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The ongoing uncertainties regarding the newly levied tariffs are concerning, especially for companies like RH RH, which sources products from international markets, including Vietnam, China, Indonesia, India, North America and Europe. Nonetheless, to counter the turbulent market, the company is continuously engaging in executing its in-house initiatives, including product transformation and platform expansion strategies accompanied by its focus on expanding its global market reach. Furthermore, its marketing efforts are acting as a catalyst, shifting market demand in its favor.
After declining on April 2, 2025, the firm’s stock price started moving upward in response to its fourth-quarter fiscal 2024 earnings release. On its earnings call, RH disclosed its upbeat fiscal 2025 views, which are likely to have fostered the uptrend alongside its supply-chain enhancement initiatives. The company’s supply chain management was aimed to reduce the pressures on its margins and cash flows compared to its industry peers.
RH stock has climbed 12.9% during Monday’s trading hours, indicating investors’ optimism about its growth prospects amid a risky macro environment.
RH’s Supply Chain Enhancements
The company highlighted the resourcing of the majority of its China production from Vietnam since the last Trump administration, wherein the 25% tariff on China was disclosed. RH currently sources about 35% of its products from Vietnam compared with 23% from China. Furthermore, the company has successfully resourced a significant amount of its China production to its factory in North Carolina.
In regards to Vietnam, RH remains optimistic about the potential negotiations on downsizing tariffs after the recent interaction between Donald Trump and To Lam, General Secretary of the Communist Party of Vietnam. The company believes that if the decision is in favor of Vietnam, it will prove incremental for its growth prospects in the upcoming period.
RH’s Upbeat Fiscal 2025 Guidance
Backed by favorable in-house capabilities despite the ongoing market uncertainties, the company issued a stellar fiscal 2025 view, which boosted the sentiments of investors.
For the fiscal first quarter, RH expects revenue growth to be between 12.5% and 13.5%, with the adjusted EBITDA margin between 12.5% and 13%, which implies growth from 12.3% reported in the year-ago quarter. For fiscal 2025, the revenue growth is expected to be 10-13%, with adjusted EBITDA margin growth anticipated to be between 20% and 21%, which suggests growth from 16.9% reported in fiscal 2024. The adjusted operating margin expectations of 14-15% also indicate growth from 11.3% reported in fiscal 2024.
Notably, on April 4, 2025, RH announced its expectations for free cash flow of $250-$350 million in fiscal 2025 against the negative cash flow of $213.7 million reported in fiscal 2024.