RH, the premium home furnishings retailer, experienced a 6% drop in its stock following news of a federal investigation into furniture imports that could result in tariffs on goods entering the United States. Despite RH's efforts to shift production from China to Vietnam and its own U.S. facility, the potential for tariffs has created uncertainty around supply chain costs and profit margins.
© RH
Investors are particularly concerned that any new duties could impede the company's near-term margin improvements, which are a key driver for growth, though the impact will depend on whether the tariffs exclude RH's primary sourcing countries.
Amid this uncertainty, RH continues to invest in its brand and physical presence. The opening of RH Manhasset, The Gallery at Americana, a 19,000-square-foot immersive retail space, highlights the company's ongoing focus on customer experience and expansion. This new concept aims to enhance engagement and drive sales growth, even as supply chain cost pressures pose challenges.
Looking ahead, RH projects $4.3 billion in revenue and $442.6 million in earnings by 2028, requiring annual revenue growth of nearly 10% and a significant earnings increase from current levels. Analyst fair value estimates vary widely, reflecting differing perspectives on potential tariff impacts and margin risks, with valuations ranging from $220.85 to $420 per share. While RH maintains a strong brand position and growth strategy, the federal tariff probe underscores the risks facing global supply chains and the importance of agile cost management in sustaining profitability in a volatile market.
Source: www.simplywall.st
