The news
RH finished taking China out of its sourcing a year ago. Its deliveries are still running late. Backorder and special-order balances ran about $75 million above the prior year. The company expects clearing that backlog to add 2.5 points to fiscal third-quarter revenue growth and 6.5 points in the fourth.
For an importer changing origin under tariff pressure, RH’s figures show what the lead-time penalty costs and how long it lasts. Orders that would have shipped in one quarter are shipping two to four quarters later.
RH is also holding back its next product rollout until it has the stock to fill it.
What changed
RH spent 2025 moving production out of China and into its own factory in North Carolina, Italy and Mexico.
China receipts: from 16% of the total in the first quarter of 2025 to a planned 2% by the fourth, with a meaningful share of the remaining tariff absorbed by vendors, per its second-quarter letter last year.
Upholstery: 52% made in the US, 21% in Italy and about 12% in Mexico by year end, a significant share of it in RH’s own plant.
Rugs: a 50% tariff on India hit about 7% of the business, almost all hand-knotted rugs.
The launch calendar: the Fall Interiors sourcebook went out eight weeks late in 2025 while RH waited on tariff announcements to set prices. The new RH Estates line, mailed last quarter, was to be on gallery main floors representing 60% to 65% of the business by the end of September. That is now November, in galleries representing 80% of the business, “when in-stocks will be at adequate levels to meet and fill demand.”
How it works
The penalty shows up two quarters after the move. A factory in a new country, or a new line in an existing one, starts with longer lead times: capacity has to be qualified, made-to-order upholstery has to be built to spec, and the first runs ship late. RH’s fourth-quarter revenue last year took a hit of about $30 million from “higher than expected backorder and special order balances as a result of tariff related resourcing,” per its fiscal 2025 results. The first quarter of this year took about $45 million. The balance peaked about $75 million above the prior year.
Then it clears over two to four quarters. RH said on its first-quarter call that it expected balances back to normal by the end of 2026, with about $75 million of the deferred revenue shipping in the second half. When Vietnam’s factories closed during COVID in 2021, Williams-Sonoma reported record backorders and did not expect inventory to normalize until two to three quarters after the plants reopened. RH’s backlog is clearing over a similar span.
The precondition is the product. Made-to-order upholstery and hand-knotted rugs carry long lead times in any sourcing setup, so a change of origin stretches them further than it would stretch a stocked, factory-finished item.
The pattern
RH is at least the third importer since May 2025 to put a number or a date on deliveries slipping after a tariff-driven change of origin.
Steve Madden planned to cut China from 71% of its US imports to the mid-teens for fall 2025. CEO Edward Rosenfeld said goods moved to other countries would arrive a month to 45 days later. By its second-quarter call, the company had moved some fall production back to China because “it would be difficult to ensure on time delivery” elsewhere, he said.
Yeti stopped shipments and shut down production in China for more than three weeks while it moved sourcing, cut its full-year sales growth outlook to 1% to 4% from 5% to 7%, and pushed several 2025 product launches into 2026 for lack of supply.
RH is the one still carrying the backlog a year on.
The counter
Williams-Sonoma changed origin too and reported comparable brand revenue up 6.2% in the same quarter, with furniture comps positive, per its fiscal second-quarter results. Its merchandise margin fell 230 basis points on the tariffs still in force, and inventory rose 1% on revenue up 6.7%. The company said it was chasing best sellers rather than stocking ahead. RH’s revenue grew 2.6%.
Mix explains part of the gap. Williams-Sonoma sells more stocked, factory-finished goods; RH’s made-to-order upholstery would have carried a long lead time wherever it was built.
The 2.5-point and 6.5-point backlog contributions are guidance for goods that have not shipped. The fourth-quarter number also depends on Estates and new galleries coming through in the same quarter.
What's next
The Estates main-floor rollout and the second mailing are scheduled for November. The test is the fourth quarter: RH guided revenue growth of 16.1% to 21.2%, and at the midpoint the backlog, Estates and new galleries account for nearly all of it. If the $75 million ships as guided, the lead-time penalty from the China exit will have run about six quarters, start to finish.
