What Happened?
Shares of luxury furniture retailer RH (NYSE: RH) jumped 7.8% in the afternoon session after the company reported decent third-quarter financial results, where it met revenue expectations.
Quarterly revenue of $883.8 million was in line with Wall Street's estimates, but adjusted earnings of $1.71 per share fell significantly short of the $2.16 consensus. Furthermore, the company's revenue guidance for the upcoming quarter also came in below expectations. Despite these headwinds, investors appeared to focus on a significant improvement in the company's cash generation. RH reported a positive free cash flow of $83 million, a stark reversal from a negative cash flow of about $96 million in the same quarter last year. This strong performance likely signaled a potential financial turnaround, encouraging investors to look past the immediate earnings shortfall and weak forecast.
Is now the time to buy RH? Access our full analysis report here.
What Is The Market Telling Us
RH’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 4.1% on the news that the company announced the opening of a new large-scale design gallery in Detroit.
The new location, named RH Detroit, The Gallery in Birmingham, was described as a 60,000-square-foot, four-level immersive retail experience. This concept blended retail with hospitality, featuring a Rooftop Restaurant and a landscaped outdoor lounge. Chairman and CEO Gary Friedman noted that the space was part of a quest to elevate the brand through experiences that "cannot be replicated online." The opening was part of RH's broader plan to establish immersive Design Galleries in every major market, a move the company believed would help it reach revenue goals of $5 to $6 billion in North America.
RH is down 58.4% since the beginning of the year, and at $164.27 per share, it is trading 63.9% below its 52-week high of $454.52 from January 2025. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at an investment worth $385.00.
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