MW One of the first 'liberation day' losers reports earnings this week

By Bill Peters

Earnings Watch: Results are due from RH, Victoria's Secret, GameStop, Oracle and Adobe

On April 2, hours after President Donald Trump announced hefty new tariffs that shook markets, luxury furniture chain RH got caught in the crossfire when it reported quarterly results that afternoon. Following a weaker sales outlook, shares fell sharply after hours, and tumbled some 40% a day later.

On Thursday, when RH $(RH)$ will do it all again, executives might have a chance to discuss the backdrop for the company and the furniture industry at large with a little less noise.

Still, shares of the company, once known as Restoration Hardware, are down over 53% so far this year. UBS analyst Michael Lasser, in a note last week, pointed to "several crosscurrents" that could add more volatility to the company's financials and stock price.

"In the external environment, this includes tariff and economic uncertainty, stock-market volatility, and a less robust luxury housing market over the past few months," he said. "These all could impact demand for high-end home furnishings and make it tougher for RH?to manage the business."

The retailer, known for its lavish furniture stores and dense print catalogs, reports as it undergoes a big refresh of its furniture collection and plans to open new stores and expand abroad. But RH relies heavily on Asia to make its furniture, and the U.S.'s tariffs - intended to get more companies to make things in America - have threatened to raise prices for consumers, as businesses pass on the extra costs of those duties to protect their margins.

Lasser noted that RH's liquidity position was "less than strong," with $30 million in cash on hand to end its last fiscal year. He also said the company's leverage profile was "elevated."

Other store chains, on earnings calls over the past few weeks, have touted the flexibility of their manufacturing and sourcing capabilities and said they would take a measured approach to any price increases. The months ahead will put those ideas to the test amid the U.S. trade war's stops and starts.

RH's wealthier customers have felt less pain over the past few years of rising prices, but they're more sensitive to the stock market. And Trump's on-again, off-again tariff prescriptions, along with negotiations with trading partners like China, have kept investors on edge.

In April, RH's management said it had already stocked up on $200 million to $300 million worth of excess inventory. That month, Wedbush analysts estimated the inventory surplus might give the company less than one quarter's worth of "cushion" from any hit from tariffs.

"Strategically, we think the company is making a lot of smart moves," Lasser said. "But, the volume of actions can confuse the investment story at times."

He added: "The market seems to believe that there's just a lot that needs to go right in order for the stock to work. This is also why there tends to be a good amount of volatility in the shares in reaction to earnings, in our view. It's just hard to price the value of this equity."

This week in earnings

The week ahead will bring a few more reports from other retailers and restaurants. Gaming and restaurant chain Dave & Buster's Entertainment Inc. $(PLAY)$ reports during the week, as does online styling platform Stitch Fix Inc. (SFIX) and pet-supplies retailer Chewy Inc. $(CHWY)$. Software companies Adobe Inc. $(ADBE)$ and Oracle Inc. $(ORCL)$ also report.

The call to put on your calendar

Victoria's Secret - again: Victoria's Secret & Co. $(VSCO)$ was supposed to report quarterly earnings last Thursday. But thanks to a cybersecurity breach that forced the lingerie maker to take down its website, it pushed its report back to this Wednesday. The results and call seem likely to offer additional details on the fallout from the attack, as well as an update on the impact of tariffs and competition, as some analysts worry about limited growth prospects for women's intimate clothing.

The number to watch

GameStop sales: Along with trying to sell videogames in physical stores amid falling sales and a shift toward digital gaming, GameStop Corp. $(GME)$ is buying bitcoin (BTCUSD). Ahead of the original meme stock's quarterly results, set for Tuesday, Wedbush analyst Michael Pachter said the retailer's push into the trading-card business had brought "modest success," but added that "we see no potential for a rebound in GameStop's core business, following failed attempts at an omnichannel strategy and NFT trading."

"That said," he added, "despite a complete lack of an articulated strategy, GameStop has consistently been able to capitalize on the existence of [a] 'greater fool' willing to pay more than twice its asset value for its shares - and so far, they've been right."

-Bill Peters

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June 08, 2025 10:00 ET (14:00 GMT)

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