RH Cuts Growth Outlook on Demand Concerns as Weaker Economy, Rising Rates Bite By Investing.com

RH Cuts Growth Outlook on Demand Concerns as Weaker Economy, Rising Rates Bite

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By Yasin Ebrahim

Investing.com -- RH fell in after-market trading on Wednesday after cutting its full-year growth outlook on concerns about waning demand as inflation continues to put the squeeze on consumers at a time when rising rates have slowed housing activity.

RH (NYSE:RH) fell more than 5% in aftermarket hours following the announcement.

The home furnishing company trimmed its fiscal 2022 net revenue growth in the range of -5% to -2% from a prior forecast of in a range of 0% to 2% growth. Operating margins were cut to a range of 21% to 22%, down from a prior forecast of 23% to 24%.

The weaker outlook was blamed on a "deteriorating macro-economic environment has resulted in lower than expected demand," the company said, forecasting a weaker second half of the year. The jump in mortgage rates amid Federal Reserve rate hikes that has slowed home buying activity was also flagged as another headwind for demand.

"With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year end, our expectation is that demand will continue to slow throughout the year," the company added.

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