Coverage ended 8 updates · Last at 4:36pm ET

Live: Complete Coverage of RH Earnings

By Joel South · Updated Sep 11, 4:36pm ET · Published Sep 11, 3:00pm ET

Live Updates

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My Take

Consensus Pre-Earnings:

  • Rev: $905M | EPS: $3.22

Actuals:

  • Rev: $899M | EPS: $2.93

Takeaway Bullets:

  • Bearish: Topline and EPS misses; tariff costs trim near-term margins and push revenue into later quarters.

  • Bullish: Demand +13.7% despite housing slump; margins expanded 340 bps; Paris launch looks transformational.

  • Neutral: FY25 guide intact at +9–11% rev, but with tariff caveats and delayed product launches.

What Changed From Last Quarter

  • Guidance trimmed to reflect $30M tariff cost and delayed Sourcebook (~$40M revenue shift).

  • Paris Gallery launched September 5; early traffic >RH New York, design pipeline in 6 days > first 5 EU galleries combined.

  • Sourcing shift: China receipts to fall from 16% (Q1) → 2% (Q4); 52% of upholstered furniture will be US-made by year-end.

  • Liquidity levers reaffirmed: ~$500M in real estate equity, $300M excess inventory being converted to cash.

Key Operating Highlights

RH is proving it can defend margins even while absorbing tariff shocks and investing in European expansion.

Metric Q2 2025 Q2 2024 YoY Δ
GAAP Net Income $51.7M $29.0M +79%
Adj. Operating Margin 15.1% 11.7% +340 bps
Adj. EBITDA Margin 20.6% 17.2% +340 bps
Free Cash Flow $80.7M –$37.9M Swing to positive

Guidance Update

FY2025 Outlook (Revised):

  • Revenue growth: +9–11% (unchanged range)

  • Adj. Op Margin: 13–14%

  • Adj. EBITDA Margin: 19–20%

  • Free Cash Flow: $250–300M

Q3 2025 Guide:

  • Revenue growth: +8–10%

  • Adj. Op Margin: 12–13%

  • Adj. EBITDA Margin: 18–19%

Flag: Management absorbed $30M in incremental tariffs in H2 and delayed its Fall Interiors Sourcebook by ~8 weeks, shifting ~$40M of revenue from Q3 into Q4/Q1’26

Management Commentary

CEO Gary Friedman highlighted that RH grew demand +13.7% despite “the polarizing impact of tariff uncertainty and the worst housing market in almost 50 years.” He stressed that ~5.4 points of demand vs. revenue variance should be recaptured in H2 as shipments normalize.

Big Miss for RH

After hours, RH posted Q2 revenue of $899M (+8.4% YoY) vs. Street at $905M (❌ miss), and adjusted EPS of $2.93 vs. $3.22 consensus (❌ miss). Free cash flow hit $81M, an upside surprise in a heavy tariff/disrupted environment.

Metric Actual Estimate Beat/Miss
Revenue $899M $905M ❌ Miss
Adj. EPS $2.93 $3.22 ❌ Miss
Free Cash Flow $81M N/A ✅ Positive

Stock take: Margins were stronger than expected (Adj. EBITDA margin 20.6% vs. 17.2% last year), but tariff overhang, shipment shifts, and trimmed FY25 outlook are dampening sentiment.

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How RH Performed After Recent Earnings

Quarter EPS Surprise 1-Day Move 7-Day Move 14-Day Move
Q1 2026 NM vs. –$0.07 est. +6.9% +4.0% +17.1%
Q4 2025 –17.3% –40.1% –34.0% –30.0%
Q3 2025 –6.2% +17.0% +7.0% +6.3%
Q2 2025 +5.2% +25.5% +34.7% +30.4%

Live coverage has ended. The full story is below.

Full Coverage

The story so far

RH reports after the close with consensus eyeing a sequential reacceleration as tariff-driven shipment pauses from Q2 are recaptured in H2. The setup follows a volatile Q1 where revenue was –0.6% vs. consensus yet EPS beat, and management kept FY25 guidance while flagging a ~6-point Q2 revenue headwind from April’s tariff shock with recovery in H2. This print matters for validation of the demand/ship timing bridge, durability of the new 30% membership discount, and International/Design initiatives’ contribution to margin and cash flow.

What to Expect — Estimates (Consensus)

  • Revenue: $905.36 million

  • EPS (Normalized): $3.22

  • Cash from Ops: N/A in snapshot

  • FY 2026 Revenue: $3.52 billion

  • FY 2026 EPS: $10.69

  • FY 2027 Revenue: $3.89 billion

  • FY 2027 EPS: $14.51

At these levels, revenue growth implied is ~9% YoY for the quarter and ~11% for FY26, off a depressed FY25 base.

Key Areas to Watch

  • Tariffs, sourcing, and the Q2 → H2 bridge
    Management cited an unexpected “Liberation Day” tariff shock that paused shipments, implying ~6 pts of Q2 revenue deferral to H2; look for confirmation of recoverability and lead-time normalization.

  • Permanent shift to 30% membership discount
    RH lifted the member discount from 25% to 30% (permanent); investors will assess demand elasticity and margin offsets (pricing, mix) within the 20–21% EBITDA guide.

  • Europe and gallery cadence
    Momentum at RH England and upcoming Paris (Cannes-timed), London, Milan openings underpin international scale; updates on demand and in-stock/fabric fixes are key.

  • Capital allocation & real estate
    Management highlighted ~$500M of real-estate equity and multiple sale-leasebacks as potential liquidity levers against a targeted $250–$350M FCF in 2025.

 

Contact [email protected] for any questions or corrections.

Joel South

Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.

He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.

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