Please ensure Javascript is enabled for purposes of website accessibility

RH Shares Fall as All Stores Close Indefinitely

By John Rosevear - Mar 31, 2020 at 11:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The home furnishings company will stop paying its retail workers on Friday.

What happened

Shares of RH (RH 1.34%) were down on Tuesday, after the upscale home-furnishings retailer said that it will keep its stores closed indefinitely amid the ongoing coronavirus pandemic. 

As of 11:30 a.m. EDT today, RH's shares were down about 11.3% from Monday's closing price.

So what

RH reported earnings after the market closed on Monday, and they weren't bad: For the full fiscal year, earnings per share grew 77% to $9.07, on a 6% increase in revenue. 

But 2020 is already shaping up as a very different kind of year.  

The interior of a Restoration Hardware luxury home-goods store.

RH's stores will be closed indefinitely. Image source: RH.

RH had originally planned to keep its retail locations closed until March 27, and to pay its employees while they were closed. But that plan has had to change: CEO Gary Friedman said that the company's stores will now be closed indefinitely, and that it will pay its store employees through April 3, but not beyond that.

In an effort to show some solidarity with those workers, Friedman and the rest of senior management will forgo 100% of their salaries until business conditions improve.

Now what

For obvious reasons, RH withdrew its guidance for 2020, and declined to give any sort of forecast on Monday beyond saying that long-term prospects are still very good. But Friedman did note that although the company is making sales online while its stores are closed, total demand has fallen 40% since stores closed in mid-March. 

For investors, here's the takeaway: RH should have the cash and resources to get through this, and it might even be in position to make some acquisitions as competitors falter. But it's going to be ugly for a while. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

RH Stock Quote
$307.56 (1.34%) $4.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.