RH Reports Q1 Surprise Profit Amid Tariff Challenges, Shares Surge

RH, the luxury home furnishings retailer, reported a surprise profit in its fiscal first quarter despite missing revenue expectations and facing significant tariff challenges and a weak housing market. The company’s stock surged between 11% and 18% following the earnings release, reflecting investor relief amid ongoing uncertainties. RH reaffirmed its full-year revenue growth target of 10%-13% and projected free cash flow of $250-$350 million, buoyed by strong high-end margins and strategic shifts in sourcing. To mitigate tariff impacts, RH is significantly reducing its reliance on China—from 16% of product receipts in Q1 to 2% by Q4—and increasing domestic and Italian production, with over 50% of upholstered furniture expected to be U.S.-made by year-end. CEO Gary Friedman highlighted the chaotic and unpredictable tariff environment under President Trump's policies, which has delayed product launches and disrupted supply chains but also accelerated RH’s European expansion and efforts to absorb some tariff costs through vendor partnerships. Despite these headwinds, RH remains optimistic about recovering sales in the latter half of the year and navigating the toughest housing market in decades.