RH, the luxury lifestyle brand, has issued clarifications in response to market volatility following the reciprocal tariffs announced on April 2, 2025. The company also released its fiscal 2025 free cash flow outlook, projecting between $250 million and $350 million.
RH stated that it has operated under a 25% tariff on Chinese imports since the previous Trump administration. In response, it successfully shifted a significant portion of production from China to Vietnam, achieving 'significantly better than pre-tariff landed China pricing.' Additionally, RH has resourced a meaningful amount of its production to its own facility in North Carolina.
The company reiterated its belief that tariffs are a strategic tool being used by President Trump to accelerate global trade negotiations. RH referred to a statement made by President Trump on April 4 via his Truth Social platform: 'Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S. I thanked him on behalf of our Country, and said I look forward to a meeting in the near future.'
RH commented that 'if the President responds in kind, the Company's resourcing to Vietnam will be accretive to margins.'
On April 2, RH reported an 18% year-on-year increase in net revenues for the fourth quarter (on a 13-week comparable basis), outperforming the broader furniture and home furnishings industry despite the "worst housing market in almost 50 years." The company also disclosed that RH Brand demand increased 19% in January and continues strong. As of the current quarter-to-date, total company demand is up 17%, with RH Brand demand rising 20%.
RH noted that it believes no major furniture or outdoor furniture retailer has sourcing advantages in light of current tariff developments. The company emphasised its 'more transparent reporting regarding countries it sources from than other public furniture retailers,' whose opaque disclosures may have led to 'an incorrect analysis of the potential tariff impact and competitive positioning.' RH stated, 'it will be apparent that RH does not have any more market or financial risk than other higher end furniture-based retailers.'
To enhance transparency and guide investors, RH has introduced a free cash flow forecast of $250 million to $350 million for fiscal year 2025. Free cash flow is defined as net cash from operating activities minus capital expenditures and is used internally to assess liquidity and operational efficiency.
As part of its ongoing strategy, RH continues to expand its supply chain capabilities in the U.S. and abroad and plans to fully exit China-based manufacturing by the end of fiscal 2025.
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