RH Misses Q4 Earnings, Eyes +8%-10% FY Revenue Growth Amid Rebrand

Restoration Hardware (RH) reported a significant miss in its fourth-quarter earnings, with revenue at $738.3 million compared to the expected $777.4 million, and adjusted EPS at 72 cents, falling short of the $1.69 estimate. The company also noted a miss in its adjusted gross margin, reporting 43.5% against the anticipated 45.2%. Looking forward, RH anticipates a low single-digit decrease in Q1 revenue and expects adjusted EBITDA margins to range between 12% to 13%. Despite these challenges, RH projects an 8% to 10% revenue increase for the fiscal year and anticipates demand trends to accelerate throughout 2024. The company has undergone a significant transformation over the past eighteen months, aiming to launch a more inspiring and disruptive brand. This transition comes after a period of focusing on climbing the luxury market, a strategy detailed in shareholder letters from Q4 2021 to Q1 2023. Amidst the earnings miss, RH's stock experienced volatility, initially dropping by 7% after hours but later recovering to a 4% increase, suggesting investor optimism for the brand's strategic pivot and future performance.