US furniture retailer RH shares tumble as slowing sales prompt dour revenue forecast

Applied Energetics

08/09/2023 19:35

By Chibuike Oguh
       NEW YORK, Sept 8 (Reuters) - Shares of U.S. home
furniture retailer RH  RH.N  dropped more than 15% on Friday
after the company warned that slower quarterly sales would
result in disappointing revenue.
    RH after the closing bell on Thursday forecast third-quarter
revenue of $740 million-$760 million, below the average Wall
Street analyst estimate of $772.87 million according to LSEG
data. 
    RH's second-quarter net revenue fell 19% to $800 million
while net income slumped 37% to $76.5 million as furniture sales
declined due to weaker demand for luxury items. 
    RH's stock fell more than 15% to $312.95, its biggest daily
drop since March 2020.
    "We continue to expect the luxury housing market and broader
economy to remain challenging throughout fiscal 2023 and into
next year as mortgage rates continue to trend at 20-year highs
and the current outlook is for rates to remain unchanged until
the second quarter of 2024," RH Chairman and CEO Gary Friedman
said in a letter to shareholders.
    Multiple analysts, including from Citigroup, UBS and
Wedbush, slashed their price targets for RH's shares following
the report. JPMorgan and Jefferies analysts, however, raised
their price targets.
    The median Wall Street price target for RH's shares is $340
with a current recommendation of "Hold," LSEG data showed.
    RH estimated increased advertising costs of $50 million as
it begins printing and mailing out its product catalog in coming
weeks to homes across the United States and UK.
   "With majority of mailings not hitting homes yet, it's likely
management is embedding some degree of conservatism in 3Q (third
quarter) sales guide," Jefferies analysts, led by Jonathan
Matuszewski, wrote in a note to investors.

 (Reporting by Chibuike Oguh in New York; Editing by Lance
Tupper and Mark Porter)
 ((Chibuike.Oguh@thomsonreuters.com; +332-219-1834; Reuters
Messaging: chibuike.oguh.thomsonreuters.com@reuters.net))