RH (RH) shares slumped lower Thursday after the high-end furniture chain slashed its full-year sales forecast amid what it called a "deteriorating macro-economic environment."
RH, previously Restoration Hardware prior to its re-listing on the Nasdaq in 2012, said full-year sales would likely fall between 2% and 5% from 2021 levels, down from its prior forecast -- which was only published in early June -- of a gain as high as 2%.
Profit margins will likely narrow as well, the group said, thanks in part to higher input and labor costs, with operating margins now seen in the range of 21% to 22%.
Home retailer Bed Bath & Beyond (BBBY) cautioned Wednesday that "an acute shift in customer sentiment" has "materially escalated" into the summer months, forcing it to accelerate markdowns of its existing inventory following a wider-than-expected first quarter loss.
“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.
“While we anticipate the next several quarters will pose a short-term challenge as we cycle the extraordinary growth from the Covid-driven spending shift, shed less valuable market share as we continue to raise our quality, and choose not to promote our business while we navigate through the multiple macro headwinds, we continue to believe our long-term investments will enable us to drive industry-leading performance over a longer term horizon," he added.
RH shares were marked 9.7% lower in early afternoon trading to change hands at $214.30 each, a move that would extend the stock's year-to-date decline to around 60%.
"RH's business update signaled likely meaningful intra-quarter demand deterioration.. Importantly, in our view, demand must have slowed considerably as management provided guidance on 6/2,” said Cowen & Co. analysts, who cut their price target on the group by $150 to $300 per share.
