RH sees housing market ‘frozen,’ delays catalog as it swings to surprise loss

Shares of RH dropped 8% in the extended session Thursday after the home furnishings company formerly known as Restoration Hardware swung to a surprise quarterly loss and said that promotions will pressure its bottom line amid a “frozen” housing market.

It also told customers that its hefty catalog will be late, with mailing delayed until the first quarter of fiscal 2024 “when demand conditions will likely be more favorable.”


lost $2 million, or 12 cents a share, in the third quarter, swinging from earnings of $99 million, or $3.78 a share, a year ago. Adjusted for one-time items, the company lost 42 cents a share. Analysts polled by FactSet were looking for adjusted EPS of 94 cents a share.

Revenue fell to $751 million, from $869 million a year ago. The analysts surveyed by FactSet expected RH to report revenue of $757 million in the quarter.

RH “experienced increased headwinds in early October when mortgage rates peaked above 8%” and the Israel-Hamas war started, it said in a letter to shareholders.

The company continues “to expect the existing housing market to remain frozen until interest rates and/or home prices fall meaningfully,” it said.

“Additionally, the home furnishings market has become increasingly promotional, and we believe that will create a mix shift toward clearance products, pressuring gross margins.”

Operating margins were below expectations due to higher-than-expected expenses, including international store openings, costs related to the pending acquisition of the New York Guesthouse property and “unsuccessful efforts to secure the iconic One Ocean Drive Miami Beach location,” the company said.

RH in September announced plans to “reimagine and restore” the public property.

In keeping with the often quirky tone of its letter to shareholders, RH said it continues with its plans to “expand the RH ecosystem” where customers will be inspired “to dream, design, dine, travel and live in a world thoughtfully curated by RH, creating an emotional connection unlike any other brand in the world.”

“For the past 23 years we’ve heard others tell us what can’t be done, and for the past 23 years we’ve failed… to listen,” said the letter, which was signed by Chief Executive Gary Friedman. “Soon the world will be within our reach.”

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