What Smart Investors Know About RH Stock
Wall Street is down on most retailing stocks right now and is practically ignoring companies in the home furnishings space. Investors are concerned about sales pressure on retailers as consumer spending patterns slow. And furniture companies are more exposed to risks from a recession than peers that sell more consumer staples products, like groceries.
Yet downturns are regular parts of the economic cycle, and they don't threaten the long-term growth outlook for a business like RH (NYSE: RH). Smart investors know that the luxury home furnishings specialist can endure weaker demand without taking too big a hit to its business.
That said, RH isn't well insulated from the short-term challenges of weaker consumer spending. Sales in the most recent quarter were down nearly 20% to $800 million. That decline was partly due to soaring results a year ago, but management also said in a letter to shareholders that demand fell due to industrywide issues, including slowing home sales and rising interest rates.
Source Fool.com
