The CEO of RH, Gary Friedman, was surprised by the adverse effects that tariffs had on the company’s stock. During an earnings call, Friedman expressed his surprise at the significant drop in share prices. RH is particularly vulnerable to tariffs due to its reliance on Asian manufacturing sources.
Prior to the announcement of former President Donald Trump’s tariff plan, Friedman had already faced setbacks. The earnings of RH, a luxury-furniture retailer that rebranded from Restoration Hardware in 2017, were disappointing and fell short of analyst expectations, negatively affecting the company’s share price. As the earnings call progressed, the announcement of Trump’s tariffs caused the shares to fall dramatically. Friedman’s response was atypical for a CEO, as he openly expressed his surprise at the falling stock prices during the call.
RH’s dependency on Asian suppliers exposes the company more to tariffs compared to some other firms. With the retailer already positioned at a premium price point, further price increases could deter customers, potentially reducing revenue.
In the fourth quarter of 2024, RH reported earnings per share of $1.58, which was below the anticipated $1.92 predicted by analysts. Revenue also did not meet expectations.
Despite the threat posed by the tariffs, Friedman voiced his support for Trump’s plan, suggesting the tariffs might not remain at this level for long. He commented on the strategic use of leverage in negotiations, indicating he believed the tariffs would not be permanent and viewed them as potentially beneficial in the long term. Friedman argued that the tariffs could ultimately result in positive outcomes over time.
This information was initially reported by Fortune.com.
