RH stock falls on preliminary full-year results

Yahoo Finance Live anchors discuss the decline in stock for RH.

Video transcript

[AUDIO LOGO]

- In the meantime, though, we got to talk about RH, formerly known as Restoration Hardware. Of course, it's restating its earnings results for several periods after uncovering mistakes in its calculations. The retailer though saying the restatement is unlikely to affect its GAAP Net Income. But that's not all. It also came out with some other numbers, some other preliminary numbers here from the company. It sees its revenue for the full year at the low end of its 3.5% to 4.5% decline estimate for sales. So that doesn't help matters either.

- Zero surprise on this company's guidance. We'll leave the accounting thing aside. We had a CEO, Gary Friedman, come out months ago. I remember covering it because it has been ultimately one of the most read stories on our platform in the past six months. He said that the housing market was collapsing. When we see a CEO get on their earnings call and tell the investment community that the demand for their product is essentially collapsing because the market around that product is collapsing, and it's just a huge, huge red flag.

And the street has, I think, just continued to love this stock, wrongly love this stock. Now also note this too, and Citigroup pointed this out this morning. Despite all the challenges in the marketplace, here's a company that spent $1 billion to buy back their own stock last year. What a horrible investment just given how far the fundamentals of turned for this business. Look at that stock price. It's dreadful.

- It is. It is. And taking a look at, of course, the different divisions that they have, and how this is also a company that really was selling into the time period when people were-- or households were thinking about buying that extra house, that ski house, that beach house even, and then being able to Airbnb it or rent it out or just have another property that they could use as an investment.

And then, with such a market-- a drastic market shift that we've seen as the Fed continues to really loom large over what the rate environment looks like, I think for Restoration Hardware it's how did you not get a sense that was going to be coming as well and where that eventually needed to shift some of the business strategy also.

- Some of the stuff has cost more than my car. [LAUGHTER] In our age.

- The mirrors cost a lot.

- It's mind-boggling. I mean, bring some of those price points down. Help me out. Help me out. I want to buy some RH, I just can't get there, Julie.

- I think you'll have to shop somewhere else, Sozz.

- Or work harder? You're telling me I have to work harder, right?

- No.

[LAUGHTER]

- Change careers.

- Please don't work harder. Yes, the latter maybe.

[LAUGHTER]