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The company now sees annual sales down between 2% and 5%, compared with prior expectations that saw sales flat to up 2%. It said it still anticipates revenue in its fiscal second quarter to be down between 1% and 3% from prior-year levels.
RH shares fell nearly 8% in after-hours trading following the release. The stock had already fallen almost 3% during regular trading, closing at $237.32.
“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,” CEO Gary Friedman said in a statement.
He added that the next several quarters will pose a short-term challenge for the company, as RH laps a period of heightened demand in the earlier days of the Covid pandemic.
The company warned in early June that it was seeing softening demand pegged to the Russian invasion of Ukraine. Still, Friedman said at the time that 2022 was poised to mark the beginning of a new growth chapter for the business.
RH’s revenue in the three-month period ended April 30 totaled $957 million, up from $861 million in the prior-year period.
RH also said Wednesday that it has not repurchased any stock since announcing on June 2 the expansion of its common stock repurchase plan.
The retailer’s shares have fallen 55% year to date, as of Wednesday’s market close.