RH - Class A
Q2 2025 Earnings
Adjusted items include $3.597M asset impairments (inventory and property/equipment), $1.913M product recall costs, $1.233M reorganization-related costs, and $1.352M share of equity method investment losses
Market Reaction
S&P 500 over the same 30 days: +0.73%.
Did RH Beat Earnings? Q2 2025 Results
RH delivered a mixed fiscal second quarter, missing on both the top and bottom lines as tariff disruptions created a meaningful wedge between what customers ordered and what the company could ship. Adjusted EPS of $2.93 fell short of the $3.22 consensus estimate by 8.91%, while revenue of $899.15 million, up 8.4% year over year, came in just below the $905.36 million analysts had expected. The gap tells much of the story: RH logged demand growth of 13.7% in the quarter, but an approximately 5.4-point variance between demand and revenues, driven by tariff-related supply disruptions, kept recognized sales constrained. Adjusted operating margin expanded 340 basis points to 15.1%, a notable improvement even after absorbing a roughly 170 basis point drag from European expansion costs, headlined by the September opening of RH Paris on the Champs-Élysées. Looking ahead, management guided for full-year revenue growth of 9% to 11% and free cash flow of $250 million to $300 million, though the outlook does not yet account for potential tariffs from a newly announced furniture trade investigation.
- Demand increased 13.7% in Q2 despite tariff uncertainty and depressed housing market
- Two-year demand increase of 21% driving significant market share gains
- Adjusted operating margin expanded 340 basis points year-over-year to 15.1%
- RH England Gallery demand up 76% and online demand up 34% in Q2
- RH Paris off to a very strong start with Gallery traffic exceeding RH New York
“RH continued to generate industry leading growth in the second quarter as revenue increased 8.4%, and demand increased 13.7% despite the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years.”
RH CEO, on the earnings call
Forward Guidance & Outlook
Fiscal 2025: Revenue growth of 9%-11%, adjusted operating margin of 13.0%-14.0%, adjusted EBITDA margin of 19.0%-20.0%, free cash flow of $250M-$300M. Includes approximately negative 200 basis point operating margin impact from international expansion investments and 90 basis point impact from tariffs net of mitigations. Q3 2025: Revenue growth of 8%-10%, adjusted operating margin of 12.0%-13.0%, adjusted EBITDA margin of 18.0%-19.0%, with approximately negative 270 basis point operating margin impact from international expansion and 120 basis point impact from tariffs. Updated outlook reflects $30 million in incremental tariff costs net of mitigation in H2, delay of new brand extension to Spring 2026, and 8-week delay of Fall Interiors Sourcebook shifting approximately $40 million in revenues from Q3 to Q4 and Q1 2026. Outlook does not include any new tariffs from the recently announced furniture investigation. Adjusted capital expenditures expected to decrease to $200M-$250M in 2026 and $150M-$200M in 2027 and beyond.
RH YoY Financials
Figures from SEC filings and company reports. Not investment advice.