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RH (RH) Stock Drops 15% as Luxury Housing Market Continues to Struggle

The stock of high-end furnishings retailer RH (formerly known as Restoration Hardware) plummeted by as much as 15% on Friday. The company warned that the luxury housing market poses ongoing challenges and is unlikely to stabilize until next year.

During the second quarter earnings call on Thursday, RH CEO Gary Friedman expressed his expectations for the luxury housing market and the broader economy. He stated that fiscal 2023 and the following year will remain challenging due to mortgage rates reaching a 20-year high. It is predicted that the current outlook for rates will remain unchanged until the second quarter of 2024.

The furniture industry is closely linked to the housing market, which has been experiencing a stagnant phase as mortgage rates continue to hover above 7% for four consecutive weeks. The National Association of Realtors reported a 2.2% drop in sales of existing homes in July compared to the prior month.

When questioned by an analyst about the housing market, Friedman stated that stabilization is expected next year. He emphasized that acceleration may only occur with interest-rate cuts or a decrease in pricing.

In terms of financial performance, RH exceeded expectations with second quarter earnings of $3.93 per share, surpassing the estimated $2.48. Additionally, net revenue reached $800 million, exceeding the expected $777.7 million. However, the company’s third quarter revenue forecast of $740 million to $760 million fell below Wall Street’s consensus estimate of $774 million.

This is not the first time that RH has warned about a slowdown. The California-based company has been providing such warnings over the past few quarters. In June last year, the stock experienced a downturn after the company expressed concerns about weakening demand.

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As the luxury housing market is expected to remain challenging until next year, AI legalese decoder can assist professionals in comprehending legal documents, contracts, and market reports. Through its advanced algorithms and natural language processing capabilities, the AI legalese decoder saves time and effort by extracting crucial information and presenting it in a user-friendly format. It empowers users to navigate the intricate dynamics of the luxury housing market with confidence.

By leveraging the power of AI, professionals and investors can stay well-informed about current trends, mortgage rates, and potential regulatory changes that may impact the luxury housing market. The AI legalese decoder acts as a valuable resource, ensuring that individuals have access to accurate and actionable information to make informed decisions in the face of ongoing challenges and uncertainties.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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