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The company is now seeing an annual sales decline of 2% to 5%, compared to a previous forecast of stable sales of 2%. It said it still expects revenue in the second quarter of the fiscal year to fall between 1% and 3% from the previous year’s levels.
RH shares were down about 8% in after-hours trading following the release. The stock was already down about 3% during regular trading, to close at $237.32.
“With mortgage rates doubling last year’s levels, sales of luxury homes down 18% in the first quarter, and the Federal Reserve forecasting a further 175 basis points for the fed funds rate by the end of the year, we expect demand to continue to slow throughout the year,” said CEO Gary Friedman. In a statement.
He added that the next several seasons will pose a short-term challenge for the company, as RH spends a period of increased demand in the days prior to the Covid pandemic.
The company warned in early June that it was seeing a dip in demand linked to the Russian invasion of Ukraine. However, Friedman said at the time that 2022 is preparing to start a new growth chapter for the company.
RH’s total revenue for the three months ended April 30 was $957 million, up from $861 million in the same period last year.
RH also said Wednesday that it has not repurchased any shares since the June 2 announcement of an expansion of its common stock buyback plan.
The retailer’s shares are down 55% year-to-date, as of the market close on Wednesday.
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