RH cuts outlook weeks after previous guidance, shares slide

June 30, 2022 GMT
FILE - This Nov. 11, 2015 file photo shows the interior at the Restoration Hardware store at International Plaza in Tampa, Fla.  Shares of RH, previously known as Restoration Hardware, are down 9% before the market open on Thursday, June 30, 2022 after the luxury home furnishings company cut its fiscal full-year sales outlook less than a month after issuing it, blaming worsening macro-economic conditions for causing lower-than-expected demand.(Eve Edelheit/Tampa Bay Times via AP, File)
FILE - This Nov. 11, 2015 file photo shows the interior at the Restoration Hardware store at International Plaza in Tampa, Fla.  Shares of RH, previously known as Restoration Hardware, are down 9% before the market open on Thursday, June 30, 2022 after the luxury home furnishings company cut its fiscal full-year sales outlook less than a month after issuing it, blaming worsening macro-economic conditions for causing lower-than-expected demand.(Eve Edelheit/Tampa Bay Times via AP, File)
FILE - This Nov. 11, 2015 file photo shows the interior at the Restoration Hardware store at International Plaza in Tampa, Fla.  Shares of RH, previously known as Restoration Hardware, are down 9% before the market open on Thursday, June 30, 2022 after the luxury home furnishings company cut its fiscal full-year sales outlook less than a month after issuing it, blaming worsening macro-economic conditions for causing lower-than-expected demand.(Eve Edelheit/Tampa Bay Times via AP, File)
FILE - This Nov. 11, 2015 file photo shows the interior at the Restoration Hardware store at International Plaza in Tampa, Fla. Shares of RH, previously known as Restoration Hardware, are down 9% before the market open on Thursday, June 30, 2022 after the luxury home furnishings company cut its fiscal full-year sales outlook less than a month after issuing it, blaming worsening macro-economic conditions for causing lower-than-expected demand.(Eve Edelheit/Tampa Bay Times via AP, File)
FILE - This Nov. 11, 2015 file photo shows the interior at the Restoration Hardware store at International Plaza in Tampa, Fla. Shares of RH, previously known as Restoration Hardware, are down 9% before the market open on Thursday, June 30, 2022 after the luxury home furnishings company cut its fiscal full-year sales outlook less than a month after issuing it, blaming worsening macro-economic conditions for causing lower-than-expected demand.(Eve Edelheit/Tampa Bay Times via AP, File)

Shares of RH tumbled 9% at the opening bell Thursday after the luxury furniture store chain cut its sales expectations just weeks after issuing guidance to its investors, blaming worsening macro-economic conditions and rising mortgage rates.

After predicting earlier this month that 2022 sales would be flat to up 2%, the Corte Madera, California, company said late Wednesday that in now believes sales will fall between 2% and 5%.

“With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year end, our expectation is that demand will continue to slow throughout the year,” said CEO Gary Friedman.

Friedman pointed to a more pronounced slowdown in the second half of the year.

RH sales surged during the COVID-19 pandemic as people spent more time at home. Those spending patterns have shifted drastically with the rollout of vaccines and people traveling more. Now, with inflation and fears of a recession, Americans are pulling back further on spending to focus on necessities.

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RH, previously known as Restoration Hardware, also announced earlier this month that it planned to buy back an additional $2 billion of its own shares. On Thursday, the company said it has not bought any of those shares.

Other furniture companies like Wayfair, La-Z-Boy and Overstock.com slid at the opening bell as well after RH cut its guidance.