for the fourth quarter, compared with $11.4 million, or $0.57 per share, a year earlier. The company said that RH Brand’s fourth-quarter demand rose by 21%. However, demand softened in mid-December after mortgage rates spiked and mortgage applications fell 22% after hawkish commentary from the Federal Reserve. Based on the total dollar volume of purchases for fiscal 2024, 72% of its products were sourced from Asia, including 35% from Vietnam and 23% from China. On Wednesday, U.S. President Donald Trump unveiled fresh tariffs on imports, including 46% on Vietnam and 34% on China.

Meanwhile, the company ended the year with meaningful debt, mostly due to the stock repurchases of $2.2 billion, the company also ended the year with incredible business momentum and meaningful assets. These assets include real estate that the company believe has an estimated equity value of approximately $500 million, which the company plans to monetize opportunistically as market conditions warrant, and excess inventory of $200 to $300 million at cost, that the company plan to turn into cash as the company optimize the assortments post the product transformation. The company expects a higher risk business environment this year due to the uncertainty caused by tariffs, market volatility and inflation risk

RH in the fourth quarter of FY24 has reported the adjusted earnings per share of $1.58, missing the analysts’ estimates for the adjusted earnings per share of $1.89. The company had reported the adjusted revenue growth of 10 percent to $812.4 million in the fourth quarter of FY24, missing the analysts’ estimates for revenue of $828.24 million.

RH provided full-year 2025 guidance forecasting revenue growth of 10% to 13%, with an adjusted operating margin of 14% to 15% and an adjusted EBITDA margin of 20% to 21%.

For the first quarter of fiscal 2025, RH expects revenue growth of 12.5% to 13.5%, with an adjusted operating margin between 6.5% and 7.0% and an adjusted EBITDA margin of 12.5% to 13.0%.