Yahoo Finance Live anchors discuss stock performance for RH after the company reported earnings.

Video Transcript

JULIE HYMAN: Let's talk about another story that we're watching here this morning that's sort of in line with some of the spending trends we're talking about. RH, the luxury furniture retailer formerly known as Restoration Hardware, the stock is down 8.5%. After cutting its outlook, it cited lower-than-expected demand. By the way, it didn't just cut its outlook. It cut its outlook for the second time in, what, a month?

BRIAN SOZZI: We just talked about this company--

JULIE HYMAN: In the past month, right?

BRIAN SOZZI: --a couple of weeks ago for earnings.

JULIE HYMAN: So the company now says for the full year its revenue will fall to between 2-- it will fall. It's not gonna grow at all. It said it will fall by 2% to 5%. It had seen flat to up 2% growth just on June 2. That was the most current number that we had. It sees adjusted operating margin at 21% to 22%. It saw 23% to 24%.

And the company's chairman and CEO saying in the statement, basically, it's a deteriorating macroeconomic environment. Another interesting side note in the statement, they had just announced a stock buyback, but they haven't actually bought back any shares yet, even though the stock has been under pressure.

BRIAN SOZZI: RH was the tell months ago. They-- RH started warning about pressured demand trends in their business. Everybody shook it off. But really that has been the canary in the coal mine stock, canary in the coal mine company.

I'm looking at a good note from Citi analyst Steven Zaccone on RH. Apparently, he caught up with their management team after the warning last night. Noting, two things, one, they are not going to promote. This is a company that is not going to discount prices, like Target, to move really the high levels of inventory that we just saw from them a couple of weeks ago.

And the last two, they view-- or according to Citi, that 20% is still seeing the operating-- is still seen as the operating margin of floor. So that was an interesting nugget as well.

BRAD SMITH: Yup, also interesting here, how much of their actual new sales are really tied to the luxury homes market as well. Friedman also noting, with mortgage rates double last year's level, luxury home sales down 18%. That impacts this businesses' ability to sell into some of those new homes, people who are furnishing those luxury homes, and the 18-bedroom type of situations that people may have been buying into previously.

They're also talking about the Federal Reserve's forecast for another 175 basis point increase to the Fed funds rate by the year end. Their expectation that demand will continue to slow throughout the year.