RH CEO: 'Significant inflation' to hit this year, and gather speed in 2026 and beyond

By Claudia Assis

RH CEO Gary Friedman decries impact of tariffs and inflation, but says that 'clouds will soon pass'

RH now expects $30 million in tariff-related costs in the second half of the year.

RH Chief Executive Gary Friedman spooked investors late Thursday, saying that he believes "significant inflation" will emerge this year "and accelerate into 2026 and beyond" as the furniture industry reels from tariffs and his company posted quarterly results that missed expectations.

Friedman shared his thoughts on inflation, tariffs and the retail outlook for RH, formerly Restoration Hardware, in the company's letter to shareholders accompanying quarterly results. The lengthy letter sported a quote from Warren Buffett and Friedman's signature goodbye.

Friedman's call on inflation came as the executive decried potential tariffs on furniture entering the U.S., on top of existing levies on steel and aluminum that are also hitting the industry.

'While the sky in our sector has been darkened by inflation, interest rates, tariffs and global politics, those clouds willsoon pass'Gary Friedman, CEO of RH

The Trump administration last month started an investigation into possible future furniture tariffs.

While the goal is returning furniture manufacturing back to the U.S., Friedman said, "most in our industry hope that this investigation surfaces the difficulty of that task."

Manufacturing of high-quality wood or metal furniture "does not exist at scale in America. It would require years of investments in building the facilities and workforce that most in this industry cannot afford to make," Friedman said in the letter.

RH lowered its guidance for the year due to the ongoing tariff uncertainty, calling for $30 million in tariff-related costs in the second half of the year.

The retailer has already delayed the launch of a brand extension to 2026 and its fall catalog, which the company calls "sourcebook." Last year, the voluminous catalogs were distributed in early August.

RH guided for 2025 revenue growth between 9% and 11% on Thursday. The company had called for 2025 revenue growth between 10% and 13% when it reported fiscal first-quarter results in June.

RH shares (RH) fell 6.8% in after-hours trading Thursday.

Friedman's shareholder letters often carry a quote; Thursday's selection came from a 2016 Berkshire Hathaway Inc. (BRK.B) (BRK.A) letter from Buffett to shareholders: "Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it's imperative that we rush outdoors carrying washtubs, not teaspoons."

The sky in the furniture business "has been darkened by inflation, interest rates, tariffs and global politics," Friedman said in his letter, but "those clouds will soon pass."

It will "not only be clear skies, but also be clear that it was a good time to be a shareholder of RH," the CEO wrote, ending with his signature "carpe diem."

RH reported adjusted earnings of $2.93 a share on sales of $899 million, about 8% higher year on year. Analysts polled by FactSet expected adjusted EPS of $3.21 on sales of $905 million.

Shares of RH have lost 42% so far this year, contrasting with an advance of 12% for the S&P 500 index SPX.

-Claudia Assis

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09-11-25 2014ET