Shares of RH (NYSE: RH), the luxury home furnishings retailer, plummeted 7.07% in after-hours trading following the release of its second-quarter fiscal 2025 earnings report. The company's results fell short of analyst expectations, and management lowered its full-year revenue growth guidance, sparking investor concerns.

For the second quarter ended August 2, 2025, RH reported adjusted earnings per share of $2.93, missing the analyst consensus estimate of $3.20. While this represents a significant increase from the same period last year, it wasn't enough to meet market expectations. Revenue for the quarter came in at $899.151 million, slightly below the analyst estimate of $904.643 million, marking an 8.38% increase year-over-year.

Adding to investor worries, RH lowered its fiscal 2025 revenue growth guidance to a range of 9% to 11%, down from the previous projection of 10% to 13%. The company cited ongoing tariff uncertainty and a challenging business environment as key factors for the revised outlook. RH now expects $30 million in additional tariff-related costs in the second half of the year, net of mitigation efforts. Furthermore, the company announced that approximately $40 million in revenues would shift out of Q3 and into Q4 and Q1 2026 due to the delayed launch of its fall sourcebook.

CEO Gary Friedman addressed the challenges in a letter to shareholders, stating, "We expect a higher risk business environment due to the uncertainty caused by tariffs, market volatility, inflation risk, and an increasing level of global discord." Friedman also warned that additional tariffs on furniture imports could pose significant challenges for smaller companies in the industry, potentially leading to consolidation.

Despite the headwinds, RH remains focused on adapting its supply chain strategy. The company is aggressively responding to recent 50% tariffs imposed on imports from India, which impact 7% of RH's business, mainly hand-knotted rugs. Additionally, RH is shifting more of its upholstered furniture production to its factory in North Carolina, projecting that 52% of these products will be produced in the United States by the end of the year.

As RH navigates these challenges, investors will be closely watching how the company manages its supply chain adjustments and mitigates the impact of tariffs on its business in the coming quarters.