06:25 AM EDT, 09/12/2025 (MT Newswires) -- RH (RH) shares fell early Friday as the home furnishing retailer lowered its full-year revenue growth outlook amid persistent tariff-related uncertainties, while its fiscal second-quarter results came in below market expectations.

The company now anticipates revenue to grow between 9% and 11% for fiscal 2025, it said late Thursday, compared with its previous guidance for a 10% to 13% gain. The current consensus on FactSet is for sales of $3.51 billion. The stock dropped 11% in the most recent premarket activity.

"Due to the dislocation and continued uncertainty related to tariffs, we believe it is prudent to revise our guidance for fiscal 2025," Chief Executive Gary Friedman said in an earnings letter to shareholders. "While we continue negotiations with our manufacturing partners, our updated outlook reflects a $30 million cost of incremental tariffs, net of mitigation, in the second half."

Additional tariffs on furniture could prompt US manufacturers to shift production to countries closer to their international clients to avoid freight costs and potential counter duties, according to Friedman. RH has continued to shift sourcing out of China and continues to expect receipts to decrease to 2% in the fourth quarter from 16% in the first quarter, "with a meaningful portion of the tariff absorbed by our vendor partners," Friedman said.

The retailer is also "aggressively responding" to the recently imposed tariffs of 50% on India, which impact 7% of its business, "almost entirely hand knotted rugs," Friedman said. The company has begun identifying alternative countries for the category. RH now estimates 52% of its upholstered furniture to be produced in the US, 21% in Italy and about 12% in Mexico by the end of the ongoing fiscal year. The percentage made in the US is expected to continue to increase throughout 2026, the CEO added.

The company reported adjusted earnings of $2.93 a share for the quarter ended Aug. 2, up from $1.69 the year before, but below the Street's view for a larger increase to $3.21. Revenue advanced 8.4% to $899.2 million, but trailed the average analyst estimate of $905.4 million.

"Demand increased 13.7% despite the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years," Friedman said.

For the ongoing three-month period, RH expects revenue growth of 8% to 10%, while the Street is looking for $892.5 million. The company anticipates about $40 million in revenue to shift out of the current quarter and into the subsequent two quarters, according to Friedman.