RH - Class A
Q1 2025 Earnings
Adjusted EPS excludes $0.851M non-cash compensation charge, $1.907M income tax adjustment, and ($8.205M) share of equity method investment income (including $7.9M capital distribution from Aspen LLC)
Market Reaction
S&P 500 over the same 30 days: +5.20%.
Did RH Beat Earnings? Q1 2025 Results
RH turned in a quarter that defied a punishing backdrop, posting adjusted diluted EPS of $0.13 against a consensus that had penciled in a modest loss, a gap that underscores just how sharply the luxury home furnishings retailer outperformed expectations. Net revenues rose 12.0% year-over-year to $813.95 million, coming in just fractionally below the $818.57 million consensus, while the company swung to GAAP net income of $8.04 million from a loss of $3.63 million in the year-ago period. The standout driver was international momentum, with RH England Gallery demand up 47% and European comparable galleries posting 60% demand growth, helping offset what CEO Gary Friedman described as the worst housing market in nearly half a century. Tariff headwinds cloud the near-term picture, with Liberation Day duties expected to shave roughly 6 percentage points from Q2 revenue growth before a second-half recovery. Even so, management held full-year guidance steady, projecting revenue growth of 10%-13% and free cash flow of $250 million to $350 million for fiscal 2025.
- 12% revenue growth driven by product elevation and expansion investments despite worst housing market in nearly 50 years
- RH England Gallery demand up 47% in Q1 with online demand up 44%
- European comparable Galleries (Munich and Düsseldorf) saw 60% demand growth in Q1
- Adjusted operating margin of 7.0% and adjusted EBITDA margin of 13.1% at high end of expectations
- Free cash flow of $34M compared to negative $10M in prior year quarter
- Membership discount increased from 25% to 30% to capture market share
“Our industry leading growth continued into fiscal 2025 as revenue increased 12% in the first quarter despite the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years. Both adjusted operating margin of 7.0% and adjusted EBITDA margin of 13.1% were at the high end of our expectations, and we achieved positive free cash flow of $34 million in the quarter.”
RH CEO, on the earnings call
Forward Guidance & Outlook
RH maintained fiscal 2025 guidance assuming existing tariffs remain unchanged: revenue growth of 10%-13%, adjusted operating margin of 14%-15%, adjusted EBITDA margin of 20%-21%, and free cash flow of $250M-$350M. For Q2 2025, the company expects revenue growth of 8%-10%, adjusted operating margin of 15%-16%, and adjusted EBITDA margin of 20.5%-21.5%, including an approximate negative 180 basis point operating margin impact from international expansion investments. Liberation Day tariffs are expected to negatively impact Q2 revenues by approximately 6 points, to be recovered in the second half. A planned new brand extension has been delayed from fall 2025 to spring 2026 to mitigate tariff risk. Adjusted capital expenditures are estimated to decrease to $200-$250M in 2026 and $150-$200M in 2027 and beyond. The company plans to open 7 Design Galleries in fiscal 2025 and accelerate to 7-9 new Galleries per year plus 2-3 additional concepts going forward.
RH YoY Financials
Figures from SEC filings and company reports. Not investment advice.