RH stock (RH) rallied on Friday, rising more than 11% in early trading after the company reported a surprise profit in the first quarter and maintained its full-year outlook, alleviating concerns about the business amid tariffs and a weak housing market.
The home furnisher unexpectedly swung to a profit, reporting earnings of $0.13 per share, compared to estimates for a $0.05 loss. Revenue of $814 million was a slight miss compared to analyst estimates for $819 million, according to Bloomberg data.
RH maintained its full-year outlook for net sales to rise 10%-13%, which was seen as a sign of optimism as the company navigates supply chain disruptions and a delayed launch of some products due to tariff uncertainty.
The stock initially rose as much as 20% in extended trading late Thursday.
Despite stronger-than-expected results, commentary on the company’s earnings underscored the difficulty of reacting in real-time to shifting tariff policy.
“What it is right now is it’s kind of chaotic and unpredictable,” RH CEO Gary Friedman told investors on Thursday. “You don’t know what the tariffs are going to really be. You don’t know how long they’re going to be. You don’t know what countries are going to be what exactly.”
Read more: What Trump’s tariffs mean for the economy and your wallet
RH, whose fiscal first quarter ended May 3, is one of the first retailers to report on the period that encompasses some of the steepest tariffs in decades.
The last time RH reported earnings, President Trump stood in the Rose Garden and unveiled his “Liberation Day” tariffs that raised duties on China to 54% and then to over 100%.
The event had immediate repercussions for RH, which is highly exposed to sourcing in China.
“Oh shit, OK,” Friedman interjected on the April 2 earnings call when he saw RH stock tanking around 40% in after-hours trading.
On Thursday’s call, Friedman recounted the uncertainty that ensued in the weeks following Trump’s announcement, even after the president temporarily scaled back most tariffs on April 9.
“What happened when the reciprocal tariffs hit, we stopped shipments,” Friedman said Thursday. “People stopped producing. … and when you try to ramp back up quickly in a chaotic time like that, things are just — things are late. Things get backed up.”
He added that tariff uncertainty dampened consumer purchases, too. Sales of outdoor furniture, which peak in the spring and early summer, “got a little rocked, like everywhere got rocked from the reciprocal tariff announcements,” Friedman said. “When the market went down, our business went down.”
RH expects the tariff disruption will negatively impact Q2 revenues by 6 percentage points, though it sees revenue recovering in the second half of the year. The company continues to shift sourcing out of China and said it projects 52% of its upholstered furniture will be made in the US, primarily in its North Carolina factory, while 21% will be produced in Italy by the end of the year.
RH’s vendor partners absorbed a “meaningful portion” of the tariffs, Friedman noted. He also pointed out that the trade wars have been “devastating” for smaller businesses, which gives large firms like RH a competitive advantage.
“I mean, there’s a lot of people going bankrupt,” Friedman said. “A lot of the ankle-biter businesses, the little online things, … they can’t raise capital. … A lot of them are blowing up. They’re going away.”
Year to date, RH stock is down over 45%.
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