RH’s RH shares plummeted 17.1% in yesterday’s after-hours trading session after its fourth-quarter fiscal 2025 (ended Jan. 31, 2026) earnings release. The luxury home furnishings retailer missed expectations for both earnings and revenues, given the challenging operating environment. Net revenues were impacted by about $30 million due to higher backorder and special order balances linked to tariff-related sourcing changes. An additional $10 million impact came from adverse weather toward the end of the quarter.
Nonetheless, net revenues increased year over year in both the quarter and the full year, indicating continued demand despite near-term disruptions. However, earnings declined on a yearly basis, reflecting pressure on profitability.
RH remains focused on long-term growth. The company continues to invest in expansion and platform development. At the same time, the company highlighted risks from tariffs and broader external factors that could impact operations and margins.
RH’s Q4 Earnings, Margin & Revenue Discussion
The company reported adjusted earnings per share of $1.53, which missed the consensus mark of $2.21 by 30.8%. The reported figure decreased slightly by 3.2% from $1.58 per share in the year-ago period.
RH Price, Consensus and EPS Surprise
RH price-consensus-eps-surprise-chart | RH Quote
Net revenues of $842.6 million also lagged the consensus mark of $872 million but improved 3.7% year over year.
RH’s Margin Highlights
Gross margin contracted 180 basis points (bps) year over year to 42.9% in the reported quarter.
Adjusted selling, general and administrative expenses decreased 190 bps year over year to 31.4% of total revenues.
Adjusted operating margin expanded 20 bps year over year to 11.5%. Adjusted EBITDA increased 7.4% year over year to $149.1 million for the quarter. Adjusted EBITDA margin also expanded 60 bps year over year to 17.7%.
Fiscal 2025 Highlights of RH
Adjusted EPS came in at $6.29, up from $5.39 from a year ago. Net sales were $3.44 billion, up 8.1% from fiscal 2024.
Adjusted operating margin expanded 10 bps year over year to 11.4%. Adjusted EBITDA margin expanded 40 bps year over year to 17.3%.
RH’s Balance Sheet & Cash Flow
In fiscal 2025-end, RH’s cash and cash equivalents were $41.1 million compared with $30.4 million at the end of fiscal 2024. The company ended fiscal 2025 with merchandise inventories worth $818.5 million compared with $1.02 billion at the end of fiscal 2024.
RH ended the quarter with a net debt of $2.38 billion and a net debt-to-adjusted EBITDA ratio of 4.0x.
Net cash provided by operating activities was $452.2 million in fiscal 2025 compared with $17.1 million in the year-ago period. Free cash flow was $252.4 million in fiscal 2025, in contrast to the negative $213.7 million in fiscal 2024.
Capital expenditures in fiscal 2025 were $199.8 million, down from $230.8 million in fiscal 2024.
RH Unveils Q1 Fiscal 2026 View
For first-quarter fiscal 2026, the company expects the quarterly revenues to decline between 2% and 4% year over year.
Adjusted EBITDA margin is forecasted to be between 5.5% and 6.5%, down from 13.1% reported in the prior-year quarter.
Fiscal 2026 Guidance of RH
For fiscal 2026, RH expects revenue growth between 4% and 8%.
Adjusted EBITDA margin is forecasted to be between 14% and 16% and adjusted free cash between $300 million and $400 million.
RH’s Zacks Rank & Peer Releases
RH currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Williams-Sonoma Inc. WSM reported mixed results for the fourth quarter of fiscal 2025 (ended Feb. 1), with earnings beating the Zacks Consensus Estimate and net revenues missing the same. On a year-over-year basis, both metrics declined.
The quarter’s performance reflects a balanced trend, with strength in operating execution and brand positioning partly offset by pressure on the top line. Margin performance remained solid, supported by cost discipline and supply-chain efficiencies, even as revenue trends softened in a challenging environment.
Wayfair W reported fourth-quarter 2025 non-GAAP earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 32.8% and marked a significant improvement from a non-GAAP adjusted diluted loss of 25 cents in the year-ago quarter. Net revenues for the fourth quarter of 2025 rose 6.9% year over year to $3.3 billion. Excluding the impact of the company’s exit from Germany, revenue growth stood at approximately 7.8% year over year. The figure beat the Zacks Consensus Estimate by 1.48%.
Last 12-Month net revenues per active customer increased 5.6% year over year to $586. The active customer base saw a modest decline. The metric decreased 0.5% year over year to 21.3 million as of Dec. 31, 2025.
The Home Depot Inc. HD has reported fourth-quarter fiscal 2025 results, wherein the bottom line beat the Zacks Consensus Estimate, while the top line missed the same. However, sales and earnings per share declined year over year.
The decline in sales was primarily due to the absence of storm-related activity in the fiscal fourth quarter, which reduced demand in several key categories. Persistent consumer uncertainty and ongoing housing market pressure continued to weigh on home improvement spending, limiting the company’s ability to capture incremental demand in the quarter.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Home Depot, Inc. (HD): Free Stock Analysis Report
Williams-Sonoma, Inc. (WSM): Free Stock Analysis Report
RH (RH): Free Stock Analysis Report
Wayfair Inc. (W): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).