Why RH Sees Softer Demand Ahead

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RH

is wobbling on Friday, after the home goods retailer provided a cautious outlook for the year.

After the close of regular trading Thursday

RH

(ticker: RH) said it earned $7.78 a share, on revenue that rose 11.2% year over year to $957 million. Consensus called for EPS of $5.33 on revenue of $924.8 million.

That better than expected quarter was somewhat overshadowed by the company’s outlook. Its second-quarter forecast was a bit light, and for the full year, RH expects revenue to be flat to up 2% year over year, a range that puts it below the $3.99 billion consensus estimate.

The move comes as RH said that it had seen “softening demand trends which began at the time of the Russian invasion of Ukraine and have further slowed during the market disruption over the past several months.” That leads it to believe that the next few quarters could be challenging, although it reiterated its optimism about the longer-term, bolstered by recent investments in its business.

That’s a bit of a departure from other home goods retailers, as

Williams-Sonoma

(WSM) sounded a more upbeat note when it reported results last month, and home improvement retailers

Home Depot

(HD) and

Lowe’s

(LOW) also saw demand hold up better than many expected.

In addition, other retailers catering to higher income consumers across the sector have tended to deliver strong results and guidance this earnings season.

Still analysts remained largely upbeat about the stock, arguing that near-term choppiness should give way to increased earnings as the company further expands and cements its place amid the sector’s luxury players.

The market also seems unconcerned: after notching small losses, RH was up 0.02% to $302 in recent trading.

Write to Teresa Rivas at teresa.rivas@barrons.com