RH Stock Surges 20%: Strong Guidance and Accelerating Demand Drive Investor Confidence

RH, the luxury home furnishings retailer, saw its stock price surge by 20% on Friday morning following the release of its Q3 earnings report. Despite missing revenue and EPS estimates, the company's shares soared on strong guidance and accelerating demand, reflecting investors' confidence in RH's growth prospects.



RH reported third-quarter revenue of $811.73 million, missing the consensus estimate of $812.16 million, according to Benzinga Pro. The luxury retailer reported third-quarter adjusted earnings of $2.48 per share, also missing analyst estimates of $2.65 per share. However, the company's guidance for Q4 and full-year growth rates of 20% to 22% and 9.9% to 10.4%, respectively, exceeded analyst expectations and fueled investor confidence.



The positive inflection of RH's business continued to gain momentum in Q3, with demand increasing 13% despite operating in the worst housing market in 30 years. The company's vector is increasing in both magnitude and direction, with November demand up 18% and accelerating into December with month-to-date demand up 30%. This strong performance is driven by the RH brand, where November demand increased 24% with the introduction of the new RH Modern Sourcebook.

RH's proactive sourcing strategy to mitigate potential tariff impacts further bolstered investor confidence. The company stated that it does not expect a negative impact to margins as a result of the most recent communications regarding the potential for increased tariffs in 2025. RH has been proactively moving sourcing away from China over the past several years with the expectation of fully exiting the country by the end of the second quarter.



In conclusion, RH's stock surged 20% Friday morning, driven primarily by the company's raised guidance for Q4 and the full year. Despite missing revenue and EPS estimates in Q3, RH's shares soared on strong guidance, reflecting investors' confidence in the company's growth prospects. The positive outlook, driven by strong demand and strategic initiatives, boosted investor confidence, leading to the significant stock price increase. As RH continues to execute on its product transformation and platform expansion, investors can expect the company to maintain its momentum and deliver strong performance in the coming quarters.