Bracing For A Bumpy Ride: Analyst Eyes Weak Q1 Results For RH

Telsey Advisory Group analyst Cristina Fernández reiterated a Market Perform rating on the shares of RH RH with a price target of $225.
RH is reporting 1Q earnings after the markets close on Thursday, May 25.
The analyst expects softened consumer discretionary spending in categories like home furnishings and home improvement to weigh on the quarterly results.
The analyst notes that retailers' results in 1Q23 and retail sales data from the U.S. government confirm the weak trend.
Near-term uncertainties loom large on the stock, as the company has been pessimistic about the housing market on recent calls, citing a weak demand environment.
For the quarter to be reported, the analyst sees a sales decline of 24% to $727.5 million. EPS is expected to be $2.06.
The analyst sees an operating margin contraction of 1,100 bps to 13.7%, with a gross margin contraction of 600 bps Y/Y to 47.1%.
In the first quarter, the company may see sales deleverage and investments in advertising related to new products as it opens new stores.
Overall, at this point in the year, RH is pointing toward the low-to-mid-end of its existing guidance range.
On the positive side, the brand remains healthy, and RH has new product introductions this year and the opening of its first international store, RH England, in June.
Further out, RH plans to open nine more international stores in 2024-2025 and smaller format stores in the U.S.
Price Action: RH shares are down by 0.36% to $255.76 on the last check Tuesday.

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