RH’s RH shares plummeted 26.1% in yesterday’s after-hours trading session after its fourth-quarter fiscal 2024 (ended Feb. 1, 2025) earnings releases. The luxury home furnishings retailer missed expectations for both earnings and revenues, given the softening demand in the high-end home furnishings sector, led by macroeconomic factors.
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Nonetheless, RH’s earnings and revenues increased on a year-over-year basis. RH’s strategic investments over the past two years have driven significant market share growth and positioned the brand as a leader in the luxury home market.
RH acknowledges the challenges, including risks related to tariffs, market volatility, and inflation. However, the company remains focused on long-term strategy rather than short-term fluctuations. Despite operating in the weakest housing market in nearly 50 years—where only 4.06 million existing homes were sold in 2024, similar to 1978 levels despite a much larger population—RH has continued to perform strongly. This resilience is attributed to its focused investment strategy, described as “An inch wide and a mile deep.”
RH Price, Consensus and EPS Surprise
RH Price, Consensus and EPS Surprise
RH price-consensus-eps-surprise-chart | RH Quote
RH’s Q4 Earnings, Margin & Revenue Discussion
The company reported adjusted earnings per share of $1.58, which missed the consensus mark of $1.91 by 17.3%. The reported figure, however, increased significantly by 119.4% from 72 cents per share in the year-ago period.
Net revenues of $812.4 million also lagged the consensus mark of $827 million but improved 10% year over year. In the fiscal fourth quarter, total demand for RH's products increased 17% and RH Brand demand grew 21% year over year. Although demand softened in mid-December due to rising mortgage rates, RH Brand demand stabilized at 19% higher in January.
Notably, in the fiscal fourth quarter, revenues increased 18%, and adjusted operating income surged 57% on a comparable 13-week basis—outpacing other home furnishing businesses. Despite operating in the worst housing market in 50 years, RH attributes this success to its transformative product expansion, which has been one of the most significant in the industry’s history.
Gross margin expanded 120 basis points (bps) to 44.7% in the reported quarter. Adjusted selling, general & administrative expenses decreased 110 bps to 33.3% of total revenues.
Adjusted operating margin expanded 220 bps year over year to 11.3%. Adjusted EBITDA increased 23.1% year over year to $138.8 million for the quarter. Adjusted EBITDA margin also expanded 180 bps year over year to 17.1%.
Fiscal 2024 Highlights of RH
Adjusted EPS came in at $5.39, down from $6.87 from a year ago. Net sales were $3.18 billion, up 5% from fiscal 2023. Net revenues grew 6.8% over a comparable 52-week period, with total demand rising 9% and RH brand demand increasing 12% in fiscal 2024.
RH’s Balance Sheet & Cash Flow
In fiscal 2024-end, RH’s cash and cash equivalents were $30.4 million compared with $123.7 million at the end of fiscal 2023. The company ended fiscal 2024 with merchandise inventories worth $1.02 billion compared with $754.1 million at the end of fiscal 2023.
RH ended the quarter with a net debt of $2.59 billion and a net debt-to-adjusted EBITDA ratio of 4.8x.
Net cash provided by operating activities was $17.1 million in fiscal 2024 compared with $202.2 million in the year-ago period. Free cash flow was negative $213.7 million in fiscal 2024 compared with negative $67.1 million in fiscal 2023.
Capital expenditures in fiscal 2024 were $230.8 million, down from $269.4 million in fiscal 2023.
Fiscal 2025 Guidance of RH
For fiscal 2025, RH expects revenue growth between 10% and 13%.
Adjusted operating margin is expected to be between 14% and 15%, while adjusted EBITDA margin is forecasted to be between 14% and 15% and an adjusted EBITDA margin between 20% and 21%.
For the fiscal first quarter, revenue is expected to grow 12.5% to 13.5%, with an adjusted operating margin of 6.5% to 7.0% and an adjusted EBITDA margin of 12.5% to 13.0%. International expansion investments will reduce the operating margin by 160 to 200 bps.
RH’s Zacks Rank & Peer Releases
RH currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Williams-Sonoma Inc. WSM delivered impressive fourth-quarter fiscal 2024 results (ended Feb. 2, 2025), surpassing the Zacks Consensus Estimate for both earnings and net revenues. Year over year, both figures showed solid growth.
Williams-Sonoma’s strong performance in the quarter was driven by revenue gains, record-high operating margins and robust earnings. Its strategic focus on cost management and investments in digital and retail channels has positioned it well for sustained growth, even amid potential economic headwinds.
Additionally, Williams-Sonoma announced a 16% increase in its quarterly dividend, raising it to 66 cents per share.
The Home Depot Inc. HD has reported fourth-quarter fiscal 2024 results, wherein earnings and sales surpassed the Zacks Consensus Estimate and improved year over year. Home Depot's adjusted earnings of $3.13 per share increased 9.4% from $2.82 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.04 per share.
Home Depot anticipates that fiscal 2025 sales will increase 2.8% year over year. Home Depot expects comparable sales to rise 1% for the 52 weeks.
Ethan Allen Interiors Inc.’s ETD reported second-quarter fiscal 2025 consolidated net sales of $157.3 million, which represents a 6% decline from the $167.3 million reported a year ago. Ethan Allen reported an EPS of 59 cents compared with 68 cents in the prior year. The decline in profitability was attributed to softer sales, increased operational expenses and restructuring charges.
Ethan Allen’s gross margin remained stable at 60.3%, a slight improvement over the 60.2% a year ago. However, the operating margin dipped to 11.5% from the previous year's 13%, mainly due to higher advertising expenses, which increased to 2.5% of net sales from 2%.
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