RH (RH, Financials) shares tumbled 40% Thursday, their steepest drop ever, after new U.S. tariffs raised fears about rising costs and supply chain disruptions for the high-end furniture retailer.
The sharp decline followed RH's earnings release and President Donald Trump's announcement of broader tariffs targeting countries like China and Vietnam, where RH sources a large share of its products. Analysts at Stifel said the tariffs immediately soured investor sentiment, leaving RH “fully at the mercy” of rising duties.
While RH said it stocked up on $200 million to $300 million worth of furniture ahead of the announcement, analysts at Wedbush estimated that buffer might only last a quarter. The firm warned the tariffs could push RH's production costs up by as much as 38%.
In fiscal 2024, 72% of RH's products came from Asia—35% from Vietnam and 23% from China. The company had previously pledged to exit China by the second quarter, but didn't repeat that goal this week. CEO Gary Friedman acknowledged the difficulty of moving away from countries like Indonesia, which supplies premium teak for outdoor furniture.
Analysts say RH may fare better than other retailers due to its wealthy customer base, but the uncertainty could still weigh on big-ticket sales. Industry groups, including the National Retail Federation and Home Furnishings Association, warned the tariffs would increase prices and strain both consumers and U.S. manufacturers.
