Why RH Rallied To Start The New Year

Group 1 - Shares of luxury furniture-maker RH rose 9.6% following the delay of tariff increases on furniture items until 2027, providing relief to the company and its peers in the furniture sector [1][4] - The Trump administration had previously imposed a 25% tariff on imported upholstered furniture, with plans to increase it to 30% and other tariffs to 50% on January 1, but these increases were delayed due to progress in trade talks [2][7] - RH's CEO noted that tariffs have disrupted supply chains and increased prices, leading to significant operational challenges, including a 90-basis-point impact on operating margins [3][4] Group 2 - The furniture industry has faced multiple challenges over the past four years, with RH's stock down 76% from its pandemic-era highs, indicating a potential turnaround opportunity if headwinds begin to clear [6][8] - The company's sales are closely tied to the housing market, which has been weak, and management's decision to take on substantial debt for stock repurchases has been criticized as ill-timed [6][8]