RH (RH), the California-based luxury home furnishings company formerly known as Restoration Hardware, is reeling after a dramatic 37% plunge in its stock price on Thursday.
The price collapse dragged shares to their lowest point in nearly five years. The plunge came on the heels of a disappointing fourth-quarter earnings report and an underwhelming outlook for the year ahead. Hours before the company’s earnings call, the Trump administration ignited market volatility by unveiling sweeping new tariffs on dozens of countries, hitting many of RH’s key suppliers.
In Q4, RH reported adjusted earnings of $1.58 per share on $812.4 million in revenue — falling short of analyst expectations of $1.91 and $827.3 million, respectively. After projecting stronger numbers in its bullish Q3, the company blamed a sudden softening in demand tied to surging mortgage rates and a weakening housing market. Mortgage applications plunged 22% in December, dragging down sales at a time RH had expected seasonal strength.
The selloff deepened as CEO Gary Friedman took the stage during the earnings call. The market had already begun reacting to the dual blow of weak results and the tariff announcement. Then came the unscripted moment that defined the day.
Trade Tensions Add to a Tumultuous Quarter
The tariffs announced Wednesday represent a seismic shift in U.S. trade policy. The administration unveiled a 10% baseline import tax on all countries and sharply higher tariffs on nations with trade surpluses. RH, heavily dependent on Asian manufacturing, was hit squarely in the crosshairs. The company sources 35% of its inventory from Vietnam, 23% from China, and most of the remainder from Indonesia and India — countries now facing tariffs of 46%, 34%, 32%, and 26%, respectively.
RH’s vulnerability is no secret — it’s outlined clearly in its annual 10-K report. Still, the scale and suddenness of the tariffs appeared to catch the company off guard. Friedman, responding in real time to RH's plummeting share price during the call, broke script with a moment of candor rarely seen in corporate America.
The "Oh Sh—" Moment: CEO Reacts in Real Time
“I guess the stock was down based on some of the numbers we reported and then it got killed because of — really, oh sh—, OK. I just looked at the screen. I hadn’t looked at it,” Friedman said, as the company’s stock dropped over 40% at one point. “It got hit when I think the tariffs came out. And everybody can see in our 10-K where we’re sourcing from, so it’s not a secret.”
The moment instantly became symbolic of RH’s broader challenges: a company already strained by inflation, rising interest rates, and a weak housing market now facing a direct hit from escalating trade tensions. Yet Friedman remained defiant, suggesting the tariffs may not be permanent and urging patience.
“I think we’ve got a very smart administration negotiating at a level we haven’t seen in our lifetimes. This is a chess game, not a checker chain,” he said, later adding that RH is well-positioned with stocked inventory that could buffer short-term disruptions.
Despite the chaos, RH is forecasting modest recovery in FY26 with projected revenue growth of 10-13%, up from 5% in FY25. The company is also working to address its balance sheet, which is burdened by $2.2 billion in share repurchases. Plans are underway to monetize $500 million in assets and convert $200-300 million in excess inventory into cash.
Whether RH can regain its footing remains to be seen. But on a day when tariffs collided with missed earnings, a raw, unscripted moment from its CEO captured the company’s precarious position — and the jarring speed with which the ground can shift in today’s markets.
“I guess the stock was down based on some of the numbers we reported and then it got killed because of — really, oh sh—, OK. I just looked at the screen. I hadn’t looked at it,” Friedman said, as the company’s stock dropped over 40% at one point. “It got hit when I think the tariffs came out. And everybody can see in our 10-K where we’re sourcing from, so it’s not a secret.”
The moment instantly became symbolic of RH’s broader challenges: a company already strained by inflation, rising interest rates, and a weak housing market now facing a direct hit from escalating trade tensions. Yet Friedman remained defiant, suggesting the tariffs may not be permanent and urging patience.
“I think we’ve got a very smart administration negotiating at a level we haven’t seen in our lifetimes. This is a chess game, not a checker chain,” he said, later adding that RH is well-positioned with stocked inventory that could buffer short-term disruptions.
Despite the chaos, RH is forecasting modest recovery in FY26 with projected revenue growth of 10-13%, up from 5% in FY25. The company is also working to address its balance sheet, which is burdened by $2.2 billion in share repurchases. Plans are underway to monetize $500 million in assets and convert $200-300 million in excess inventory into cash.
Whether RH can regain its footing remains to be seen. But on a day when tariffs collided with missed earnings, a raw, unscripted moment from its CEO captured the company’s precarious position — and the jarring speed with which the ground can shift in today’s markets.
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